For this discussion, we are talking about advertising for podcasts–which means these are files that are downloaded to the end user for the majority of views. This is not about streaming video content.
The answers I give people come down to six basic items:
If you have or anticipate a large audience, CPM ads (spots that are priced per thousand views by the audience) are a great way to generate revenue. This is comparable to TV advertising in that the ads are embedded into episodes. This embedding can be done by the producer when the episode is created or it can be stitched in post-production by an ad serving network.
There are a few different Podcast Ad networks that can do the stitching–Wizzard Media (full disclosure: my employer) is the largest (http://www.wizzard.tv). Ad stitching has the key advantage of being able to monetize your entire back catalog. That's important because in a given month most shows see over 50% of their downloads from old episodes. That ensures you maximize revenue.
Cost per acquisition, also known as affiliate advertising, refers to a system under which you are paid only for those leads you generate. This is of particular interest to smaller shows where they are not getting a big enough audience to make a CPM model work for downloads. Many podcasters that do CPA will tell you they make more money from having the affiliate links on their site then they do from mentioning the ads in their show–but they need the show to drive traffic to their site to start with.
This works great for a show on specific niche topic. The cost of the placement will vary widely depending on the audience size and the use of the product. The placement needs to be baked in during production–so it will be in for life.
Chances are if you are doing a comedy or general entertainment show this will not be for you–but if you are doing a niche show on say Mini Coopers–then your show is a great candidate for doing a product demo.
Don't confuse this genre with a product review, which implies impartiality. The Federal Trade Commission does not look lightly on that. If you are being compensated to talk about a product, you must clearly and prominently state that to your audience. Full disclosure is a must.
This is where you charge a subscription fee or a per-download payment for your show. This is really for two groups–those with large established audiences or those doing very specific how-to type shows. And even in those cases they are at best going to see a 3% to 4% signup for premium content versus those consuming their free content. This is definitely not for those just starting out. Unless your name is Joss Whedon you can forget about getting any uptake until you establish your free content first.
While not a direct money maker per the above methods, many have seen a good return on investment by creating a series that promotes their product or service. "Will it Blend," which is a show about blending almost anything, has been a huge success for the company Blendtec, which created this series to promote their industrial strength blenders. The lesson from that and other successful shows is to make sure the content is appealing to the viewer. Just putting up a self promotion video about your company that has no entertainment or educational value to viewers will pretty much guarantee it is a waste of everyone's time and your money.
When talking to different podcasters, I rarely recommend just one method above for generating revenue but rather a mixture. If someone is really interested in charging for their content, I also recommend they go the CPM route for their free content. Having ads in your free content definitely increases the number of people signing up for the premium ad-free content. The combination of items above that will work best for you will depend on the type of show you are doing and the size of the audience.
Rob Walch is VP of podcaster relations at Wizzard Media.