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Overcast Podcast Advertising: Is it profitable for you?

April 04 2017 – 12:38pm

UPDATE – February 23, 2019: After a break of more than 18 months, I recently ran another Overcast campaign. The numbers this time around weren’t nearly as favorable as I reported in my original report:

I got a great deal on my spot, which I purchased in the lull between Christmas and New Years’. You can see I paid $400. The current rate sheet shows a $1,300 rate for ads in the Business category. Even though I exceeded the estimated 100 new subscribers with this spot, the cost per subscriber was quite high: $2.90 per subscriber – much more than 76¢ per subscriber I reported in the original post. I also ran another ad in May 2017 for which I paid 63¢ per subscriber.

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With the current rates and estimates, you would be paying a whopping $13 per subscriber if you ran an Overcast ad in the Business category and succeeded in gaining 100 new subscribers.

That’s an astonishingly-high acquisition cost. You’d better have a robust back-end business model if you’re going to support that spend.

So, for the foreseeable future, I will not be advertising my podcast on Overcast, nor do I recommend anyone else shell out that kind of cash. There is a bubble.

By the way, if you read my income reports, you know that I enjoy earning extra credit card points on my 3x points credit card. Apparently Overcast is not partnered with Chase in this regard. I earned the usual 1x points on my Overcast advertising spend, rather than the 3x I earn for my ads on Amazon, Facebook, or BookBub.

Original post:

Getting new listeners is the most painful part of podcasting. You’ll probably do just about anything to get new listeners for your podcast.

Even buying advertising.

I recently bought advertising for Love Your Work in the podcast app, Overcast. If you aren’t familiar, Overcast is popular with tech-savvy listeners. It has great features such as “Smart Speed” (wherein it cuts out pauses), “Voice Boost” (which does what you would guess), and a smoother sounding speed-adjustment for listening to podcasts at various speeds (I especially like that I can slow down podcasts to less than 1x, but more than iOS Podcasts app’s excessive .5x. This is good for listening to podcasts in my second language – Spanish.)

Overcast is the second most popular app amongst my listeners. Here is data of an episode before my Overcast advertising experience.

Here’s how my Overcast ad experience went.

How much does Overcast advertising cost?

I don’t remember when I first saw that I could buy advertising in Overcast. I think it was on Twitter.

I saw something a lot like this.

(Overcast’s advertising pricing and availability changes frequently. To see the current pricing and availability, log in to Overcast, and visit Account > Buy Ad.)

It looked like a good enough deal to try it. But, “Business” was the ideal category for advertising my podcast, and it was sold out.

The only relevant category available was “Arts.” It was $350, and there wasn’t enough data in yet to decide what to expect from it.

I thought about all of the things I could do with $350. Then, I thought about the constant aching in my stomach that comes with trying to build a podcast.

Alleviating that aching – even for a little while – was worth $350. So, I bought a slot.

I did it fast. Clearly the spots were selling out quickly. Clearly, the prices would only rise.

Whenever I feel that tension before a big purchase, I usually feel better afterwards. I feel the tension because I want the thing.

This was no exception. I felt happy about my purchase.

Then, I got this email.

A separate email said they now had enough data to know the expected performance of my ad (based upon the Arts category), so they were refunding the difference.

They refunded $225. My 30-day ad in Overcast, originally $350, would end up being only $125.

That was some classy sh*t right there. They didn’t have to give me that refund. I had been willing to take the risk.

Does Overcast advertising bring in listeners?

The ad certainly brought in more listens than I would have had otherwise. Here are my downloads through Overcast for episodes released before, and during, the life of my ad.

(Note that the final episode during the campaign, #67 with Ryan Hoover was released two days before my ad was done, and five days before this data was collected.)

So, my Overcast ad certainly brought in more listens. In fact, it brought a 60% increase in listens on the Overcast app.

Here you can see Overcast’s share of my listenership for episode #65 with Joanna Wiebe. Overcast’s share grew from about 14% of my listeners to about 23%.

How can you see your Overcast ad?

I initially couldn’t find my ad in the Overcast app. I’d listen to a podcast in the Arts section, and I’d keep closing, then opening, the app to get it to refresh what ad was showing.

I did that like 100 times, and didn’t see my ad.

So I emailed Overcast. It turns out, if you’re subscribed to a podcast, you won’t see ads for it. It turns out I’m subscribed to my own podcast on Overcast. Go figure.

I unsubscribed, and sure enough, I started to see my ad.

You aren’t able to edit the title of your ad, but you can edit the description. I simply listed my three most popular guests, Jason Fried, Dan Ariely, and James Altucher, in hopes that would catch the attention of my target audience. Then, of course, “entrepreneurs & creators,” in case those prompts weren’t enough.

Does Overcast advertising perform well?

I began to wonder how my ad was doing. I had some baseline numbers for performance, based upon the estimates for clicks and subscriptions in the rate card above.

Here’s the click through and subscription rates you can expect in the various categories, according to these numbers.

You can find the performance of your Overcast ad under Account > Purchased Ads. Halfway through the month, here’s what my performance looked like.

In the Rate Card above, they estimate that 1% of all Views result in Taps. 10% of all Taps result in Subscriptions. So, my ad was performing about average.

What I didn’t consider was that after someone listens to your show for the first time, it might take awhile before they’ll start subscribing.

Here’s what my ad’s performance looks like now, about 5 days after the ad ended.

Note that the ad attracted 1,385 Taps. I estimate that I received 1,240 more downloads from Overcast than I would have otherwise. So, I estimate about 90% of Taps result in a download.

What can you learn from your Overcast Ad?

My ad outperformed the average ad in the Arts category! Here are some things I can learn from that.

• Is your content above average? If my podcast performed above average in converting subscribers, that may mean that my content is above average in “quality,” or its ability to attract subscribers. This can help guide you in deciding whether to devote more resources to improving your quality, or devote more resources promoting your podcast. As much as you hear “forget about all else but quality,” for many shows, I don’t believe that’s enough.
• What % of downloads convert to subscribers? If you get someone to listen to your podcast, what percentage of those people will convert to subscribers? It’s almost impossible to know, but an Overcast ad at least gives you a ballpark. 11.8% of people who viewed my podcast, and 13.2% of downloads, converted into subscribers. Of course, this can vary widely depending on the context: these people were already on an app on which they could easily subscribe. What percentage of people who listen on my show notes page convert to subscribers? My guess-timate is 5%. In any case, probably not more than 13.2%. Like I say, it’s a ballpark.

Something to note is that I don’t think Arts is the ideal category for my podcast. The only reason my podcast is filed under Arts (Arts > Design to be specific), is because I experimented with different categories, and found that I showed up in iTunes “What’s Hot” under Design when categorized as such. I don’t talk about Design much on my podcast, but I have some reputation within the field of design, having written a book about design. I don’t know how iTunes “knows” that (it could just be through other shows listeners are subscribed to).

So, if I were able to advertise in the Business category (my top category is Business > Careers), I would probably have even better performance. However, since the average Business advertiser pays $1.20–$1.99 per subscriber, and the average Arts advertiser pays $.99–$1.49 per subscriber it was a good deal for a first run. I paid 76¢ per subscriber.

Is Overcast advertising profitable?

There’s a big gap in podcast discovery, and many podcasters are willing to pay for advertising for their podcasts.

We all believe that our show is good enough that if we could just get people to listen to it, they’d be hooked for life.

This is one reason I think podcast discovery is a problem worth tackling. You can be a pick-axe salesperson in a gold rush.

Let’s say you have a podcast supported by ads. You have two pre-rolls, and two mid-rolls. By industry standard rates, you charge $18 CPM and $25 CPM respectively. (Some podcasts get way less, some get way more.)

You get $86 CPM per episode. So, for every 1,000 downloads, you earn $86.

The “by downloads” model

One way to evaluate the profitability of Overcast advertising is by downloads. How many downloads did the ad generate, and how much do you get paid for those downloads?

With my calculated 1,240 additional downloads, I potentially would earn $107 on my $125 ad.

That’s not terrible considering some of those listeners will subscribe. This might be a great deal if you have a packed inventory of dynamically-inserted ads, which advertisers are paying for by the impression.

But, I know that’s not me. All of my ad inventory isn’t filled (more on that later), and I don’t do dynamically-inserted ads.

Also, consider that advertisers like advertising with podcasts because the listeners trust the host. Someone who just listens to your show for 15 seconds, then moves on forever, will not become a customer of your advertisers, and thus will not make your advertisers happy.

For most podcasters, downloads don’t magically translate to dollars.

Finally, consider that my ad performed well above average. If my ad had performed on the low end, and I got only 900 downloads (90% x 1,000 Taps), I would “potentially” earn $77.40 on my $125 ad.

The “by subscribers” model

You of course don’t want people to listen to your podcast once. Your subscribers are who your advertisers really want. So, are Overcast ads profitable by the subscribers model?

Let’s imagine again that I get $86 per 1,000 downloads of my episode (from loyal subscribers).

Each new download is worth 8.6 cents.

I paid 76¢ per new subscriber on my ad. So, each subscriber needs to download my podcast 9 times before I turn a profit on my ad. Since I have a weekly podcast, that’s about 2 months to turn a profit.

Again, consider that my ad performed well above average. Currently, the average new subscriber (across all categories) costs $1.41–$2.21.

That’s 17–26 times each subscriber needs to download, or 4–6 months to turn a profit.

Not too bad, right? If only it actually worked that way.

Are you able to fill all of your podcast’s advertising inventory? I know I’m not.

Here’s what the breakdown looks like based off of how much inventory you’re able to fill in the above scenario.

If you want an approximate value of how much inventory you’ve filled in the lifetime of your podcast, try this (very rough) calculation.

% Inventory filled = Total Advertising Earnings / (1,000’s of Downloads x CPM per episode)

When I run these numbers, I realize I’ve only sold about 14% of my total ad inventory!

(This calculation is “very rough” because it doesn’t account for impressions that old advertisers are getting that are above the original estimated number of impressions – a solid argument for dynamically-inserted ads.)

Does 1 Subscriber = 1 Download?

You may have noticed that my calculations so far assume that each subscriber will download each episode.

That obviously won’t be the case, but how many downloads does each subscriber count for?

There’s not much data to help you with this, but you can at least hack some data that’s available through different platforms.

My Stitcher Partner Portal says my show is on 143 Favorites lists.

Podbean says I have 43 Followers.

Using my “Total Listens” data from Stitcher, it looks like about 25% of my subscribers listen to each episode.

But, listens and downloads are different things. Podcast advertising is still calculated by the download, with the knowledge that many of those downloads are not engaged listens.

If I cross-reference the downloads data from Libsyn with my subscription data on these platforms, here’s what I get.

That’s a pretty broad difference. I can only be confident that somewhere between 0% and 100% of subscribers download each episode. (Actually, it’s possible for a subscriber to download an episode more than once, but let’s be realistic.)

Here’s how many months it would take to break even with the average subscriber acquisition rate of $1.41 (for an ad performing at the high end of Overcast’s range), at various levels of inventory sales and downloads-per-subscriber rates.

Months Until Profitability @ $1.41 Per Subscriber ($86 CPM)

Here’s the same table with the average subscriber acquisition rate of $2.21 (for an ad performing at the low end of Overcast’s range).

Months Until Profitability @ $2.21 Per Subscriber ($86 CPM)

And here’s the same table with the subscriber acquisition rate of 76¢ that I had.

Months Until Profitability @ 76¢ Per Subscriber ($86 CPM)

If 50% of my subscribers download each new episode, and I sell 20% of my ad inventory, my Overcast ad should achieve profitability within 20 months.

If we assume an average performance of $1.41 per subscriber, and we assume an average of 50% of subscribers downloading each episode, and we assume the average show fills 50% of its advertising inventory, then the “average” Overcast ad is profitable within 15 months.

What did I not think about?

There are countless factors that could affect how profitable an Overcast ad is for you. Including:

• How frequent is your show? All of my numbers assume a weekly show. Yours may be more often, or less often.
• What is your CPM? I just used industry-standard rates. You might get much higher rates.
• What is your monetization model? You may have a back-end business or Premium level that makes your effective CPM higher.
• What is your “viral coefficient?” For each new subscriber you get, to how many people do they recommend your show? It’s possible you have a higher than 1.0 viral coefficient, which makes each subscriber more valuable than the purchase price.
• Did you catch the attention of an influencer? The numbers I considered in this post are all about averages. In my experience, things don’t grow at a steady clip. There are explosive inflection points, often caused by an influencer. Maybe iTunes decides to feature your show, or Marc Maron invites you for an interview. It’s hard to know when these tipping points will come.

Will I advertise on Overcast again?

I’ve written this post to show you how I think about advertising on Overcast, and how you might think about it yourself. As you can see, it takes quite awhile for me to achieve profitability with an ad on Overcast.

So, obviously, I shouldn’t renew, right? Please, I’m a podcaster. I’ll do anything for new listeners. I just bought another ad.

Now, if you’re a developer, go make another podcast discovery app. With ads.

Calculate the profitability of your Overcast ad

April 9, 2017: Over on Reddit’s /r/podcasts, user Ches_LLYG of the +7 Intelligence podcast (Twitter) put together this amazing spreadsheet where you can punch in all of your own numbers. (Go to File > Make a copy… before entering your data.)

This post is filed under Podcasting.