Spotify Podcasting: Megaphone, SPAN & Programmatic

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Could you clarify the type of technology that you acquired? Was it a hosting technology?

By the end of 2017, we launched the Megaphone Targeted Marketplace, utilizing Nielsen data in a unique way. We were able to ingest all their data and target specific audiences. I was particularly fond of this strategy, as I always viewed podcasting as a digital medium. We saw the shift from direct-to-consumer host-read ads to big brands buying against audiences across all podcasts in the network. This made it easier for large brands and agencies to participate, as they didn't have to ensure the ad was pronounced correctly or the length was right. We would pre-record the ads, allow agencies and clients to review them, and then run them across the audience.

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What made Spotify the best choice for a partnership?

There were several factors that led to this decision. Spotify had made a significant commitment to podcasting, which we thought was important. They were a well-regarded brand with a good product. They also had a global sales force and were a global company. At that time, iHeart was outsourcing everything to its international partners, and others were doing the same. We believed that international markets would become increasingly important. Spotify also had deep pockets and was investing heavily, which certainly influenced our decision.

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Let's start with the marketplace as a whole, and then we can discuss how Megaphone might differ.

Advertising remains the primary source of revenue for most podcasters. Some podcasts still use what we call "baking in the ad", where the ad runs in a show indefinitely, host read. This practice has become less common as it doesn't make sense for publishers to lock in an ad indefinitely, preventing additional revenue generation from that programming. However, some still do it because direct-to-consumer advertisers find it more effective. For instance, if a show released during the Christmas holidays gets replayed the following year, the ad will be heard again. Direct-to-consumer advertisers measure return on investment simply. If they spend a dollar and get a dollar and fifty cents in return from selling products or services, they will continue to spend. We were one of the first to implement dynamic ad insertion at Megaphone to monetize programming indefinitely. While recent programming likely generates more downloads and impressions, there is often a long tail of valuable inventory. We were doing host reads but dynamically inserting them and selling them against impressions, a practice common in the marketplace today. The host read still feels like an endorsement from the host, maintaining the connection with listeners.

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