How to Price Podcast Sponsorships (Hint: It’s NOT CPM)

Real quick before we get started. I wanna tell you about an upcoming free webinar I have on November 2nd, 2022 at 1:00 PM Eastern Time. If you’ve been thinking about launching a podcast, but you’re worried it’s gonna take too much time, or your current podcast is taking too much time, then I have a better way for you. It’s called Mini Podcasting. These are 20-minute or fewer solo shows, and I’m going to be doing a free hour-long webinar on how to launch, stay consistent, and monetize your mini-podcast. 

So here’s what you’ll learn in this free 60-minute webinar:

1. Why a mini-podcast is easier than most other formats. 

2. How to define the mission of your mini-podcast. 

3. How to come up with episode ideas,

4. Staying consistent through batching and monetizing

Plus, there will be a Q&A session where you can ask me any questions you’d like of me. I will stay on as long as you need to. You can register for free at [makemoneypod.com/webinar]. It’ll also be in the show notes for this episode. That’s [makemoneypod.com/webinar]. Join me on November 2nd at 1:00 PM Eastern Time for this free webinar on how to make a mini-podcast. 

Over the last few weeks, we have talked about sponsorship. How to find sponsors. How to keep sponsors if you need a sponsorship contract. But what we haven’t talked about yet is perhaps the question I get the most: How do I price my sponsorship?

Now, you’ll know if you’ve been listening that I reference a few ways in previous episodes. The most common is the cost per milli or CPM. But I have a different way for you. And that’s what I wanna talk about in today’s episode. So hang tight because I am going to give you the formula, the framework that you need to price your sponsorships.

Hello, and welcome to Make Money Podcasting where I teach you how to make your first $10,000 with your podcast. On this show, you’ll learn tried and true methods to increase your revenue and turn your podcast from a money pit into a moneymaker. 

Hi, I’m your host, Joe Casabona. And my podcasts have been making money from day one without a lot of downloads. I’ll share everything I know with you here on Make Money Podcasting. 

So first, let’s talk about CPM. This is a term that you’ve probably heard before because this is the most common way to price sponsorship for big podcasts. CPM stands for cost per milli or cost per mill-i. I’ve heard people pronounce it as and that means there is a dollar amount per thousand downloads. 

So, let’s just say you have 1000 downloads and your CPM is $20. That means you can charge $20 per sponsorship. If your CPM is 5,000 downloads, (and this is downloads per episode within a 30-day period. Just to be clear) So again, if your CPM is 5,000 downloads in the first 30 days per episode, then you can charge $100 per sponsorship.

Now, if you’re getting 5,000 downloads in the first 30 days, that puts you in the top 5% of podcasts. This podcast isn’t getting that many. How I Built It, my main podcast gets about that many. But I charge a lot more than $100 per sponsor spot per episode. In fact, I charge double or triple that. And that’s because again, you likely don’t have that many downloads and there are some real costs to both like getting sponsors and running your podcast, and a CPM of the average (kind of last time I checked this depends on the category), but the average is between 18 and $24.  Again, depending on the podcast category. So if we just say $20 for most podcasts, that’s not gonna be worth it like it wouldn’t be worth it to sell at a thousand downloads per 30 days. It wouldn’t. CPM just wouldn’t make sense. You’d make a lot more money not selling those ad spots and instead selling your own product or promoting your mailing list because I’m gonna guess that the email addresses on your mailing list are worth a lot more than 20 bucks.

So how can smaller podcasters like you, like me, make money with sponsorship? Well, you probably don’t have the downloads, but you might have followings in other areas. Facebook, Twitter, Instagram, TikTok, your social media, other social media, your mailing list, and YouTube website visitors. You probably have an audience bigger than just the number of downloads to your podcast. 

I’ve coached people who have smaller podcasts, but they have a mailing list of 8 or 10,000. And newsletter sponsorships are blowing up right now. So when you put together an offer, instead of calculating your cost based on CPM, you can calculate what I call your Overall reach. I’ve heard other podcasters use that term or other terms, but you’re basically calculating for your sponsor how many people overall you’ll reach.

So, let’s look at an example. Let’s say you get 50 downloads per episode over a 30-day period. But you have 4,000 Twitter followers. You have 600 Instagram followers. Your mailing list is let’s say 2000. So, I think I have to read the tape back. But, we said 50 downloads, and 4,000 Twitter followers, so that’s 4,050. 600 Instagram followers, that is 4,652,000 people on your mailing list. That’s 6,650 which is your overall reach, right? You’re adding up your audience across all of these platforms. 

And I know what you’re thinking, right? You’re thinking, well, what if people on my mailing list also happen to listen to the podcast? That’s a little unlikely. You might have some overlap, but I don’t think the overlap is going to be significant enough for you to subtract. But If you want, you know, calculate the overall reach and then round down to the next round number, whatever. But I don’t think that’s going to make an impactful difference because your audience is going to either be on your newsletter, right? And then you promote your show to your newsletter, and maybe some people will listen or they’ll just like read the notes. Or there are gonna be people who listen to the podcast who have no idea that you have a newsletter. So, reasonable to think that calculating your overall reach is you’re just gonna kind of take the raw numbers and add them up. But if you wanna, you know, again, round down or like take 10% off or whatever, that’s totally up to you. 

But let’s use this overall reach of 6,650. You can put together an offer that is something like this: A midroll ad read that is 60 seconds long. Three tweets the week the episode airs where you talk about the sponsor, one Instagram post story or reel that goes up per week about the sponsor. And then a dedicated area in your newsletter where you have a section where you talk about the sponsor and thank them.  

These add a ton of value for your potential sponsors. And it makes, so it just kind of blows that $20 CPM out of the water. That’s how I charge 250 to 350 bucks per sponsor spot. And because your audience trusts you, and you’re speaking from the heart, you’re gonna help with conversions, right?

So this is the other thing you look at say, SquareSpace or Casper or MeUndies or some of these other bigger companies who are just kind of trying to cast a wide net and reach as many people as possible. Those are general-purpose sponsors who are just trying to go by volume, right? 

It’s Coca-Cola doesn’t measure ROI from Super Bowl ads. You can’t. I mean, you know how many people watched the Super Bowl, but you don’t know how many people watched your specific commercial and you don’t know how many people were encouraged to drink Coca-Cola after seeing the ad. You just don’t know those things. You’re going for brand recognition there. And so when we talk about our smaller audiences,  (I like to call them like small, but loyal or small, but mighty) they listen to you because they trust you. And so when you make a recommendation, even if it’s paid, they are more likely to listen to that. 

And I make it really clear to my listeners that

A: There are sponsor spots. 

B: I vet those sponsors.

I don’t just recommend anybody who’s gonna hand me a paycheck. And that’s really important. It’s really important for them to know. It’s really important for me to say. 

And I’ve had sponsors before were nothing against them. I just didn’t think they weren’t a good fit. One,  was Manscaped. They are a…let’s call them a gentleman’s grooming company. And they wanted to sponsor my podcast. And I said, “I’m sorry. I just don’t think men’s grooming tools are a good fit for my audience” and I decline them. 

The same thing with another sponsor that wanted a lot of, well, this goes into kind of contract negotiations and what they’re asking for, but I had another sponsor who I wasn’t sure if they were a good fit. They did send me the product to try, but they didn’t want me to make it clear that it was paid placement. They wanted me to work their product into the conversation. And I told them no deal on that because I need to make it clear, I make it clear when there’s a current sponsor read, like music usually plays in the background or I say like, “This episode is brought to you by…”,  but also when I mention a former sponsor or current sponsor outside of that sponsor spot. I make it clear that they are a current or former sponsor. I want to be very upfront about that. 

And because of that, my audience trusts me. And so when I recommend something, they’re more likely to convert or there’s such great brand alignment with my audience and the sponsor that they’re more likely to convert. I’ve called this CPA or cost per acquisition. I think cost per acquisition is a little bit different, right? Because that’s basically an affiliate program in my eyes. If you’re getting paid per acquisition, that is an affiliate program. And I personally don’t do affiliate programs. And sponsorships are very different to me. And so if a brand just comes to me and they say, “Well, we don’t wanna sponsor your podcast, but we’ll do an affiliate program”, that’s not gonna work for me. There are a few affiliate programs that work for me. So that is, I think CPA or cost per acquisition is different. But calculating your overall reach, this is the formula you want.

And I’m not gonna tell you like how much to charge. Like there’s no like formula. Like, oh, calculate your overall reach and then divide by five. And that’s how much you can charge per sponsor spot. It really depends on what you offer to the sponsor and how much your clout or your trust is worth to the sponsor. 

I will say this though, I recently interviewed Justin Moore on my main podcast. I shouldn’t call it my main pod. It’s my interview podcast. How? It’s my older podcast, I guess.  I do both of these weekly, so, they’re both my main podcasts. But, on How I Built It, I interviewed Justin Moore. And he told me that we should stop making our prices public. I had prices listed on the sponsor page, so sponsors could just be like, “Yep, okay. This is the package I want.” But again, that works for maybe bigger, and like NPR doesn’t make their prices public. But maybe for bigger podcasts where they are straight-up calculating CPA or CPM, that’s gonna make more sense.

But for us, we’re adding value beyond just reading a sponsor spot, you’re probably going to want to come up with a custom package. And so I thought that Justin offered really good advice here that I wanna reiterate here. I will link his episode in the show notes for this, which you can find in your podcast app or over at [makemoneypod.com/214]. That’s season two episode 14.  

So, the advice he gives is to get on a call with the sponsor. I know that people in, especially my former space, never wanted to get on a call. They’re like, “Why would ever…Why would anybody wanna talk to somebody on the phone?” But let me tell you. If somebody is willing to hand you like a $10,000 check either worth the phone call, even if it’s just to make sure that you’re not like some fly-by-night email address that’s gonna take their money and run. 

So get on the call with them and ask them this question: “What makes this a win for you?” Because honestly, some brands might not be looking for conversions. Maybe they’re looking for brand awareness. Maybe they just wanna be associated with you because you’re a trusted voice in your space. That happens to me a lot in the WordPress space. WordPress companies will approach me. They wanna sponsor my work because they want me talking about their stuff. 

And so take some notes, ask them what channels, what areas they wanna be more visible on. I always say podcast sponsorship is my main offering, but I also do these other things. What works best for you? And then come up with three sponsorship packages. Give them options, shoot your shot on one of them, and be like, “Hey, for $10,000 you can get a half-year sponsorship on my podcast. I’ll create three videos on my YouTube channel and I’ll post an Instagram reel, 10 Instagram reels that you can then repurpose for like organic sharing.” 

So, for us, for me, for you, it’s not just about CPM. It’s about offering value to a brand that wants to align themselves with us. 

And so to recap, don’t use CPM to price your podcast. Your podcast sponsorships. Instead, calculate your overall reach, look at the places where you have a presence, add up all of those subscribers, followers, and listeners, and then think of a few things, right? You don’t have to go into every sponsorship like pitch call cold. Think of a few things you’re willing to offer sponsors, right? 

If you’re not willing to make YouTube videos, then don’t offer it. If you prefer to make reels where you talk about the brand or you highlight the brand in some way, then do that instead, and create this kind of a la carte menu for yourself. 

Get on a call with a potential sponsor and come up with a custom package based on what makes a win for them. 

So there you go. That’s how you price your sponsorship. I hope this was really helpful to you. If it is, share this episode with a friend and say, “Hey, I know that you do sponsorships. Here’s how Joe Price is, and this is how he’s been doing it for seven years. His podcast was sponsored before it even launched.” So I’d really appreciate that. 

Thanks so much for listening to Make Money Podcasting. 

Again, for all the show notes you can head over to [makemoneypod.com/214].

And until next time. I can’t wait to see what you make.