Spotify acquires podcast host and ad specialist Megaphone for $235 million

Within two years of its first foray into the business of podcasts, Spotify has pieced together a complete set of capabilities in the market. The firm has just announced it has acquired another piece of the puzzle with a $235 million purchase of advertising and hosting platform Megaphone. 

With the deal, Spotify's capabilities in podcasting now include content, a player, software including hosting capabilities and ad tech, plus its own ad sales team, not to mention its many deals with podcast publishers.

The acquisition of Megaphone represents the next step in Spotify’s expandsion of the possibilities of this intimate and screenless medium, the company said in a release. In the beginning of 2020, Spotify launched Streaming Ad Insertion, a proprietary ad insertion technology, and this investment will see the firm double down on this segment. The deal will allow advertisers to activate across Spotify’s original and exclusive podcasts while scaling reach through the Megaphone Targeted Marketplace.

To target listeners better and use Spotify’s data, podcasters and advertisers will have to pay to host their show on Megaphone or to distribute ads. Megaphone has over 5,500 shows hosted on the platform from the likes of like Slate, iHeartMedia, Disney, and Vox Media.

Spotify and Megaphone will offer podcast publishers tools that will help them earn more from their work. Once the deal is sealed, Spotify will make Streaming Ad Insertion available to podcast publishers on Megaphone, the first time this technology will be made available to third-parties. Publishers will be able to offer more-valuable podcast audiences to advertisers based on confirmed ad impressions.

In Spotify's Q3 earnings, it said over a fifth of its total monthly average users (MAUs) engaged with podcasts and that podcast advertising revenue nearly doubled year-on-year. Spotify's podcast catalogue includes over 1.9 million titles.