3 Ways Podcasts Generate Revenue, and Why Brands Should Support Their Creators

Their audience is engaged and connected

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Podcast advertising is on track to hit more than $220 million in 2017, up 85 percent from last year. But with challenges like the lack of a universal method of tracking actual listeners (downloads don’t always indicate a human actually listened to an episode), it can be a daunting industry for marketers.

Podcasters care deeply about their subjects, whether they discuss current events or completely improvised comedic worlds; and fans of podcasts care deeply about the hosts. In fact, ads read within podcast episodes by the hosts perform better than ads pre-produced by marketing teams.

Beyond the audio realm, podcasts are increasingly used as source material for TV and film projects. Lore, a podcast about scary stories, has been developed as an anthology series by Amazon and debuts this Friday. Homecoming, based on Gimlet Media’s podcast, is also coming to Amazon and stars Julie Roberts.

Brands have gone beyond supporting podcasts and are now creating podcasts of their own. Gimlet has created now six branded podcasts for companies like Blue Apron, eBay and Microsoft.

So, just how are podcasts earning all of that revenue and attention?

Relationships with advertisers

As more and more podcasts join networks like Earwolf, Gimlet or Maximum Fun, they’re connected to ad partners more easily than if the shows had to forge relationships on their own.

Earlier this year, Rooster Teeth, a video game-centric content creation studio, launched its own podcast network to help be a liaison between podcast creators and brands.

“Some days you have to decide if you’re going to wear your creator hat or your business person hat,” said Gus Sorola, co-founder of Rooster Teeth Productions. “Rooster Teeth, or another business, can jump in and help alleviate that pressure for creators.”

Brands like meal kit service Blue Apron, mattress maker Casper and web hosting platform Squarespace frequently advertise on podcasts because of a listener’s relationship to the shows.

75 percent of podcast listeners take an action on a sponsored message, but it takes 25 to 30 times for a consumer to hear that message before they follow through with engagement.

Direct support from listeners

Despite the increase in podcast revenue this year, advertisers can carry a show only so far.

Podcasts hosted on the Maximum Fun network, for example, are supported both by host-read ads as well as donations in the form of “jumbotrons.” Fans of specific shows can pay to have a personal message read on that show; the window of opportunity to purchase one is quite small, as the network typically tries to sell a year’s worth of messages at a time, creating a fun, digital stampede for dedicated fans.

For Maximum Fun, 75 percent of the network’s revenue comes from subscribers and just 25 percent from advertisers. Each year, the network participates in a telethon-like event with proceeds going toward your show of choice.

One podcast has survived 11 years without a single advertiser and only fairly recently started accepting formal donations from fans.

Uhh Yeah Dude, hosted by Seth Romatelli and Jonathan Larroquette, started in 2006 and has never featured an advertiser. Instead, the hosts collect regular monthly donations from fans via Patreon, a membership platform frequented by podcasters and other creators to generate outside income. UYD now raises about $10,000 a month for the weekly show.

“How are we going to maintain doing this? How are we going to talk shit earnestly about the shit that we talk shit about?,”  Larroquette told Vice about the choice to stay ad-free.

Patreon, though, is just one part of their revenue plan.

Live show experiences, plus IRL merchandise

In addition to selling graphic T-shirts, sweatshirts and other merchandise online, UYD has taken their show on the road for years.