Over the past two years podcasts have become a mainstream medium among the North American public. Whether this was the due to the immense popularity of Serial, the launch of companies such as Gimlet Media that focus on producing podcasts or new platforms available for content distribution (eg. Soundcloud or Overcast), it’s clear that podcasts are here to stay. The increased listenership has lead to a significant increase in money that advertisers are spending to reach the listeners; according to Midroll, the average CPM (CPM = cost per thousand impressions) for Podcasts is approx. $25 vs. the $14 that YouTube content creators receive.

In my view, there are three reasons why Companies are willing to spend more on podcast advertising versus other advertising mediums:

Podcast listeners are captive and are not taking time to fast forward or skip ads. These ads are typically in 30 seconds segments and placed at different points in the episode as embedded content which leads to more “actual” impressions. Tier 1 companies have started advertising on podcasts (eg. Rackspace, 99 Universal Pictures, Ford & Stamps.com) and there is significant demand from Companies who want to advertise through this medium. However, there are very few podcasts that have >100,000 subscribers which leads to bidding wars, thereby inflating the CPM. The cost of producing advertising is much cheaper than video based platforms as there is no visual requirement; on an all-in cost basis (ie. including production cost) the CPM’s blend to a similar value as other mediums.

Podcast sponsorship is a relatively new form of advertising and I believe companies will develop innovative approaches to content creation in order to more effectively reach subscribers. As listenership and the number of podcasts produced continues to grow, it will be interesting to see the trend of advertisers willingness to pay for these ads.

I would love to hear your opinions or comments on this topic so leave me a comment below or tweet @nlukka