Advertising on podcasts is just getting started. 20% of listeners buy products after hearing about them on a podcast. It’s no surprise that businesses are doubling down on podcast sponsorship—literally. IAB reports that spending on podcast ads will exceed $1B in 2021, and breach $2B in 2023.

With over 2 million podcasts, there’s something for everyone. And just as this surging medium attracts massive global audiences, it also presents incredible opportunities for those who want to advertise on podcasts.

This guide explores the world of podcast advertising, giving you everything you need to tap into the immense potential of this channel. We’ll dig into the essential knowledge you need, including:

• Why podcasts ads work
• Why you should use them
• Where you can find podcast sponsorship opportunities for your business
• How to find the right podcast for an advertisement
• How to estimate your ad costs, measure your performance, and more.

Sitting comfortably? Let's begin.

Why advertise on podcasts?

Here are three benefits of advertising on podcasts:

Podcasts have engaged audiences

According to The Infinite Dial, approximately 80 million Americans—28% of the U.S. population over the age of 12—are now weekly podcast listeners. About 47% of listeners said they listen to podcasts within 24 hours after they download them.

Listeners are more receptive to podcast ads

40% of listeners find podcast ads less intrusive than other types of ads. Unlike other mediums, podcasting has high ad engagement, as listeners are more interested in hearing the ads and less likely to skip past them.

Podcasts drive product awareness, interest, and sales

69% of podcast listeners said they became aware of a new product or service from podcasts. In a comScore study of 2,000 U.S. respondents aged 18 to 49, two-thirds of listeners admit they have researched a product or service, or even made a purchase after hearing about something in a podcast episode.

These listeners trust their hosts to only feature, recommend, or suggest genuine, helpful products and services to them. As a result, podcast listeners are more open to purchasing from the brands they hear advertising on podcasts.

Is podcast advertising effective?

92% of people listen to podcasts when they’re alone. So, if you’re advertising on podcasts, your brand has an opportunity to engage your ideal customer in a one-to-one conversation.

This form of advertising cuts through the clutter you usually deal with on other mediums like social media or TV. The window of opportunity is a split-second before people scroll on past or leave the room to make more popcorn.

It's clear that people hear podcast ads and actually welcome them. 78% of podcast listeners said they don’t mind ads because they know it supports the show. That receptive attitude eventually leads to increased sales and brand engagement, as 75% of podcast listeners take action after hearing sponsored content.

Brand awareness and direct response both perform well

There’s a lot to love about podcast sponsorship opportunities. It’s a win for everyone:

• Listeners engage with podcast ads
• Advertisers generate leads with podcast ads
• Content creators generate revenue from their work

SXM Media revealed the power of brand recall on podcast ads. Interestingly, listeners recalled the brands mentioned in ads, whether the ad was long or short.

Whatever the conversion goal—brand awareness or direct response—well-targeted podcast ads outperform ads across other platforms. However, podcast targeting goes beyond choosing a show with lots of following. The best podcast ads tend to be those that align with the content of the show. (We’ll explore targeting a little later in this guide).

How do podcast ads work?

Now that you know why podcast advertising is effective let's see how it works. We know it can be a little daunting to start advertising on podcasts. There’s so much to learn, and you probably have a ton of questions.

When should a podcast ad play? Should you have your ad announced during the live recording or prerecorded separately? Should you use baked-in or dynamic podcast ads? (Come to think of it, what are baked-in and dynamic ads?!)

‍It’s time to get familiar with how podcast ads work.

Ad position

Most podcasts offer three slots for advertising in their shows—pre-roll, mid-roll, and post-roll:

• Pre-roll ads: These ads appear in the first 10% of a podcast episode before the main content begins—like ads before a TV show or YouTube video. They typically last about 15 seconds.
• Mid-roll ads: These ads last play in the middle of an episode and tend to last a little longer than pre-roll ads, usually about 60 to 90 seconds. Some shows will have multiple mid-roll ad breaks.
• Post-roll ads: These ads play towards the end of your show, just before the closing credits. Post-roll ads last about 20-30 seconds and often include a call to action.

Types of ads

Dynamic vs. Baked-In
‍A baked-in ad is an advert that lives within the show’s content for the lifetime of that recording. By comparison, a dynamic ad is an advert that isn’t part of the original show recording’s audio file, and so, the producer can move the ad’s position over time.
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An IAB report says that dynamically placed ads account for 48% of podcast ad revenue, while baked-in ads account for 52% of revenue.

There is a growing appeal about dynamic ads because they give hosts and show producers more podcast sponsorship opportunities, which helps them generate ongoing ad revenue from their content. As DAI helps advertisers reach listeners across the entire show's catalog, companies advertising on podcasts benefit from higher exposure. This article from Sounds Profitable can help you understand the gritty details.

Whereas baked-in ads may not always be relevant when a listener hears a show recording, dynamic ads will be more likely to connect with listeners regardless of when they listen to the show.

That said, baked-in host-read ads can offer a sense of authenticity and continuity of content that dynamic ads can't match. The significant advantage of baked-in ads is that the message is often 'host-read,' which gives advertisers a chance to leverage the host's unique personality for brand endorsement.

Host-read ads vs Pre-produced ads
‍The consensus is that host-read ads feel more natural, especially if it's done without a script. Unscripted ads allow hosts to talk about their sponsor's products or services off-the-cuff. Baked-in ads can be prerecorded or read during the episode production.

“Unscripted” can sound daunting to a brand that wants to ensure its message is delivered, but rest assured that this style of ad is usually based on a list of talking points and must-have items (ex. a disclaimer, spelling out a URL or coupon code, or terms of an offer). Even with strict advertising standards, the health services industry is a popular industry on podcast ads.

On the other side of the coin, we have pre-produced ads, which enable producers to polish their messages and achieve a stronger brand identity across channels. Brands that have recognizable characters or jingles may opt for pre-produced ads to strengthen their brand impact.

While this leads to very professional ads with impeccable delivery, the downside is that the ads risk sounding mechanical—even if the host is the one reading the ad. Dynamic ad insertion uses prerecorded ads, so it requires more creativity to adapt your message across your entire podcast library.

How to identify the right podcasts for your brand

When you’re looking for podcast sponsorship opportunities, your podcast targeting can make or break your efforts. Diversity in podcast audiences has enjoyed a massive surge in the last decade.

• New listeners are 44% more likely to identify as multicultural.
• 21% of podcast listeners are 55 or older (compared to 14% in 2011).
• 58% of listeners have a household income of under $75,000, while 29% earn over $100,000.

If you want to reach a particular audience, it's crucial to place your ads on relevant shows and not just popular podcasts. With better targeting, you're more likely to attract the right audience for their products, services, or courses.

However, the size of your ad budget is a major factor in the podcast sponsorship opportunities you can pursue. If you have a large budget for your podcast ads, you can try a broader variety of shows - with large audiences and those more niche - to see which one(s) will deliver the best ROAS. A larger ad budget allows you to distribute your ads across more episodes on each podcast to generate higher podcast impressions.

So, now that you’re ready to start advertising on podcasts, here are three methods to help you find suitable podcasts for your audience.

1. Browse media kits

Media kits are resources that podcasters provide to help advertisers understand how to sponsor their podcasts. These kits can be web pages, downloadable PDFs, videos, or audio files. Ideally, a good media kit will include reliable data to help potential sponsors determine if a podcast is a good fit.

Most podcast media kits are quite light. That said, you should be able to find the following information when browsing media kits for podcast sponsorship:

• An overview of the target audience and show content
• Host bio
• Audience demographics (i.e. age, gender, and location)
• Audience metrics including social follower counts and email subscribers
• Download counts of the show
• Notable accolades
• Pricing and packages available

Also, here are some additional things you can ask the podcast host to see:

• Information on previous advertisers to help you see if this show is in step with your market, competitors, or brands you want to align yourself with.
• Audio samples to gauge the audio quality and the podcast host’s voice, style, and diction.
• Reviews from listeners to study the social proof and credibility of the show and its host.
• The current availability of inventory to identify if your preferred ad position is available.

2. Consider YouTube simulcasts

YouTube generates one billion hours in audience engagement every day. So, it’s easy to see why many podcast hosts are going beyond audio platforms to include video channels in their content distribution. Not only does it help them reach bigger audiences, but it offers additional audience exposure to anyone that wants to advertise on podcasts.
‍In our research, Podcasts with YouTube simulcasts have an 8% higher renewal rate than podcasts without, attract 14% more direct response advertisers and dedicate 1% more of their show time to running ads.

‍Discover these hidden gems using Magellan AI's feature that allows users to filter a list of podcast shows that simulcast to YouTube.

3. Look for podcasts with more competitive separation

Competitive separation is the amount of time, or a restriction that the podcast uses between ads of competing brands or solutions. For example, if the podcast has sponsorship inquiries from two project management platforms, the producers may reject one sponsor or schedule the campaigns with several months between them.

The more competitive separation the podcast ad platform provides, the better it is for the brands advertising on podcasts. Companies want their target audience to pay attention to their brand—not directly compare their offer with a competitor's.

It's also in the best interest of the podcast producer or publishing company to create greater competitive separation for their advertisers. This measure of good faith will help advertisers get more ROAS and attract more sponsorship opportunities. Some podcast shows will preemptively block out advertisers in the same industry to encourage the current advertisers to renew.

How to place ads on podcasts

Once you’ve identified the right podcast for your brand, then it’s time to start placing ads. Podcast ad placements have different pricing structures based on several factors.
Follow the four steps below to start advertising on podcasts.

1. Understand cost structure

Across the podcasting space, advertising costs vary based on many factors, including:

• Number of listeners per episode
• Length of audio ad
• Number of ad spots per episode
• Number of listeners who respond to the ad

Podcasts can structure their pricing however makes sense for them. You’ll often see fixed and CPM rates but come across some podcasts that price their placements on a CPA model.
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‍Fixed Rates
‍As podcasts expand their audience and reach across various channels, they may set fixed pricing for their various podcast ad spots. These spots can also be packaged with other ad placements including social media posts, blog posts, testimonials, or YouTube ad reads. Generally, the price of the ad corresponds to the size of the audience so podcasters will set these rates relative to CPM rates.

‍CPM (Cost Per Mille)
‍CPM is a fixed rate for every 1,000 listens of the podcast episode. For example, if an episode gets 10,000 listeners and the ad rate is $20 for every 1000 listeners, you’ll pay $200 for your ad. This rate is also used for pricing in dynamic insertion because the platform that's running the ad will determine where the ad is placed to reach the target demographic.

‍AdvertiseCast reported the following on podcast advertising costs:

• Industrywide, the average CPM rate is $18 per 1,000 listeners for 30-second ads and $25 per 1,000 listeners for 60 seconds ads.
• Podcasts with audience sizes ranging from 500 to over 100,000 listeners charged a CPM rate between $21 to $27 for 30-second ads.
• For 60-second ads, the CPM rate was between $23 and $37.

Keep in mind that these are broad averages—it may be significantly different depending on your ad and the podcast show.

You should also consider the number of times you’ll run the ads on a show. For example, you might want to run your 30-second ad two times, mid-roll and post-roll, on a show that has 30,000 listeners. If the platform charges a CPM of $25, this will amount to $1,500.

‍CPA (Cost Per Acquisition)
‍Podcasts that generate income from cost per acquisition or cost per action usually have a smaller audience. This model is similar to affiliate advertising. Therefore, the ads aren't always placed by a brand—some podcasters subscribe to these affiliate programs by themselves for their own benefit.

However, a brand could negotiate a custom referral package. But given how much work the podcast host must put in to produce an ad, individual arrangements like this are a less common approach.

2. Plan your first campaign

Your first campaign doesn’t have to be complicated. Here is a basic checklist of what you need to do to start advertising on podcasts:

• Create a shortlist of target podcasts.
• Determine how you will place your ads. Will you use dynamic ads with audience targeting or baked-in with individual shows?
• Vet your list by studying the things we’ve discussed in this guide, including demographics, inventory availability, pricing, past advertisers, and ad reads.
• Contact the podcasts you believe are closely aligned with your business and goals.

Don’t panic if you don’t see immediate results. Remember that listeners take time before they download shows, and more than 53% of them listen to their downloaded audio at a later date.

3. Determine flighting, frequency, and ad copy

With your ads running already, you should think about how you can optimize their distribution. You must decide how long you want to run the ads (flighting) and when you’ll stop running them (hiatus). Next, determine the frequency of the ads. How often should they run?

‍Give yourself enough runway for ads to mature. Research shows it may take up to six weeks for a single ad to reach a fully-baked goal index. Keep your ads live for about 7-10 weeks to give them a chance.

‍Give your ad drops some space. Aim for one drop every three weeks, as this enables you to track activity in between ad spots. So, you should play on 3-4 episodes throughout a 7-10 week test period for each podcast show.

These decisions depend on your budget and the availability of ad slots on your chosen podcasts.

4. Send a product sample for a more authentic endorsement

If a host truly knows—and likes—your product, it makes for a more authentic, engaging ad.

When Adam Carolla featured Blue Apron in his podcast, you could sense just how authentic he was in the announcement because he had used the service. Similarly, in Couple Things’ ad for Home Chef, it was clear that Shawn and Andrew use the product.

Martha Gallant, Growth Marketing Manager at Helix Sleep, says: “Every host that Helix works with receives an extensive onboarding experience so they can give a truthful endorsement.”

‍Sustainable shoe brand, Allbirds, works hard to keep its podcast ads personable and relatable. In its Office Ladies’ ad, the presenters explain how they received a sample t-shirt from the brand. While they weren’t long-time users, the sample still enabled them to share a personal experience that made the ad more genuine.

What to measure when advertising on podcasts

As with any form of advertising, it’s important to track performance and ROI. You have several reliable options:

• Direct attribution: Podcast hosts can call out unique vanity URLs or promo codes during their announcements. These tracking mechanisms help you determine which podcasts drive the most business value.
• Indirect attribution: If site traffic or product purchase spikes in the weeks following the ad run, this could be indirectly attributed to the ad.
• Survey: You can use these via email or on your order confirmation page to ask people, "How did you hear about us?"

Unlike other advertising channels where audience action can be attributed to costs immediately, there's a time lag between listeners downloading and listening to podcasts, and not all downloads happen at once. A Right Side Up report revealed that an episode normally takes at least two weeks before most conversions happen—and as long as five weeks before the total amount of conversions are fully realized.

Should you manage podcast ads in-house or outsource to an agency?

You should weigh up your goals, budget, and the time you have to determine if you should manage ads in-house or outsource. Here’s a quick comparison:

In-house pros:

• You know your product and audience best so you can judge potential shows for fit
• There is real-time access to results, with no waiting on data reports

Agency pros:

• Get better ad rates through negotiation
• Leverage the agency’s experience in the channel to apply best practices and grow quickly
• Save a lot of time by eliminating the learning curve

Managing your ads in-house means you'll make mistakes, but you have the chance to learn and discover what works. If you have more time than money, you may want to take care of your ads in-house. However, if you want the fast-track with expert support, an agency makes sense.

Final thoughts

Advertising on podcasts isn’t like advertising on other channels. People don’t skip over ads or run away from them on podcasts—they listen. Moreover, listeners trust podcast ads more, especially when they come across as authentic endorsements from their favorite hosts.

If you take the time to find shows that align with your brand values, your goals, and your budget, you can turn podcast sponsorship into a high ROI channel that generates greater brand engagement and consumer trust. Eventually, partnerships with the right podcasts can drive more leads and sales than any other marketing channel in your growth strategy.

We're living in the golden age of podcasting. And with growing diversity in listenership and millions of shows attracting niche audiences, now is the perfect time to advertise on podcasts. The first step is finding the right podcast for your brand.

‍Are you ready to tap into the potential of podcast advertising? Get in touch with us to see how Magellan AI can help you find the best podcast sponsorship opportunities for authentic ads.

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