How Spotify is reimagining podcast ads

Spotify continues to remake the podcast industry.


November 12, 2020

Oh, the antiquity of podcast advertising.

For years, hosts have awkwardly tried to sell us mattresses, underwear, and a slew of other products that have no relationship to the show.

But Spotify has been on a quest to make podcast ads more relevant (and more valuable) through automation. And on Tuesday, it announced a $235m deal for the money-making engine of the podcast world: Megaphone.

Spotify’s shopping spree continues

Having secured some of the biggest names in the podcast industry (Gimlet, The Ringer, Joe Rogan), Spotify now is shifting its focus to monetizing its talent.

Megaphone was launched in 2015 as Panoply, the brainchild of the online publishing entity The Slate Group.

Over the past 5 years, it has quietly grown into one of the premier podcast hosting and ad distribution businesses.

We’re no longer in the age of Mad Men

According to leading podcast reporter Nicholas Quah, Spotify was drawn to Megaphone for ad targeting and audience segmentation software.

Spotify has been building out its Streaming Ad Insertion (SAI), which sells ad inventory for the streaming giant’s original programming. Megaphone will help bring scale and expand this type of ad inventory.

But some traditionalists think Spotify’s automated ad solution will ruin what makes old school “friction-filled” podcast ads effective in the first place.

“[This complaint] presupposes that the ad experience is going to get worse for the consumer,” one Spotify exec tells Quah, “which is a premise I don’t buy.”

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