Here’s Why You Shouldn’t Put Ads on Your Podcast

Why subscription revenue is less time-consuming, more predictable, and the future of podcast monetization

The problem with podcast ads

Ads are what most podcasters default to when they start thinking of ways to make money. Most other podcasts have ads, the thinking goes, so why shouldn’t mine?

1. They’re time-consuming

Marc Maron might sound breezy and casual in that Stamps.com ad, but that’s only because you didn’t hear the five other takes before he nailed the delivery.

2. They’re an unreliable source of income

Compared to other digital channels, podcast analytics are primitive, so measuring the ROI of podcast ads is an inexact, unreliable science (at best).

3. Your audience probably doesn’t like them

Finally, although they’re more bearable than traditional ads, many people don’t like listening to podcast ads either, and will skip over them if they have the option.

Why the freemium model works

Freemium and subscription content is already making billions of dollars today — not in podcasts, but in software and free-to-play games.

The freemium model powers the businesses behind lots of familiar digital products

1. It generates predictable income

Many software as a service (SaaS) companies today make money by releasing a product for free and then charging a small subset of users a subscription fee for extras (additional features, more users, support, etc.) The free-to-play video game industry relies on a similar model (a small % of users pay for extra content), sometimes favouring micro-payments over subscription fees.

  • Churn, which measures how quickly you’re losing customers, and;
  • Customer Lifetime Value (LTV), which is how much you can expect to earn from your average customer before they churn out.
Supercast gives podcasters subscription revenue analytics at-a-glance

2. It doesn’t distract from your core product

When you sell freemium content, you’re not creating a whole new product or thing. Instead, you’re spending more time doing what you set out to do — podcasting — rather than spending that time dealing with booking and managing sponsors, sales, and ad reads.

3. Your audience wants you to do it

Podcasts might actually be more suitable for the freemium model than software products simply because of how much more engaged podcast audiences are than other audiences.

“Podcast hosts speak directly into our ears for over 30 minutes at a time, and many listeners build a strong affinity with the content and show host. Makes sense.”

Like SaaS products, most successful podcasts generally have a smaller, more engaged user base that is usually willing to pay to:

  • (a) support a creator they have established a strong relationship with, and:
  • (b) get access to exclusive content or member benefits.

So how many listeners do I need to make the freemium model work?

More than 10,000

If you’re just starting out and averaging less than 10,000 downloads per episode, it’s probably too early to start thinking about monetizing with a premium subscription (also remember, downloads don’t = listeners). Instead, focus on creating a great podcast and building a loyal audience, so that when you do monetize you’ll have passionate listeners ready to support you.

Fewer than 1,000,000

Freemium content obviously isn’t the only way to make money if you’re already a podcast mega star with millions of listeners and advertisers already beating a path to your door.

Tim Ferris tried listener-supported subscriptions before returning to ads. (Image credit: Rachel Kaplan)

They need to be repeat listeners, too

As I mentioned earlier, podcast analytics suck, so knowing exactly how many regular listeners you have is tricky. Getting direct subscriber counts would help a lot, but most podcast apps don’t release that data at the moment.

So how much money are we talking here, exactly?

We’ve seen established influencers monetize between 3–7% of their audience directly via subscriptions and listener support.

Estimates based on 4% conversion rate and $5/month subscription
Former Peking University lecturer Xue Zhaofeng quit his job in 2018 after monetizing his podcast lectures using the subscription-based iGet app. (Image credit: 36kr.com)

I’m sold, but do I have to pick between ads or a subscription?

If China’s industry is any indication, there’s a lot of untapped value in the North American podcasting market, and listener-supported models are a first (and easily achievable) step to monetizing some of that value.

So, how do I launch a subscription podcast and build predictable revenue from my show?

Technically speaking, until recently it was a massive headache. That’s why we built Supercast to make it easy for podcasters to adopt subscriptions.

  • How to set up a private podcast feed
  • Different kinds of premium podcast content you can produce easily
  • How to track subscriber engagement and project your revenue growth

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Aidan Hornsby

Founder of DoubleUp (DoubleUp.agency), co-founder of Supercast (supercast.com). Admirer of simplicity, fan of excess. Sharing notes at booknotes.email