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How to avoid cheating yourself out of podcasting revenue
Contrary to a lot of grumbling on LinkedIn, the health and growth of podcast advertising is going to come from Digital Ad Insertion (DAI), not "baked-in".
There’s been a push by some buyers (many in the Direct Marketing space) to go back to “the good old days” of baked-in sponsorships. Baked-in is where sponsorship ads are created and then edited directly into the audio file. Once published, these spots tend to live forever as it’s a lot of work to edit them back out again.
I want to point out that contrary to what buyers may say, they aren’t asking for baked-in because it converts better; they are asking because it includes an infinity of free ad plays. The math is pretty simple. The same conversion rate times an unlimited number of free impressions is hard to argue with. So I get why they are asking.
But the math for the publisher is also a no brainer, in the opposite direction.
The back catalog is, on average, responsible for over 80% of all weekly impressions, so baking in ads corresponds to an 80% drop in revenue. This is because for each baked-in ad, you reduce the future inventory you have to sell to one fifth of what it was. And further, it’s next-to-impossible to sell baked-in on episodes from over a year ago, killing most monetization for anything already in the back catalog, even though that’s where people may start listening to the show in question.
Let me say this a different way: a network that avoids baking in ads can see up to 400% more revenue.
I don’t get why anyone in publishing would agree to these demands for baked-in, except for a sudden fear that the world is ending, the recession is upon us, and podcast advertising is about to go the way of radio and the dodo. ie: take the deal or die.
So let’s look to radio, a mature industry that is in the long, slow decline phase of their lifecycle. And yet, according to Advertiscast, radio still commands CPM rates between $12 and $18.
Podcasting is anything but in our decline. I don’t believe we have yet hit the top of our curve, but even if we have, my message would be the same: beware this pressure to bake anything into your feeds. The one-day-in-the-future drop from $24 to $18 CPM is not what you need to be worried about: it’s the massive drop in gross revenue right now.
All that said, I get that the pressure and the ask is real.
If you are going to sell anything approaching “baked-in”, sell episode locks via Digital Ad Insertion (DAI), and put a 60 or 90 day cap on them. This is where you lock an ad to a specific episode but the DAI engine will remove the ad when the time threshold is reached.
Then, get back to work building relationships with the buyers who want strong, long-term relationships with the most engaged listeners in the world and the podcasters they adore.
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