Or: How To Get In On Garage Sales While They’re Hot!
Before I start, so as to avoid any confusion or misrepresentation, I feel it incumbent upon myself to once again clarify: I am bullish on podcasting. I’ve published two books on the subject [1,2], run paid live training events, presented as a speaker countless times, become a “go-to” podcasting pundit for major media, built and sold podcasting technology, run the oldest podcasting network in existence and made my entire living from podcasting since early 2005. I am among podcasting’s biggest proponents. The opportunities in podcasting are alive and well. That said, I also don’t wear rose colored glasses. I call things as I see them.
Podcasters, it is time you face the facts. If you are waiting for a podcast advertising service to ride in on a white horse and rescue you from your monetary woes, let me help you: start looking elsewhere.
This all started because of a conversation I had a few weeks back where I had the unique opportunity to have podcasting explained to me. The fellow who was running through the monetization options made advertising through ad sales networks sound like a guaranteed no brainer – an easy way to monetize. The whole time I sat there, knowing what I know, thinking this is like telling people to cash in now on garage sales while the gold rush is on.
Over the last 3 years many companies have launched whose goal was to help monetize your podcast. None have performed as promised.
When these podcast advertising companies first launched they did not promote themselves as focused on supporting only a few high profile podcasts supported by 1. millions in VC backing, 2. a successful radio and/or TV career or 3. a meteoric rise associated with a connected web property. Instead, they promoted themselves as being the solution for you, the avid, and dare I say average, podcaster. It is clear, they have not delivered. It’s time to stop buying the sales pitch and waiting for that gold mine of advertising revenue that is “just” around the corner and start to figure out a real plan for your podcast.
Here we are almost 4 years after the birth of podcasting, 3 years after most of the advertising placement companies first launched, and many popular (people we have all heard of) podcasters are still struggling to figure out how to consistently monetize. “Consistently” is the key word there and by monetize I don’t mean a few extra bucks here and there to cover hosting costs etc. I’m talking about knowing that you are getting paid every-time you sit down in-front of the mic/camera. If taken seriously with real effort, the ability to pay your mortgage, put your kids through school and buy groceries, just like the opportunity any other real business offers.
Don’t get me wrong, I know most of the key players behind these companies. I’ve got many of their cell phone numbers in my cell phone – always a true measure of relationships. I have a ton of respect for them all. They are fun to hang out with and are all very smart. As an entrepreneur I appreciate that they all have tried to conquer this market. That takes guts. However, for the average podcaster, even the 10,000+ subscriber podcaster, it is just not working on a consistent basis. I felt someone needed to address this.
Now not everyone wants to make money with podcasting. I agree, podcast your passion and good things follow. That said, we all know monetization is an extremely popular topic, one I have presented on numerous times, and it is for those serious about wanting to monetize via advertising/sponsorships to whom this post is addressed.
Here’s the truth:
1. There is an over-abundance of inventory, (i.e. podcasts that desire advertising.) So as a starting point we have a market condition that drives down prices. Too much inventory is not a good thing if you are selling advertising.
2. Lack of a real market. All the ad dollars that were supposed to flow into podcast advertising never happened. All of those Madison Avenue meetings that you constantly heard about have still only resulted in what can best be described as “experimental” or “add-on” spends.
3. Change of focus by podcast advertising companies. Many companies in this space have faced the fact that it is too hard and cumbersome to sell advertising across large swaths of independent podcasts. The effort to reward ratio is too far out of whack to make any business sense. Look at all the failed companies. No need to name names.
4. Those with real technology have switched their focus to major media. Companies with the technology to perform the automation and ad insertion functions have largely turned away from ad sales for podcasts and instead are now focused on customers that can actually pay – think CNN, Fox News, Forbes, VC backed media startups, etc. Need an example? Look at Kiptronic. While I have no inside information, it is clear to me they have now steered away from their original promise of ad sales/fulfillment and instead are focused on a strategy of licensing their technology to medium or large size media outlets. (That’s what I’d do if I were them.) Need another? Look at VoloMedia, formerly PodBridge. You might not have ever even heard of them but they’ve raised roughly $22M over the last few years and my guess is it was not based on the promise of ad delivery for the independent podcaster
5. Podcasters are tough to deal with. Don’t think you get off scott free here. The truth is that most shows are very personal, you have a lot of yourself invested in the program. As such, you want control over who advertises, where they advertise etc. This all makes sense on an individual level, but mucks things up terribly when it comes to advertising sales and trying to put together any sizable ad buy. Jerry Seinfeld didn’t get this level of control for his show’s advertisers, why should you?
6. Editorial standards ARE important – at least to advertisers. Major brands, i.e. the kind of advertisers you really want – the big spenders, need “brand safe” outlets for their advertising. Coke, Pepsi, Procter & Gamble, Unilever, AT&T, Ford etc. don’t want to advertise on a web property that may go off in some weird direction that undermines their brand.
7. Major Media will absorb most of the real ad dollars. There is a reason major media is able to launch audio/video on the web and quickly monetize it. They have editorial control, brand recognition and an established sales force with the ability to make incremental up-sells to existing deals to fulfill on-line inventory.
8. Video will garner most of the real ad spend in this class of advertising. Do I really need to explain this one? (There is a reason Google has launched an ad solution for video yet with all their resources none has come for independent on-line audio.)
9. Real industries have businesses with real revenue. One, if not the largest, proponent of independent podcast advertising sales is RawVoice. Todd Cochrane, the RawVoice CEO is a frequent speaker on podcast advertising and the success they have achieved for their affiliated podcasts. I think what they are doing is great, but this little tid-bit caught my attention in the just released “white paper” on their stats package, “….three years and has stood the test of time and 100′s of thousands of dollars in advertising delivered and billed fairly.” 3 years and hundreds of thousands? Even if we assume the absolute best case scenario that is only $333,333.00 a year (if the cumulative billing exceeded a million there is no way they would have missed putting that in their report.) That number is gross sales before producer splits, administrative costs, overhead, taxes etc. If that is a market leader, the writing is on the wall.
10. Industries don’t have to constantly have panels discussing the basic means by which their medium can actually make money. Everyone already knows how – think radio, TV, etc. How many conference panels have you heard where the podcast ad placement companies talk about all that they are doing. Talk is great. How many checks have you cashed? And if you have, amortized across your entire podcasting career what does it work out to per month?
11. One or two large ad buys does not an industry make. Before anyone chimes in with ‘yeah but so-and-so just sold a big advertising deal to xyz,” let me be clear: real industries/businesses have a constant, sustainable and generally predictable deal flow. Podcasting has none of these.
12. Industries don’t depend on one or two advertisers to support a significant portion of the total market. I have no idea what the actual numbers are, but let’s face it, GoDaddy is the number one podcast advertiser. Entire companies are mainly supported by their continued ad buys. This spells trouble in my book. If GoDaddy were to decide they have achieved market or brand saturation or even if the current economic condition were to get them spooked and they decided to pull back, that sucking sound you’d here is the collapse of many podcast advertising companies. Yes we’d all loose those beloved promo codes but that just points to the fact that these are in large part CPA (Cost Per Acquisition) deals, the gold standard in economically advantageous brand advertising. If you are that dependent on only one or two advertisers it is time to branch out.
I have a few more reasons, but I think you get my point.
So what is a podcaster to do? Here’s what you should be focused on. First, have a real sit down with yourself and anyone else involved and figure out if monetization really makes sense. It is entirely possible that the extra headaches and work required outweigh any real benefit you may derive. If so, then relax and enjoy podcasting as a hobby. If you do decide to monetize via advertising/sponsorships then you need to face facts, you are choosing to go into business and that means work. Not late-night infomercial, “oh my god it was so easy to make thousands kind of work,” but the kind that takes time and effort. It can be rewarding, it has been for me, but you need to commit to it.
Next, nail down the niche you inhabit and start to map out how to best present the opportunities and value you can offer to potential advertisers/sponsors. Develop your media kit. Let me make a note here, unless you are a graphic artist/copywriter by trade my guess is you should spend $300 to $1000 on this. If those numbers scare you off – go back to step one and revisit the “sit down” with yourself. You are starting a business, there are upfront costs.
Come up with a list of prospective sponsors you believe are best suited to benefit from communicating with your audience and – get ready for it – call them. It is sales time. If you don’t like asking for money, either hire someone who does or once again revisit the “sit down” mentioned above. This is your place to shine. No ad sales network will ever be able to extract the value you can here, they need to sell in generic terms and can’t offer the unique value proposition you can when selling your particular podcast directly. You know your audience best, who better to communicate the value to a prospective advertiser?
People often ask how we consistently sell out our inventory on GrapeRadio. Easy, we have a kick-ass media kit, a proven track record, a book of business with many repeat advertisers and four entrepreneurs as owners – folks who aren’t scared to ask for the deal. While the amounts aren’t huge, $1,300 per weekly episode, we can command those prices because we have nailed our niche. A comparative CPM deal would have to be close to net $100 to make sense. No ad network has ever offered us anything close to that. We have also built a great business in white label production, i.e. non-GrapeRadio branded content specific to individual wineries for their sites. We decided from day one not to do wine reviews so as to avoid any editorial conflicts. Our figures are not awe inspiring but they buy nice equipment, pay for the trips to Napa and leave plenty leftover for shareholder distributions. Given that we all run other businesses full time, it has worked out quite nicely.
Will some of your prospective sponsors say no? Of course. That just means you get to try again and will feel that much better when they eventually say yes. Don’t ignore them, keep in contact, send updates of any press/media or other coverage you get. Let them know of interesting shows or interviews you do. Continue to build value for the next time you ask for the ad order.
I could do a whole series on how to sell podcast sponsorships but that is not my goal here. If you are looking for some more ideas check out my presentation from last year’s PNME, the infamous “podcasting is dead” presentation.
Some might say I am being too negative, that it is still too early and the boom is coming. Well I have been here since the beginning, and the “boom” in aggregated ad sales deals has been just around the corner for three years now. After a while that mantra starts to sound a bit tired. Meanwhile, those of us who took responsibility and control over our own ad sales have faired quite well the whole time. Even if some miraculous events were to take place and the flood gates on advertising were to open in this arena, no one can argue against the fact that my suggested steps above will prepare you to stand head and shoulders above the rest and best prepare you to benefit from any new opportunities. Take Wizzard Media’s recent deal with the Navy, assuming you are eligible to participate, wouldn’t it be nice if that was as add-on rather then something you depended on?
There are plenty of ad/sponsor dollars out there, however waiting for someone else to consistently deliver them to you has proven to be a loosing proposition. It is high time you realize you are the best sales representative you have. Take charge of your podcast’s future, develop a real monetization plan and free yourself from waiting for the ad sales guys to solve your monetization woes.