I didn’t realize it when I started taking sponsors with the Practice of the Practice Podcast, but I was doing something that went completely against the grain of the industry. Instead of looking at industry standards for pay, I looked at the lifetime value of getting a new client for my sponsors. Initially, I threw out a number per episode (leaving tons of money on the table) and then I got smarter as to how I work with sponsors. I’ve now discovered a few truths that help me maximize my sponsorship to bring in over six figures a year in just podcast sponsorship.
So you’re thinking about adding sponsorships to your podcast? Today we’re going to discuss what you need to do before approaching a sponsor, why the CPM model needs to be thrown out, and how to create your first sponsor packages.
As with everything I’ve been teaching you with this column, we’re always focusing on the pain and the people, before we ever pitch a product. That includes the “product” of sponsors.
My Tips on How to Find Sponsors For Your Podcast
Don’t Look for Podcast Sponsors Until You Do This
There are three questions you need to be able to answer before you ever approach a potential podcast sponsor.
- Does my audience take action when I promote something?
- What percent of my audience takes action when I recommend something?
- Am I already making money off my own affiliate links or personal products?
What we want to prove to ourselves and to sponsors, is that they will potentially get a strong ROI on their sponsorship. Of course, you can’t guarantee it, but you should feel good about what they are getting for their marketing spend. There are times you won’t follow this. For example, if you already have a proven track record, email list, and following on other podcasts or platforms, getting a sponsor to be a founding sponsor for the first season or batch of episodes is possible. But for most of you, that’s not your situation. So make sure you have an audience that will take action, before you start approaching sponsors.
Why CPM Leaves Too Much Money on the Table
Imagine your podcast gets 1,000 listens per episode. It’s hyper niche and that audience 100% lines up with a sponsor, we’ll call this fictional sponsor AcmeSites. According to the CPM model (cost per mille/cost per thousand listens), you’ll make $18-$25 per thousand listens according to the AdvertiseCast Marketplace survey. Say AcmeSites offers some software as a service (SaaS) that your audience will love or already loves. It’s $29/month and on average when people join AcmeSites they stay 32 months. That means the lifetime value of a new customer is $29 x 32 months = $928. To know these numbers, you have to also have deep conversations with your potential sponsors. If you know that 3% of your listeners take action if they hear something three times, that means of the 1,000 listens, a new sponsor can expect about 30 new sales. That ad spend for three episodes would potentially bring in 30 clients x $928 = $27,840. So a 1:1 return-on-investment for the company would mean that each episode should cost $9,280, a far cry from $18. So if you want your sponsors to get a 10x return, then you’d charge $928 per episode. They spend $928 per episode x 3 ($2,784) and make around $27,840.
See why the CPM is terrible for you?
Maximizing Through Sponsorship Packages
Most podcasters get stuck in just doing a cost per episode model. I recommend that you set a very high cost for one episode. The reason is that most sponsors will get little to no traction from one sponsor spend. Instead, I recommend having incentives for each level. Take the $928 number from above. You’ve done the math and it lines up. Maybe your cost for one episode is $1,200. But if they buy a set of three it is $900 per episode and you’ll send an email to your list. If they buy six, it’s $800 per episode, you email your list and do a social media post. If they buy 10 it’s $650 per episode, you send the email, do a social post, and also you’ll do a webinar with someone from the company. By adding on additional items, you can maximize the spend and sell more spots. Numerous times I have had sponsors say, “We were going to buy six, but with those discounts let’s buy 10.”
When it comes to finding sponsors, it’s like any relationship you want it to feel good on both sides. Would you feel good making $50 knowing your sponsor just made $30k? Communicating with sponsors, checking in on ROI, and discussing the next year’s spend early are all ways to keep that relationship going for years to come.