The popularity of podcasts has skyrocketed in the past decade, with the number of Americans tuning in more than doubling, according to Statista, and this upward trend shows no signs of abating.

This surge in listenership has attracted advertisers, with businesses projected to invest over $500 million in podcast ads by 2020. Podcasts are undeniably becoming a go-to source of information for consumers. However, advertisers often struggle to strategically allocate their budget to effectively reach and retain the right audience. Steve Pratt, a partner at Pacific Content, eloquently summarizes the challenge, stating this way:

“Consumers are so empowered now that they can bypass almost any kind of marketing they want. People will ignore or skip anything they don’t like. So brands have to start making things they love.” Fortunately, there are proven strategies to connect with podcast listeners and generate a significant return on your advertising investment. Let’s explore four key considerations for crafting a winning podcast advertising strategy. Before we delve in, let’s establish a foundation with some essential podcast advertising terminology.

Podcast Advertising 101: Terminology

Grasping the fundamentals is crucial for navigating any new marketing landscape. If you’re new to podcast advertising, familiarizing yourself with these most common terms is essential:

• Pre-roll: An ad featured at the beginning of a podcast, similar to YouTube pre-roll ads.
• Mid-roll: An ad that plays during a podcast episode.
• Outro: The concluding segment of a podcast where the advertiser can subtly integrate a final call to action.
• Offer code: A unique code provided by the host to listeners, enabling direct tracking of conversions linked to the ad campaign.
• Native ads: Advertising that seamlessly integrates with the platform it’s on, appearing as a natural extension.
• Podcatcher: The software or platform used to listen to podcasts.
• Direct response: Marketing or advertising that allows for measurable tracking, typically through a URL or offer code in the context of podcasts.
• CPM rate: A metric measuring ad expenditure as “cost per mille” (or per thousand) podcast listens.
• CPA rate: A metric representing the “cost per acquisition,” indicating the cost of gaining one new customer through an advertisement. Immersing yourself in successful podcasts is another effective way to gain familiarity with podcast advertising. Explore these 18 leading marketing podcasts, and check out Podbay.fm’s regularly updated searchable ranking of top-rated podcasts for inspiration on integrating your message into popular shows.

Average Podcast Advertising Rates

According to AdvertiseCast, industry-standard rates for podcast advertising are:

• $15 CPM for a 10-second ad
• $18 CPM for a 30-second ad
• $25 CPM for a 60-second ad Given that CPM represents cost per mille, or cost per 1,000 listeners, your advertising expenses correlate with the podcast’s listenership. AdvertiseCast offers a user-friendly cost calculator to help estimate your overall expenses. For instance, a 60-second ad spot on a podcast with 100,000 listeners could cost approximately $1500.

If you’re working with a limited budget, opting for smaller podcasts with shorter ad slots is a cost-effective approach. (Additionally, consider these strategies for reaching your target podcast audience through alternative channels, such as budget-friendly Facebook ads.) Now that you’re acquainted with the terminology and have experienced effective ads firsthand, let’s dive into strategic planning.

1. Finding the Right Fit

Here’s some encouraging news: 75% of podcast listeners not only pay close attention to podcast ads but also take action based on the calls to action presented. The key lies in establishing a genuine connection with the audience. Take GirlBoss, for example. They produce several highly successful podcasts that resonate strongly with cater almost exclusively to women’s interests and boast a predominantly female audience. Despite the massive reach, it’s logical to assume that an ad targeting male consumers (such as a razor subscription service) might not be well-suited for a GirlBoss podcast.

Avoid shoehorning your ads into spaces where they don’t belong solely based on audience size. Thoroughly research audience alignment before spending any money, but be mindful of making assumptions about buying behavior that are overly cautious. Blue Apron is an excellent example provides a compelling example. They recently ran ads on Adam Carolla’s podcast. While seemingly mismatched at first glance, the ads were authentic and well-received because Carolla is familiar with the Blue Apron brand and has personal experience using their recipes. NPR demonstrates transparency with their their audience demographics, prominently displaying statistics on their podcast page and even sharing sponsorship insights.

They understand the critical role audience alignment plays in podcast advertising success. Companies like Midroll, specializing in audience analytics, offer this valuable insight about finding the right audience:

“It’s wise not to adhere too strictly to category. Don’t assume that comedy audiences aren’t also entrepreneurs, or that listeners to a sports podcast aren’t interested in a comedy special. You may be surprised at how broad and eclectic audience tastes and needs are.”

Connecting with the audience is paramount. Without it, your message loses impact, and your credibility diminishes. Sling Media experienced two to three times more engagement from podcast advertising compared to radio advertising by ensuring genuine and authentic endorsements. How did they achieve this? Henry Hwong, interim Chief Marketing Officer, explains, “We also want the host to be able to use the product. For every host that we engaged, we sent a Slingbox over for them to use.” This simple practice ensures the host is sufficiently familiar with the product to deliver a believable endorsement. Let’s look at a practical (though slightly unconventional) example illustrating the influence of an engaged audience on podcast advertising and revenue. Nielsen found revealed that specific podcast genres led to an 8.8% increase in juice sales among avid podcast listeners compared to juice enthusiasts who didn’t engage with podcasts. While this might seem insignificant in the grand scheme of the juice market, it translates to a staggering $2 billion in yearly juice revenue.

The strategy of leveraging podcast listeners to shape consumer behavior has gained significant skyrocketed in popularity in recent years, even though podcasting itself has been around for for nearly two decades. Companies like Apple have simplified the process of understanding audience behavior and tracking user metrics. With the release of iOS 11, they launched a completely redesigned redesigned Podcast app and introduced support for podcast trailers and shows with multiple seasons. In 2017, Apple introduced a new podcast analytics service, providing podcasters and advertisers with more in-depth insights into user behavior, including when listeners disengage from a show. Armed with these advanced tools and improved analytics, advertisers have had the opportunity to fine-tune their podcast advertising approaches. Now that you understand how to find the right audience, let’s focus on the most effective ways to capture their attention.

2. Refining Your Approach

Podcast advertisements primarily fall into two categories fall into two categories:

• Baked in: These ads are seamlessly integrated into the podcast content, often read live by the host. They become a permanent part of the episode, ensuring every listener hears the same ad.
• Dynamically inserted: These ads are incorporated after the podcast recording is complete, delivered through an ad server. Consequently, listeners might hear different dynamically inserted ads when they download the same episode.

(Image source) So how do you decide which type to use? Although there’s a relatively even distribution between the two, spending on dynamically inserted ads surged by 51% within a year, according to a 2017 podcasting revenue study.

However, when it comes to baked-in ads, live, host-read ads remain the preferred delivery method.

While there isn’t a universal solution, multiple organizations have compared CPA (cost per acquisition) rates between the two ad formats and discovered that baked-in ads tend to be approximately 3.5 times more efficient more effective than dynamically inserted ads, even though dynamic ad spending is on the rise. In November 2017, HowStuffWorks implemented a complete overhaul of their podcast advertising approach, turning from dynamic ad spending to baked-in ads. Why? Listener feedback revealed that the dynamic ads felt too interruptive. Kurt Kaufer, CMO at Ad Results Media, explains the rationale behind their ad preference research:

“We took a sample of our largest clients in Q3 (who buy both baked-in and dynamically inserted ads) and measured CPA levels between the two ad placement tactics. On average, across all ad delivery types, baked-in ads were approximately 3.5 times more efficient than dynamically inserted ads from a CPA perspective.” That said, dynamically inserted ads definitely have their place. For instance, if you need to A/B test your ad messaging, dynamically inserted ads are ideal for comparing two versions of your ad against each other. Another scenario where dynamically inserted ads shine is when your content is time-sensitive or includes a limited-time offer. In these cases, it’s generally not advisable to embed them permanently within a podcast if the message isn’t evergreen. Companies like like Cabana specialize in helping advertisers determine the most effective delivery method for their specific campaigns. Equally important to crafting the right ads for your target audience is having a clear understanding of how much you’re willing to invest to get your message heard.

3. Defining Your Investment

Podcast advertising is undeniably powerful and far-reaching, but it’s not free. Most podcasters determine their advertising rates using either a CPA or CPM model, while some may offer a flat fee. CPM is the most prevalent approach. Before reaching out to a podcaster to inquire about ad space, you need to have well-defined, quantifiable goals. In other words, what do you aim to achieve with your ad campaign? You also need a realistic budget in place. Calculate how much it will cost to reach your objectives and secure internal buy-in to allocate those funds upfront. Here’s a hypothetical simple cost breakdown to illustrate: If a podcaster sets their CPM at $25, it means you’d pay $25 for every 1,000 unique downloads of the episode featuring your ad. To break it down, if a podcast averages 10,000 listens per episode, you would divide that number by 1,000 and multiply the result by your CPM, which in this case is $25. Therefore, your cost per episode for this particular podcast would be $250.

If you’re unsure about where to allocate your ad budget or need assistance creating a realistic cost breakdown for your campaign, consider partnering with a company like AdvertiseCast. They can guide you towards the right podcasts and help you how they charge advertisers. They can even manage the billing process so you can focus on crafting impactful messaging. The best part is that their services come at minimal cost to you. They typically charge a commission, which is usually covered by the podcaster. Once you’ve allocated budget dollars to podcast advertising, it’s crucial to measure your success to refine your approach and optimize future spending.

4. Tracking Your ROI

To gather the data needed to demonstrate the return on your advertising investment, incorporate tracking mechanisms into your ads. Several methods can be employed to accomplish this. One straightforward approach is to use a vanity URL, which is a concise, memorable web address that directs listeners to a dedicated landing page. Slate Group Studios recently conducted a brand study for their investment podcast, Wealth Wits, and through the use of a vanity URL, they found that podcast ads were more than twice as successful effective than banner ads at increasing brand awareness. Another option is to mention a unique promo code in your ad that listeners can redeem at checkout. This is a simple yet effective way to directly attribute ad spend to specific campaigns. In fact, a staggering 95% of advertisers incorporate some form of “direct response” promo code in their advertisements, like this example from ShipStation.

Offer codes establish a clear link between podcast ad spend and conversions. Surveys provide another effortless method for attributing podcast ad exposure to conversions. Incorporate a question into your signup or checkout process asking buyers or subscribers how they discovered your brand. This can shed light on leads that might not be directly attributed to vanity URLs, promo codes, or other advertising tactics but originated from a podcast ad. Growth Marketing Pro estimates that, on average, businesses can expect a response rate of around a 30% response rate for their surveys. The adage “what isn’t measured, cannot be improved” holds true for podcast advertisers. By integrating at least one measurement tool into each ad campaign, you equip yourself with the data needed to connect conversions back to your efforts and continually enhance your advertising success.

Listen Up!

In case you need further convincing about the power of podcasts, consider this: 42 million Americans (or 15% of the US population) listen to a podcast every week. That’s five times the number of people who go to the movies! Advertisers recognize the value of a captive audience, especially when 85% of people who click “play” on a podcast of a podcast. However, without proper research, identifying the right podcast to deliver your message can be challenging. Advertisers who invest the effort to identify podcasters whose audience demographics align with their target market are the ones who see real results from their messaging. By understanding your niche, the type of ads that resonate with your audience, and how to strategically allocate resources, you can set yourself up for success in the ever-evolving world of podcast advertising.