Podcast Sponsorship Agreements 101
Podcast sponsorship agreements are contracts that lay out the parameters of how a podcast and a sponsor encourage listeners to visit a particular product or service. They’re similar to the sponsorship agreements found on television, radio, on the internet, and other media where one party is driving customers to another party in exchange for something in return.
Podcast sponsorship agreements are unique in that the producer of the podcast is likely the sponsor; meaning that a third party is paying the producer to facilitate advertising in their podcast. Tickmark Studios, The Bigger Pockets Podcast, Podfly Productions , and Podfly Media are some companies that create podcasts for clients in exchange for producing the podcast and facilitating the sponsorship. Some podcasters are their own sponsors.
Those who have listened to a podcast have likely noticed the various forms and types of sponsorship agreements. They may appear in the following forms:
Podcasters must disclose to listeners if they have received compensation for a recommendation, endorsement, or review. This is a Federal Trade Commission requirement. Noncompliance can result in legal action by the FTC and the issuance of a fine of up to $10,000 per violation. The good news for podcasters is that there are several steps they can take to avoid noncompliance.
Core Components of a Podcast Sponsorship Contract
A robust podcast sponsorship agreement should address the parties to the agreement, deliverables, compensation, term, exclusivity and cancellation rights. The parties are the obvious items that need to be covered, but there is more than meets the eye here. When it comes to pricing, the payment terms section of the agreement should identify not only the amount of compensation and the timing of payments, but also the currency to be used, the applicable payment details and process for invoicing. Do not forget to specify whether taxes are in addition to the compensation.
The agreement should clearly identify the deliverables in as much specificity as possible. These may include, for example, disclose whether the sponsorship is for an entire series of podcasts or just a single podcast episode; where the sponsorship will appear, including whether it will be on the podcast website, in social media promotions or on some other medium; the specific timeframe of the deliverables; a plan for any creative that will need to be prepared by the sponsor or by the podcaster (if applicable); and measurement of results. The deliverables will be different for each engagement, but the agreement should identify the key features.
The agreement should specify the term of the sponsorship, which may be specified by duration, e.g., "six months," or by events, e.g., "until 200 episodes have been produced." In addition, the agreement should state whether the sponsorship will automatically renew following the expiration of the term and specify the renewal term length. There are several goodies, including the right to delete or edit sponsor content without prejudice or liability, numbers of scheduled breakaways, acceptance of script, limitations on content, disclosure of any sponsorship in the podcast, rescheduling of broadcast time, etc. Exclusions may be artistically based or based on brand reputation or safety. Exclusivity provides the sponsor with assurance that the podcast host will not enter into a similar agreement with a competitor to the sponsor during the term. For example, the sponsor would like assurance that the podcast host will not accept a sponsorship from or even advertise a key competitor’s services or products, e.g., the top two search engines for a consultancy. Cancellation rights can include termination rights for breach and for convenience. In a breach scenario, the agreement should provide a written notice and an opportunity to cure provision. A broad termination for convenience right gives the sponsor the ability to cancel for any reason that may become known after the agreement is signed. Some agreements provide the sponsor with broader rights to cancel if certain metrics or performance levels aren’t met.
Podcast Sponsorship Deals: What to Negotiate And Be Careful About
In negotiating a podcast sponsorship agreement, it is important to have a clear understanding of the goals and objectives for the sponsorship. If the sponsor’s intention is to generate sales, then those objectives should be clearly tied to the podcast’s objectives. Drawing the bright line between providing a service that ultimately generates sales can be tricky, so it is important to carefully and thoroughly craft the contract in order to allow review by each party’s legal counsel before finalizing the agreement.
Many contracts address compensation and other terms for advertising scheduling, but they do not impose any obligation on the advertiser to use the advertising when scheduled. For example, if an advertiser elects to cancel an advertising spot at the last minute, it will not be penalized for cancelling a scheduled ad. The economics of payment arrangements vary, but generally the advertiser pays for the advertising, regardless of whether the ad runs or not. Payment terms can also vary widely depending upon things like the type of sponsorship the advertiser selects, the length of the sponsorship, the length of each individual spot, etc.
The very best advice for getting the most out of a sponsorship deal is to communicate with the other party. When negotiating the deal and throughout the term of the parties’ relationship, communication is important to both effective execution of the advertising and maximizing the benefits of the deal. For podcasters, this means opening a line of communication with the sponsor to understand its advertising strategy and to inform the sponsor of how the advertising will be integrated into the podcast. For advertisers, this means being open with the podcaster about what the sponsor wants to accomplish through the advertising.
Without that open channel of communication, it is possible that what the podcaster believes is being said in the ads is entirely different from what the sponsor believes it is saying. Open communication among the parties is critically important to understanding how the others’ objectives will be fulfilled, and maximizing the effectiveness of the advertising.
Aligned sponsorship strategies not only benefit the advertiser, but the podcaster as well. Often times podcasters strike sponsorship deals without understanding what the business will get out of the deal. This can lead to issues where a podcaster’s understanding of the deliverables on its end does not align with the advertiser’s. This is another reason why open communication between the parties is important to a mutually beneficial relationship.
Legal Topics Podcasters Should Consider When Seeking Sponsorship
When entering into a podcast sponsorship agreement, both parties should carefully consider legal issues surrounding their relationship. For the podcaster, a sponsorship agreement should clearly set forth the nature of the sponsorship. For example, with a sponsorship where the sponsor’s product is advertised, the agreement should specify that the sponsor has approved the podcast host’s wording and the manner in which the sponsorship is acknowledged to insure that the podcast host maintains full editorial control over the content of the podcasts. If the sponsor is providing content to the podcast host, it is important to arrange for copyright protection of such content. Some sponsors will want ownership of the content, so the willingness to make that concession must be considered. For those sponsors willing to permit the podcast host to retain ownership of the content, the issue of the applicable license rights must be settled. For example, will it be a royalty-bearing license or a "work for hire" situation, where the podcast sponsors gets a one-time payment for the content. If the sponsor is including its trademarks in the podcasts, the podcaster should obtain a license for their use. If the sponsor is acquiring certain social media accounts from the podcast host, the terms of the transfer should be thoroughly detailed in the agreement. Sponsorship agreements with podcasters that are providing products to them can create other legal issues. Most significant is the requirement that such products are provided "gratis" (i.e. , free of charge) and without any "knowledgeable payment" (also known as "undisclosed sponsorship compensation") made in connection with the promotion of the products. Numerous federal statutes govern advertising and marketing of products by celebrities, including as Section 317 of the Communications Act of 1934, the Federal Trade Commission Act, the Federal Food, Drug and Cosmetic Act, the Comprehensive Smokeless Tobacco Health Education Act, and the Omnibus Diplomatic Security and Antiterrorism Act of 1986. These laws require that written sponsorship agreements list the names of persons making "knowledgeable payments" in order to facilitate compliance and enforcement of the underlying legal prohibitions. Note that the federal law prohibition on undisclosed compensation does not apply to payments reasonably related to the fair market value of readily identifiable airtime for advertising purposes, which is a common exemption to overcome these requirements. The Federal Trade Commission has taken the position that disclosure of such sponsorship compensation is required if sponsorship of a particular broadcast or cable television programs would otherwise trigger these disclosure requirements. Therefore, sponsorship compensation agreements with sponsors who are supplying products to a podcaster should be the subject of legal review to avoid any issues with undisclosed sponsorship compensation. In addition, the advertising or promotion of certain products may be subject to content regulations and compliance rules enforced by administrative agencies, such as the Federal Communications Commission, the Federal Trade Commission, the Food and Drug Administration and the Consumer Product Safety Commission.
Engaging and Maintaining Podcaster Sponsors
Once inking a podcast sponsorship deal can lead to fruitful and lasting relationships between podcasters and sponsors. As the digital audio age continues, the demand for podcast sponsorships is strong, resulting in recurring opportunities to explore new relationships. Podcasters and sponsors alike benefit from more than just solid pre-deal communication; maintaining a positive and healthy relationship post-signature benefits all parties. To ensure that podcast sponsorships remain mutually beneficial throughout their duration, podcasters should take the opportunity to educate sponsors regarding any advertising opportunities within their programs. Offering good counsel to sponsors in order to promote their products or services during various segments of podcasts they sponsor can make all the difference to a successful campaign. For example, by taking time to explain when and how a live read is done, the tone required, and how promotional materials and/or graphics can be used, podcasters may help sponsors design ads more suitable to their messages. In addition, encouraging sponsors to monitor listener feedback about advertisements and spots may help them to better understand how to communicate with prospective customers via the podcasts they sponsor. Communicating with sponsors beyond the scope of the terms and conditions outlined in a sponsorship agreement also may offer useful insights into how the podcasts they sponsor fares compared to other programs, as well as which platforms are most beneficial to promoting specific products or services. In-depth explanations provided by podcasters about average audience size, the demographics of listeners, how programs are marketed, and the benefits to sponsors who leverage the opportunity to personally participate in programming may help them maximize available resources to support their products or services. Finally, while many podcast sponsorships are volume driven, or relate to the total number of listeners, relating performance metrics may help to foster long-term relationships. Podcasters should provide sponsors with metrics, such as influencing market share, geographical data, industry trends, or types of listeners (i.e., working women, college students, or tech-savvy young professionals), and reach. In turn, sponsors may adjust their messaging and marketing strategies based on the feedback given to them by podcasters. When publishing podcasts as well, having reliable feedback to shape future messaging and marketing strategies is invaluable to sponsors. Communicating with existing sponsors about the aforementioned matters not only helps to build trust, but it may also result in valuable insight that improves campaigns for current and future sponsorships, as well as for the economic bottom line.
Common Mistakes And How to Avoid Them
Both sides of the podcast sponsorship agreement can unwittingly fall into certain traps that could deprive them of the benefits they seek. Both parties need to be aware of their duties and obligations and the expectations of the relationship. Failing to define the terms appropriate for the relationship is one of the most common pitfalls.
It is extremely important that all terms be clearly defined and delineated in plain language. The parties should always have the expectations for their relationship spelled out specifically in the agreement.
First, the two parties must ensure that the correct relationship is established. Is the sponsor going to be the correct term that defines the relationship with the podcaster? Or would another term like an advertiser be more enticing to the audience? These two terms are often confused but have different connotations. "Sponsor" may bring to mind a charitable organization or non-profit who desires to be associated with a particular individual or group. While "advertiser" conjures up an intent to sell something.
Second, there must be an explanation of the deliverables. The deliverables can be thought of as the music of the relationship. The podcaster should be obligated to accurately deliver the message to the audience exactly how it was intended . This means that how the podcaster is supposed to go about delivering the message must be carefully explained. Any deliverable by the podcaster should be: clearly defined, measurable, truthful and accurate, sufficiently flexible to accommodate changes in the marketplace, and allow time for the sponsor to approve it prior to execution.
Third, the payment and any disclosures that are required must be adequately addressed. The payment can be viewed as the beat or background music of the music analogy. The payment terms should be fairly detailed and specific. The correct times, amounts, due dates, and places should all be clearly spelled out. Any payment structure such as installment or milestone payments should be incorporated in the agreement.
Finally, if the sponsor intends to retain rights in the deliverables, it must be clear on whether it wants a license or an assignment in the deliverables. Generally speaking, a content owner will want an assignment of the rights to the work, while a license is better suited for a distributor whose primary goal is not to own the content itself.
A podcaster should never agree to a fee structure without first determining whether it will be profitable, and a sponsor should never agree to any terms without first knowing any obligations it will have under the arrangement.