With more than 800,000 podcasts in existence, everyone seems to be jumping on this audio bandwagon—but is it worth the investment?
Podcast listeners are on the rise, and they’re a well-educated and well-heeled demographic, being 45% more likely than non-podcast listeners to have annual incomes over $250,000. If you can get a slice of this market, it can pay dividends. The question is: How can you make money from your podcast?
Over the years, Foundr CEO Nathan Chan has grown our podcast to more than 1 million listeners. Every episode of The Foundr Podcast—which features advice from the greatest minds in business—gets tens of thousands of downloads. Who better to drop some knowledge on how to make money from a podcast?
Watch the video below as Nathan shares his best monetization tips, and then read on as we dive into the details on how to make a full-time income from your podcast.
“This episode is brought to you by…” Every podcast listener has heard those words countless times, which might make it seem like advertising (also known as sponsorship) is a goldmine. And while, yes, you can monetize your podcast by seeking advertisers, there’s a dirty little secret no one tells you. It’s extremely difficult to rely on advertising dollars as your sole source of income.
Why? Well, in Nathan’s experience, advertisers won’t even talk to you unless your podcast has at least 10,000 downloads per episode. Getting to numbers that big takes time, and some smaller podcasts may never get there.
Plus, if you do the math, advertising alone just doesn’t add up if you plan to earn a full-time income podcasting.
The Formula for Making Money Strictly from Advertising
The industry standard ad rates for podcasts (regardless of category) are $18 per 30-second CPM and $25 per 60-second CPM. CPM stands for Cost Per Mille (every 1,000 listeners).
So you’d need at least 10,000 podcast listeners per episode to be able to generate substantial income. To illustrate, let’s walk through a quick example.
Say you have a podcast that runs a 30-second ad intro (that’s an ad before the episode begins). So that’s $18 per 1,000 downloads. In addition, you run a 60-second midroll ad (that’s an ad that runs in the middle of the podcast and can begin with words like, “this podcast is sponsored by…” or “check out this product…” For the 60-second midroll, you’d get $25 per 1,000 downloads.
Still with us? Okay, let’s say your podcast gets 10,000 downloads per episode. Let’s run the numbers below:
$18 (30-second intro) + $25 (60-second midroll) = $43 X 10 (per 1,000 listens) = $430
That’s working with one advertiser for one episode. If you’ve got a weekly show, you’d make $430 per week or $1,720 per month.
If you really want to boost that income, you’d need to have two advertisers and run two 30-second spots and one 60-second spot. And even then, you’d still make only $2,440 a month from a weekly podcast that you’re sinking hours of your time into.
That’s not to say podcasters aren’t making big bucks from sponsorships. Take a look at the Entrepreneur on Fire podcast; in December 2019 alone, it raked in $92,200 from sponsorships. Impressive! But to put that into perspective, the show has more than 2,300 episodes and 1 million monthly listens.
“Advertising isn’t the number one way to actually monetize your podcast, from my experience,” Nathan says. And he’s had lots of time to play around with advertising. In fact, he worked with major advertisers—big SaaS companies making hundreds of millions of dollars a year.
But after running the numbers at the end of selling a six-week package with six episodes, he realized he was better off selling his own products from Foundr.
Plus, a 2019 study suggests that podcast ad revenue has hit its peak and will slow down in the years to come, meaning podcasters will need to find other sources of revenue.
And that brings us to our next (and favorite!) way to make money from a podcast.
2. Sell Your Own Products
Nathan emphasizes that selling your own products is the best way to monetize a podcast. So how can you do it?
- For a physical product, give a coupon code to your listeners.
- For a digital product, promote a lead magnet or free gift. That way, you can capture a listener’s email or phone number and get them started on your sales funnel so you can build a relationship from there. Popular digital products include ebooks, online courses, and memberships.
- For a service business, such as high-ticket services or consulting, offer a free consultation. During your show, you can promote a special link to sign up for a free consultation so people can book a call.
Just how effective can selling your own products or services on a podcast be? Well, for one episode, Nathan interviewed a sales trainer and had him walk listeners through his sales process. For listeners, he gave away a free PDF on selling. Later, Nathan asked him how much work he got from that one podcast episode. The sales trainer said that, at that point in time, he had $50,000 worth of work in the mix. The deals weren’t all closed yet, but that’s a big number of potential sales! That just goes to show that podcasting can be extremely effective at selling products and services.
So would you rather make a couple thousand dollars from selling advertising or make even more income by selling your own stuff?
The reason podcasting converts so well is that podcast listeners are a loyal bunch. You’re in their ear as they drive to work, go for a run, or wash the dishes, and they begin to feel like they know you.
A 2019 study found that podcast listeners “want to listen to hosts who are authentic, feel like a friend, and share the users’ passions and beliefs.” And that creates a lot of trust between listeners and hosts.
Nathan has met so many people in the Foundr community who have listened to the podcast, and say it feels like they know him. A lot of advertisers want to tap into that kind of a connection.
Since you’ve got that special trust with your listeners, it’s wise to recommend your own products because they’ll likely convert at high rates.
3. Sell Other People’s Products
That’s all well and good, but what if you don’t have any products to sell? Easy: Sell other people’s products. This is also known as affiliate marketing.
An example of this is what Pat Flynn does on his Smart Passive Income podcast. As an affiliate and advisor for email marketing software company ConvertKit, Flynn makes a commission for each sale made through his affiliate link. To make those sales, he promotes his affiliate link in his podcast. In one month, he made $14,018.67 from ConvertKit commissions alone.
To sell other people’s products, all you have to do is sign up for that company’s affiliate program, get your unique link, and promote that link in your podcast and in the show notes.
While you can make a good income doing this, from his experience, Nathan still thinks it’s better to sell your own products if possible.
Like we mentioned above, podcast listeners are loyal. And if you’ve got 1,000 true fans, as Wired co-founder Kevin Kelly likes to say, you are well on your way to making an income from your podcast. One way to do that (even if you have fewer than 1,000 fans) is through Patreon, a site that enables creators to earn recurring revenue via support from their fans.
For inspiration, check out The Amelia Project’s Patreon page. They have 264 patrons and earn $1,049 per episode.
Additional Tips to Monetize Your Podcast
- Define your target audience and create content specifically for them. A common mistake new entrepreneurs make is trying to cast a wide net and be everything to everyone. That’s the fastest way to get nowhere with a venture. Treat your podcast as a business and begin by creating a customer persona. Every guest you interview and every topic you choose should target that ideal listener.
- Publish consistently. You’re trying to build a faithful fanbase, and to do that, your listeners need to know when to anticipate new content.
- Focus on quality over quantity. While publishing every week is a noble goal, it’s worthless if what you publish each week is subpar. Try to post an episode only when it’s the best content you can possibly create.
- Promote your podcast. When your podcast is new, it’s tough to get discovered, which is why you need to focus on promotion. To do this, you can run Facebook ads, be a guest on other podcasts, and use social media to drive traffic to your podcast.
- Be patient. Yes, Foundr’s podcast gets tens of thousands of downloads per episode, but it’s also been around for years. Be patient when you’re starting your podcast, realizing success (and advertising dollars) won’t appear overnight.
How Will You Make Money from Your Podcast?
Podcasting is reaching its peak, and many entrepreneurs want to ride that wave. If you plan to make a full-time income from podcasting, you’d be wise to follow these tried-and-true tips. To recap, here are the three ways Nathan shared to make money podcasting:
- Selling your products or services
- Selling somebody else’s products
As with anything, it’s best to test each method yourself and see what works best for your podcast. If you’re just starting out and don’t have a product or many downloads yet, start with selling somebody else’s products through affiliate marketing. As you grow your fanbase, you can test advertising spots, and eventually, work your way up to selling your own products and services. It might even be best to do a combination.
What’s your biggest challenge when it comes to monetizing your podcast? Tell us in the comments below!