How smarter ad pricing could revitalize podcast revenue

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Podcast studios will go out of business unless they reevaluate programmatic advertiser rates. 

LAist Studios, New York Public Radio, Pushkin Industries, NPR, Spotify, Vox Media, SiriusXM, Vice Media, the Los Angeles Times, Buzzfeed News and others have all experienced downturns in advertiser revenue this year, leading to layoffs and organizational restructurings. The boom and bust of podcasting is seemingly taking its toll, but the numbers paint a different picture.  

According to Libsyn’s podcast advertising rates report from July, podcasts received an average CPM, or cost per mille, of $23.06 per 1,000 listens in July 2022. By July 2023, that average CPM decreased to $22.24 per 1,000 listens. These rates apply to programmatic advertising, or automated ads targeted to audiences based on their listening behavior.

Comparing programmatic advertising rates to the other major stream of podcast revenue, membership subscriptions, turns up something interesting. Podcast listeners on average pay a higher CPM to hear the shows they love ad-free. For example, Luminary offers two membership ad-free packages: $2.99/month for an annual subscription, and $4.99/month on a monthly basis.

Luminary CEO Rishi Malhotra told The Verge in March 2022 that the subscription service had a couple hundred thousand subscribers across platforms. Slicing this audience by the average number of episodes a listener might listen to per month — eight, according to Edison Research’s 2022 Infinite Dial Report — an annual Luminary subscriber pays $0.37 per listen ($2.99/8), while a monthly subscriber pays $0.62 ($4.99/8) per listen. That equates to CPMs of $37 (1000 x 37/1000) and $62 (1000 x 62/1000) per thousand, respectively. 

Applying these CPMs to 200,000 impressions, revenue generated will be between $7,400 ($37 x 200,000/1000) and $12,400 ($62 x 200,000/1000). Using the average CPM of $22.24 reported by Libsyn against the same impressions, earnings are only $4,448 ($22.24 x 200,000/1000). That’s at least a $3,000 difference in revenue between a membership ad-free model and a programmatic advertiser model — even more for a full fiscal year.

Revenue PeriodLuminary ImpressionsCPM @ $22.24 Libsyn AverageLuminary Annual Member CPMLuminary Monthly Member CPMLost Revenue Potential
1 month200,000 $4,448 $7,400 $12,400 $2952 – $7952
1 year200,000 $53,376 $88,800 $148,800 $35,424 – $95,424
(Values are estimates)

The discrepancy in revenue between programmatic advertising and ad-free membership is substantial. 

A 2023 advertising revenue study by the Interactive Advertising Bureau signals significant room to grow with programmatic advertising. “While programmatic’s share of podcast revenue has grown 5x since 2021, it still only represents ~1-in-10 revenue dollars (11%), substantially behind other digital media where programmatic represents nearly 9-in-10 revenue dollars (87%). As programmatic provides buyers the ability to achieve both scale and precision, this represents an important area for podcasting to address to be more competitive in the digital ad ecosystem.”

The idea publishers and studios must consider is that programmatic advertisers should pay the same rate as the listeners who opt out of hearing their ads, whether that is a CPM of $37, $62 or more. To me, it’s clear studios are severely undervaluing their podcast audiences. As an industry, we must seriously consider raising CPM rates to levels that are consistent with audience behavior. 

Kristen Hayford (she/her) is a media marketing and communications professional and director of The Other West Coast Productions, where she focuses on empowering voices and stories through audience development and monetization. Her previous roles include in-house marketing and communications for Politico and LAist. 

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