Podcast Advertising: What, Why, & How to Get Started + Tips

Is podcast advertising still effective? If that’s the question you’re currently asking, we get it. The advertising landscape is always changing, but podcast advertising continues to thrive. 

Recent data shows podcast advertising revenue is projected to exceed $2.5 billion annually, showcasing its growing importance. Additionally, 54% of podcast listeners are more likely to consider buying from a brand after hearing it advertised on a podcast.

So, what is podcast advertising? Why is it effective? And, should you use it? This article explains it all.

What Is Podcast Advertising?

Podcast advertising uses podcast episodes to promote a product, service, or business. This involves various types of ads. These ads typically include details about the product and personal experiences using it from the host, and often feature promo codes or discounts for listeners to use.

Additionally, businesses can create branded podcast shows, focusing the entire premise on promoting their brand. 

With over 3.2 million podcasts covering every imaginable topic, there’s a relevant podcast audience for nearly every kind of business. This diversity makes podcast advertising an increasingly popular way for companies to reach and engage with potential customers. It’s also a profitable way to monetize your podcast if you’re a podcaster. 

How Effective Is Podcast Advertising?

Podcast advertising is highly effective, as evidenced by several key metrics. A study found that 90% of podcast listeners have taken some action after hearing an ad, with 78% researching the product and 57% making a purchase​.

90% of podcast listeners take action after hearing an ad

The medium's effectiveness is also reflected in its revenue growth, with podcast advertising revenue expected to surpass $2.5 billion in 2024, a 19% increase from the previous year​. This growth is fueled by the increasing number of listeners and the expanding diversity of podcast genres, which attract niche audiences that are highly valuable to advertisers.

Podcast advertising revenue is set to surpass $2.5 billion in 2024 - a 19% increase from the previous year

Dynamic ad insertion, a technology that allows pre-recorded ads into podcasts based on listener profiles, has become a major revenue driver, generating 84% of all podcast ad revenue​. 

Dynamic ad insertion generates 84% of all podcast ad revenue

But with all this data, the question remains: why do podcast ads work in a world where advertising in other mediums is constantly being critiqued and scrutinized?

4 Reasons Why Podcast Ads Work

Podcast ads are particularly effective for the below 4 reasons:

1. Podcasts Are Intimate & Trustworthy

Podcasts create a sense of community and trust between hosts and listeners. Many listeners consider podcast hosts more authentic and trustworthy than other public figures, making host-read ads particularly effective​. This personal connection means podcast listeners are more likely to pay attention to, and act on, the ads they hear.

Podcast listeners consider hosts to be more authentic & trustworthy than other public figures

2. Podcasts Have High Engagement Rates

Podcast listeners are highly engaged, and they often tune into episodes during activities where their attention is focused - such as driving, exercising, or doing household chores. This results in a high recall rate for ads. Studies show that podcast ads are 3.5 times more likely to be acted upon than radio ads and three times more likely than TV and print ads.

Podcast ads are 3x more likely to be acted upon than radio, TV, & print ads

3. Podcasts Reach Targeted Audiences

Podcasts cater to specific interests and demographics, allowing advertisers to target niche audiences effectively. This targeted reach ensures that the ads served are relevant to the listeners, increasing the likelihood of engagement and conversion. For example, mid-roll ads in the middle of an episode generate nearly two-thirds of podcast ad revenue due to their placement in highly engaged content​.

Mid-roll ads generate ⅔ of podcast ad revenue, due to their placement in highly engaged content 

4. Podcast Ads Can Be Flexible & Creative

The format of podcast ads allows for creative and flexible advertising strategies. Brands can choose from various ad formats - including host-read ads, pre-recorded ads, and even branded content. This flexibility enables advertisers to tailor their messages to fit the tone and style of the podcast, making the ads feel like a natural part of the content​.

The flexibility of podcast ads means advertisers can tailor their messages to fit the show's tone, making them more natural & appealing

Podcast advertising leverages the trusted relationship between hosts and listeners, offers highly engaged and targeted audiences, and provides flexibility for creative ad placements. These factors create a powerful advertising medium that drives significant engagement and conversion rates.

Who Can Benefit From Podcast Advertising?

Podcast advertising offers significant advantages for brands and podcasters, each benefiting uniquely from the medium.

Podcast Ads for Brands

Podcast advertising is an excellent opportunity for brands to connect with highly engaged and niche audiences. One key reason companies might invest in podcast ads is the medium's ability to foster a sense of trust and intimacy between the host and the listener. This unique relationship often leads to higher engagement rates than other advertising mediums.

For example, a study found that 64% of consumers pay full attention to podcast ads, and 95% of regular listeners take action after hearing one.​​ This high level of engagement demonstrates the effectiveness of podcast ads in driving consumer action.

Advertising on podcasts is a great opportunity for brands to connect with highly engaged & niche audiences

Podcast Ads for Podcasters

Incorporating ads into podcast episodes can be a significant revenue stream for podcasters. Podcasters can monetize their shows by partnering with brands that align with their content and audience while providing value to their listeners. Additionally, successful ad integration can enhance the content by introducing listeners to relevant products and services, thereby increasing overall listener satisfaction and loyalty.

Dynamic ad insertion technology allows podcasters to seamlessly update and target ads based on listener profiles, making their ad space more valuable and adaptable. This flexibility helps podcasters attract a broader range of advertisers, ensuring their advertising efforts remain relevant and practical​.

Podcasters can monetize their episodes by working with brands that align with their content & audience

So, How Does Podcast Advertising Work?

Podcast advertising involves businesses paying podcasters to include promotional messages in their episodes. This form of advertising is unique because it leverages the trust and engagement that podcasters have built with their audiences.

But what does podcast advertising really look like?

Types of Podcast Ads

There are different styles of podcast ads, each with its own unique approach. 

Host-Read Ads

Host-read ads are one of the most common types. Here, the podcast host personally reads the ad, which can make the promotion feel more authentic and trustworthy. The host might share their experiences with the product, making it a natural fit within the episode's content.

Pre-Recorded Ads

Another type is the pre-recorded ad (announcer-read ads), which is produced separately by the advertiser. These ads can include music, sound effects, and a polished voiceover, giving them a professional touch. They might not have the personal touch of a host-read ad, but they can still be very effective, especially when well-produced.

Branded Content

Then there’s branded content, where a brand sponsors an entire episode or series. This goes beyond traditional ads, seamlessly integrating the brand's message into the podcast's content. It’s a deeper form of advertising that can provide value to the listener while promoting the brand.

What does a branded podcast look (or actually sound) like? If you want some examples, listen to Trader Joe’s: Inside Trader Joe’s, Blue Apron: Why We Eat What We Eat, and Sephora: #LIPSTORIES.

Why Your Brand Needs a Podcast Content Strategy in 2024

Types of Ad Placements

Let's discuss where these ads can be placed within an episode. 

Pre-Roll Ads

Pre-roll ads are short advertisements that play at the beginning of a podcast episode. They’re usually 15 to 30 seconds long and aim to capture the listener’s attention immediately.

Mid-Roll Ads

Mid-roll ads, on the other hand, are placed in the middle of the episode, often during a natural break in the content. These ads typically last around 60 seconds and provide more space to delve into the details of the advertised product or service. They benefit from listeners already engaged with the content and are less likely to skip the ad.

Post-Roll Ads

Post-roll ads play at the end of an episode. While they have a higher chance of being skipped, they still reach the loyal listeners who stay until the end. These ads can be an excellent opportunity to reinforce a brand message or call to action.

Dynamic vs. Baked-In Ads

Along with host-read and produced ads, you should know two other terms: dynamic vs. baked-in. 

Dynamic Ads

Dynamic Ads are inserted into podcast episodes dynamically, meaning they can be changed or updated after the episode has been published. This allows advertisers to run time-sensitive campaigns or test different ads across various episodes.

Baked-In Ads

Baked-in ads are permanently embedded into the episode at the time of recording. They remain part of the episode forever, giving them a long shelf life and continued exposure as long as the episode is available. But at the same time, they can be more expensive. 

Types of Cost Models for Podcast Advertising

Podcast advertising can be priced in various ways, each suited to different campaign goals and budget structures. The main cost models include:

CPM (Cost Per Mille)

CPM = ad cost per 1000 listens

CPM, or Cost Per Mille, charges advertisers a set rate per 1,000 impressions or listens. This straightforward model is commonly used in the industry. For instance, the average CPM for a 15-second pre-roll ad is around $18, while a 60-second mid-roll ad can be about $25​​. CPM is ideal for campaigns aiming to maximize reach and brand awareness.

CPA (Cost Per Acquisition)

CPA = ad cost per generated sale

CPA, or Cost Per Acquisition, bases the cost on the number of conversions generated by the ad, such as sign-ups, purchases, or other desired actions. This model is beneficial for performance-driven campaigns where advertisers only pay for results. It is particularly useful for smaller podcasts or niche markets where impressions alone may not justify the investment​. 

Flat Rate

Some podcasts offer a flat rate for their advertising slots, regardless of the number of impressions or conversions. This can simplify budgeting and ensure cost predictability. Flat rates are typically used by well-established podcasts with consistent listener bases.

Revenue Share or Commission

Podcasts and advertisers may agree on a revenue share or commission-based model. In this model, the podcaster earns a percentage of the sales generated through advertising. This model aligns the interests of both parties, as podcasters are incentivized to drive as many sales as possible​. 

How to Measure Podcast Advertising Effectiveness

Measuring the effectiveness of podcast advertising is crucial to understanding its impact and optimizing future campaigns. Here are some essential methods:

Promo Codes

Using unique promo codes in ads allows advertisers to track the direct response from podcast listeners. This method provides clear insights into which ads drive conversions and is particularly effective for measuring ROI​.

Vanity URLs

Vanity URLs are custom web addresses included in podcast ads, which listeners can use to visit a specific landing page. These URLs help track traffic generated from the podcast and can be used to measure engagement and conversion rates.

Post-Conversion Surveys

Asking customers how they heard about the product during checkout provides valuable ad effectiveness data. Surveys help capture customer journeys and attribute sales to specific podcast ads​. 

Pixel-Based Attribution

Pixel-based attribution involves embedding tracking pixels in the podcast's RSS feed or the advertiser’s website. This technology tracks user interactions from the time they listen to the ad to their activity on the website, providing detailed data on user behavior and conversion paths​. 

Listener Surveys & Feedback

Conducting surveys with podcast listeners can provide qualitative insights into how ads are perceived and their impact on brand awareness and intent to purchase. Listener feedback can help refine ad messaging and placement strategies.

How to Purchase Podcast Ad Space (For Companies & Brands)

To purchase podcast ad space, define your advertising goals and budget. Research podcasts that align with your target audience using tools like Podchaser or Chartable. Once you've identified suitable podcasts, choose the ad format - host-read ads, pre-recorded ads, or branded content.

Next, you can contact the podcast hosts directly or work with a podcast ad network like SiriusXM or Libsyn Ads, which can simplify the process by connecting you with multiple shows. Negotiate the ad rates and placements (pre-, mid-, or post-roll), and ensure you have creative control over the ad content to maintain brand consistency.

Finally, monitor the performance of your ads using tracking methods such as promo codes, vanity URLs, and listener surveys. This data will help you measure engagement and ROI, allowing you to refine your strategy for future campaigns.

How to Sell Podcast Space (For Podcasters)

To sell ad space on your podcast, start by understanding your audience. Use tools like Apple Podcasts Analytics and Spotify for Podcasters to gather data on listener demographics and habits. Create a media kit that includes this information, ad rates, and past advertiser testimonials.

Set your ad rates using standard models such as CPM (Cost Per Mille), typically around $18 for pre-roll ads and $25 for mid-roll ads​. Decide on the ads you'll offer, such as host-read, pre-recorded, or dynamic ads. Host-read ads are particularly effective due to their personal touch​. 

Promote your ad space by contacting potential advertisers directly or using platforms like Podcorn, AdvertiseCast, and Midroll, which connect podcasters with advertisers​. Negotiate terms and be flexible with pricing to attract more advertisers.

Work closely with advertisers to create engaging ad content that fits seamlessly into your episodes. Track the performance of ads using analytics tools and provide detailed reports to advertisers to demonstrate the value of their investment.

3 Tips on Running a Successful Podcast Advertising Campaign (From a Brand’s Perspective)

If you're a brand looking to start podcast advertising, here are 3 tips to help you get started.

1. Select the Right Podcasts for Your Audience

Conduct thorough research to understand the podcast listeners' demographics and interests. Tools like Podchaser and Chartable can help identify podcasts that match your target market. 

Ensuring that the podcast’s audience aligns with your customer base increases the likelihood that your ads will resonate and drive engagement.

Why Is This Important? 

Podcasts with an audience that matches your target market will yield higher engagement and conversion rates. For instance, if you’re a fitness brand, advertising on health and wellness podcasts can directly reach listeners more likely to be interested in your products.

2. Create Authentic & Engaging Ad Content

The authenticity of podcast ads (especially host-read ads) makes them particularly effective. Collaborate with podcast hosts to create ad content that feels genuine and personal. Allow hosts to share their experiences with your product or service to enhance credibility and trust.

Why Is This Important? 

Authentic ads are more likely to capture listener attention and lead to higher conversion rates. 

3. Measure & Optimize Performance

Track the performance of your podcast ads using promo codes, vanity URLs, and listener surveys. These tools can help you measure engagement and conversion rates. Continuously monitor these metrics to understand what works and adjust your strategy accordingly.

Why Is This Important?

Analyzing performance data can help you optimize your ads for better results. Understanding which podcasts and ad formats drive the most engagement can help you allocate your budget more effectively and improve ROI​. 

Final Thoughts: Is Podcast Advertising Worth It?

Absolutely. Podcast advertising combines high engagement, trust, and targeted reach, making it one of the most effective forms of digital marketing today. With listeners taking action after hearing an ad, it’s clear that podcasts offer a unique opportunity to connect with audiences on a personal level. The growing revenue in podcast advertising underscores its value, demonstrating its capacity to drive significant consumer engagement and conversions. 

Whether you're a brand looking to reach a niche audience or a podcaster aiming to monetize your content, podcast advertising offers a compelling, effective platform to achieve your goals​.