Article by GG van Rooyen (Published in Entrepreneur Mag)
The rise of the average Joe
Some of the most successful podcasts in the world were created by relative unknowns.
Tim Ferriss’s 2007 book The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich was a phenomenon. The self-help/business book spent more than four years on the New York Time’s bestseller list and has been translated into
35 languages. To date, around 1,3 million copies have been sold. It’s fair to say that every author on the planet would be happy with this sort of success. When it comes to book publishing, it doesn’t get much better than this.
Now compare the success of The 4-Hour Workweek with that of Ferriss’s podcast, The Tim Ferris Show. At the end of 2016, the show reached 100-million downloads, meaning that since the creation of the show, individual episodes have been downloaded more than 100-million times through iTunes and other podcasting channels.
Ferriss hadn’t anticipated that level of success. In fact, he started podcasting on a whim, just to see what the response would be.
“I was burned out after The 4-Hour Chef, which was nearly 700 pages, and I wanted a casual but creative break from big projects,” says Ferriss on his blog. “Since I enjoyed being interviewed by Joe Rogan, Marc Maron, Nerdist, and other podcasting heavies who really move the needle, I decided to try long-form audio for six episodes. If I didn’t enjoy it, I would throw in the towel and walk.
“My rationale: Worst-case scenario, the experience would help me improve my interviewing, which would help later book projects. This is a great example of what Scott Adams, creator of Dilbert, would call ‘systems’ (win even if you lose) thinking.”
So, he saw it as a win-win. Even if the response wasn’t great, it would have been a worthwhile experience. Ferriss also applied one of his regular approaches to podcasting, asking himself: What would this look like if it was easy? Some popular podcasts, like Freakonomics Radio, for example, are highly produced and have a strong narrative structure.
Ferriss knew that he was most likely to stick with it if he made it as easy as possible to do. So, instead of a complex podcast that required a script and heavy editing, he opted for a freeform conversational structure. He simply turned on the microphone, and started talking to people.
Monetising a podcast
Even though podcasts are generally free to download, they can create a nice revenue stream. But, as is often the case in the digital sphere, it’s a numbers game. You need some real traction before the money starts to roll in. Like banner ads, podcasts work on a CPM (cost per impression) model. Popular podcasts have sponsors who pay for a pre-roll message/ad at the start of the podcast. A typical figure is $18 (R234) per 1 000 downloads for a 15-second spot, or $25 (R325) for a 60-second message. Many podcasts have more than one sponsor, so you could make more per 1 000 downloads. Also, as the popularity of a podcast increases, the CPM rate also goes up.
“Premium podcasts tend to charge between $25 and $100 CPM. By ‘premium’, I mean high-converting, single-host, iTunes top-50 podcasts,” says Ferriss.
So, if your CPM is $50 and you’re getting 100 000 downloads, you multiply 50 with 100 to get an income of $5 000 (R65 000) per sponsor per episode.
Tim Ferriss could be making millions a year from his podcast alone, but he chooses not to monetise too aggressively.
“If I wanted to fully monetise the show at my current rates, I could make between $2 million and $4 million per year, depending on how many episodes and spots I offer. So why only ‘if I wanted to fully monetise?’ Because ‘fully monetising’ — bleeding the stone for all it’s worth — is nearly always a mistake, in my opinion,” says Ferriss.
“I want to convert casual listeners into die-hard, fervent listeners, and I want to convert casual sponsors into die-hard, fervent sponsors. This requires two things: Playing the long game, and strategically leaving some chips on the table. As a mentor once told me: ‘You can shear a sheep many times, but you can skin him only once.’”
Indeed, if you want to create a successful podcast, it’s important not to try and monetise too early.
“Novice podcasters (which I was) and bloggers get too distracted in nascent stages with monetisation,” says Ferriss. “In the first three to nine months, you should be honing your craft and putting out increasingly better work. Option A: You can waste 30% to 50% of your time to persuade a few small sponsors to commit early and stall at 30 000 downloads per episode because you’re neglecting creative. Option B: You can play the long game, wait six to twelve months until you have a critical mass, then you get to 300 000 downloads per episode and make 10x per episode with much larger brands. If you can afford it, don’t be in a rush. Haste makes waste. In this case, it can make the difference between $50 000 per year and $1 million per year. To reiterate a phrase more often used for blogging: Good content is the best SEO.”
Of course, you could argue that a self-help guru like Ferriss has a much easier time launching a podcast than your Average Joe, and he certainly has an existing audience, but he believes that anyone can start a great podcast. Being a ‘famous’ person doesn’t guarantee success, and some of the biggest podcasts around were created by relative unknowns.
“Coming to the party with a pre-existing audience isn’t enough. Celebrities, YouTube icons, and bestselling authors start podcasts every week that get abandoned three weeks later,” says Ferriss.
“Like everyone else, at one point, I had zero readers and zero listeners. We all start out naked and afraid. Then your mom starts checking out your stuff, or perhaps a few friends give a mercy-listen, and the fragile snowball grows from there.”
Creating your own podcast
Starting a podcast is relatively simple and cheap. All you really need is a microphone, a guest and an iTunes account. As mentioned earlier, it’s better to start small, gain momentum, and then think about monetisation down the line.
“Upload at least two or three pre-recorded episodes when you launch your podcast. This appears to help with iTunes ranking, which — like bestseller lists — can be self-propagating. The higher you rank, the more people see you, the higher you continue to rank,” says Ferriss.
He also recommends that you keep things simple. “Most would-be blockbuster podcasters quit because they get overwhelmed with gear and editing. I decided to record and publish entire conversations (minimising post-production), not solely highlights. I also use a tremendously simple gear set-up and favoured Skype interviews for the first 20 or so interviews, as the process is easier to handle when you can look at questions and prep notes in Evernote or a notebook.
“As Tony Robbins would say: Complexity is the enemy of execution. You do not need concert hall-quality audio. Most people will be listening in the subway or car anyway, and they’ll forgive you if recordings are rough around the edges. Audio engineers will never be fully satisfied with your audio, but 99,9% of listeners will be happy if you’re intelligible and loud enough.”
Other ways of making money
The CPM/sponsorship model is not the only way to make money with podcasting. You are, of course, also free to approach companies about sponsorship outside the CPM model. If you’ve got a podcast that will align well with a specific brand, you could approach the company about funding the show.
You could also ask your audience to sponsor the show. Neuroscientist and philosopher Sam Harris has a popular podcast called Waking Up, which is created entirely through audience contributions. Harris doesn’t believe in the CPM model, since he thinks it can sometimes seem a bit greedy and also forces listeners to sit through a lot of ads.
The popular Joe Rogan Experience podcast typically has around 12 minutes of ads, while The Tim Ferriss Show usually has about six minutes of ads. Harris has no ads, but does ask his listeners for donations. Of course, only a fraction of listeners will ever decide to pay for the content you create, but if you have enough listeners (Harris has around 800 000 every week), a relatively small number is enough to make it worthwhile.
You can ask for donations through your own website, or through a service like Patreon, which is an American Internet-based membership platform that provides business tools for creators to run a subscription content service.
You should also keep in mind that a podcast can be a smart investment, even if you make no money from it whatsoever. A podcast can be a great way to position yourself as an expert or thought leader in a particular industry. So, instead of trying to monetise your podcast directly, you can use it as a form of content marketing to promote your products and services. Importantly, though, you should not be too aggressive in your marketing. If the podcast feels like nothing more than an extended ad for your business, listeners will be put off. Instead, focus on creating great content that will drive people to your online channels.
A podcast can also be a great networking tool. You might not be able to get a meeting with a successful CEO, but you could invite him or her onto your popular podcast. Once that relationship has been created, talking business becomes easier. You could also offer your podcast to customers as a platform to discuss their own business successes and challenges. Regardless of how you choose to utilise the medium, podcasting provides an excellent opportunity to speak directly to an audience that no entrepreneur should ignore. EM
“Like everyone else, at one point, I had zero readers and zero listeners. We all start out naked and afraid. — Tim Ferriss