Podcast CPMs are dropping: what to expect in 2024
Updated: 18. March 2024
Are we heading into a podcast advertising winter? With CPM rates on the decline, many podcasters find themselves facing uncertain prospects for revenue generation. We've heard from our network of podcasters (Opens in a new window) that almost 80% are looking for alternatives to advertising and sponsorship. And if you’re a media maker yourself, chances are you're in the same boat.
Whether you're a hobbyist looking to run your podcast as a side-hustle (Opens in a new window) or a seasoned pro feeling the pinch of these ups and downs, exploring new avenues for podcast monetization (Opens in a new window) may be on your agenda. We’ve looked into the current trends to help you figure out what to expect, and collected some nifty tips to make sure you keep growing.
Here's everything you need to know to become independent from podcast CPMs.
What are Podcast CPMs?
Let's start with the basics – what exactly are CPMs? (If you're already in the know, feel free to skip ahead).
In podcasting, CPM is the prevailing structure for purchasing host-read and spot ads. It stands for Cost Per Mille, which means advertisers pay a fixed rate for every thousand times their ad gets seen or heard. The higher the CPM for your show, the greater your revenue.
Trends to keep an eye on
As of March 2024, the average CPM for a 60-second ad slot is $23. Shorter 30-second spots come in even lower at just $18. Long term trends reveal a consistent downward trajectory, with the average CPM dropping by 11% from December 2022 till now (based on data compiled from the Libsyn Ad Marketplace (Opens in a new window)).
CPM rate history for 60-seconds ad spots
Why are they falling?
Like most commodities, podcast CPM rates fluctuate with the seasons. Advertisers tend to ramp up their ad spend leading up to major events, such as around Christmas, and cut it right after. But while fluctuations are normal, industry experts have reported to us that all signs indicate a challenging year ahead for podcast advertising.
A key factor shaping the future landscape is market saturation. There are hundreds of thousands of active podcasts with millions of episodes in directories like Apple Podcasts and Spotify. This saturation has resulted in a dilution of advertising revenue, as brands have more options to choose from and can negotiate lower rates.
Finally, the economic uncertainty caused by global events has led some of the advertisers we surveyed to tighten their belts and reduce spending, further contributing to the decline in CPMs.
The importance of alternative revenue streams
The volatility of CPMs alone is reason enough to seek out alternative revenue streams. Even if current trends were to shift, predicting their duration would remain challenging. Sudden economic shocks, like the COVID-19 pandemic in 2021, can trigger new downturns. Moreover, the competition in the podcasting space is likely to keep growing, making the negative trend likely to continue.
In this increasingly challenging context, there are many options you can explore to diversify your revenue stream. A study by Stitcher (Opens in a new window) found that 27% of podcast listeners have purchased merchandise from a podcast they follow. Other alternatives include hosting live events and offering premium content for a fee.
How memberships can make a difference
While useful for achieving sustainability, these strategies tend to be very work-intensive. For media makers seeking a stable income at low effort, a membership program offers a viable alternative.
By establishing a recurring revenue stream, memberships enable media makers to cultivate a more sustainable and predictable business model, reducing their reliance on volatile advertising revenue. Memberships also offer a way to build a more engaged and loyal audience, as members are more likely to feel invested in the success of the show.
For these reasons, an increasing number of media makers are already turning to platforms like Patreon or Steady (Opens in a new window) to receive recurring support from their audience. According to a survey by Edison Research (Opens in a new window), 32% of podcast listeners have contributed financially to a podcast they enjoy.
Benefits to offer as a Podcaster
You don’t need to roll up your sleeves for extra content to launch a membership program. Media projects often get support from their communities for the work they’re already doing. A staggering 73% of paying members on Steady said in a 2023 study that their primary motivation was to help creators continue their work, with exclusive content coming in second place. But in case you want to sweeten the deal, here are a few options you can consider:
Start a conversation. You can give members a chance to interact with you directly, exchange ideas and offer feedback. The exchange will be as valuable for you as it is for them.
Offer ad-free episodes. It’s a great way to give members a premium experience without increasing your workload.
Offer exclusive episodes. If you have the time for that, and you’re willing to do that, you can also show members your gratitude with exclusive, member-only episodes.
Launch your membership program
If memberships seem like the right fit for you, there's good news: you can easily kickstart your membership program on Steady. It’s completely free to start, and we have a lot of tools you can use to engage your community more and more. Thousands of media makers are already using Steady to monetise their work, and we're here to back you up every step of the way.
Want to learn more? Check out our FAQs here (Opens in a new window). And if you're ready to kick off your membership journey today, just hit that button below:
Photo Credits: Soundtrap (Opens in a new window)
