News & Insights

Inside Spotify's acquisition of podcast leader Megaphone

A Q&A with Spotify’s Jay Richman, and Megaphone's Brendan Monaghan

Today, Spotify announced the acquisition of Megaphone, one of the world’s leading podcast advertising and publishing platforms. Megaphone offers a best-in-class two-sided marketplace with industry-leading tools to help podcast publishers publish, monetize, and grow their podcasts and help advertisers connect with podcast audiences at scale. With this acquisition we’re helping podcast publishers earn more from their work—while also helping advertisers connect with engaged podcast audiences.

We spoke to Megaphone CEO, Brendan Monaghan and Jay Richman, Spotify’s VP of Global Ad Business and Platform to learn more about Megaphone — and about what this acquisition means for the future of podcasts.

What was the first podcast that really convinced you that this storytelling medium was special?

BRENDAN: We launched Megaphone out of Slate Magazine and I was always blown away by the commitment of the audience. I watched firsthand as shows like the Political Gabfest drew such a passionate listener base. From expecting each week’s episode to drop at an exact day and time—to their willingness to pay to attend a Live show (just three people sitting around a table, talking politics). I saw how important this medium was and how people really made shows a part of their lives. It really helped fuel the launch of Megaphone.

JAY: For me it started in 2006. I was really into a nerdy show called IT Conversations which published from industry conferences and would go deep on various tech topics. I also listened to This American Life back in the day. But it wasn’t until 2014 that Serial and Startup truly captured the power of audio for me. I would put them on at night to fall asleep—which turned out to be terrible for my sleep—But from then on, I was hooked, became a binge listener and have incorporated podcast listening into my daily habits.

Brendan, you co-founded Megaphone in 2015. I think it’s safe to say Podcasts were a pretty niche medium then. Now, over 100 million Americans (A12+) listen to podcasts every month. How have you seen things change over the years?

BRENDAN: So much has changed in just 5 years. But there are a few things that really stand out. The first is technology: With the maturity of the mobile market, we instantly have access to content whenever or wherever we want. There’s no connecting a device and downloading required. It’s right there for listening at our convenience. The second is a maturing business model: With growing interest from advertisers, particularly on the brand side, podcasts are generating revenue at a scale that they have never experienced, which is putting money back in the hands of creators. And the third is content development: As more dollars flow to the space, we’re seeing significant investment in shows that go well beyond the normal “chat” style podcast. We’re seeing in depth storytelling, investigative reporting and even shows produced with the sole intent of developing IP for television and film.

Podcasts are set to reach the $1 billion market in ad spend next year but only represent 0.4% of total media ad spend. Why do you think podcasts have remained so underinvested?

JAY: I think there are a couple reasons. The first is the perception of podcasts as a niche medium. This has been changing a lot in the last couple years—and even more recently as podcast consumption continues to increase. The big reason though is the maturity of the ad technology. Podcast ad investment has been limited by long-standing constraints related to analog reporting and measurement. But in January 2020, we launched Streaming Ad Insertion (SAI), a new podcast ad technology that delivers the intimacy and quality of traditional podcast ads with the precision and transparency of modern day digital marketing. SAI has begun breaking down the barriers that have kept digital advertisers on the podcast sidelines. Our podcast inventory is nearly sold out because of SAI impact. We intend to scale SAI with Megaphone bringing next-level transparency and reach to the industry. These are exciting times and this deal further validates our commitment to podcast ad innovation.

Why are podcasts such an exciting opportunity for creators—how about for advertisers?

BRENDAN: I think at its core, podcasting is a truly intimate medium. There’s a strong connection between a show host or story being told and the listener. Listeners really cherish that connection. And it allows creators to find and connect with a deeply engaged audience on all sorts of niche topics.

Advertisers have recognized the value of being part of that experience. However, they have also come to understand that podcasts are sacred ground for listeners. As a result, you’re seeing compelling ad creative and engaging experiences that are aligned with the show or the host so as not to disrupt the listener experience. It’s such a unique medium and regularly reminds us at Megaphone that a podcast must account for all three players in the relationship – the show, the listener and the advertiser.

JAY: I couldn’t agree more with Brendan. Audio really is the theater of the mind—we’ve only begun to scratch the surface of what’s possible creatively in this intimate and screenless medium.

The connection between listeners and hosts that Brendan mentioned is so valuable. There’s trust there, and that trust extends to brands: studies say that listeners trust podcast ads more than other forms of media. Plus podcast listeners are a highly sought after audience: they’re the unreachables—young people, cord-cutters.

How will the acquisition of Megaphone benefit Spotify creators, and advertisers?

BRENDAN: Megaphone provides publishers with a suite of tools and technology to distribute, monetize and measure their shows wherever podcasts are listened. At the same time, we created a marketplace to aggregate unsold ad inventory from our publishing partners and sell that inventory to premium advertisers based on desired audience segments (demographics, psychographics and even geography).

The acquisition will allow us to provide products and services to publishers and advertisers in more depth and at a faster pace than we have in the past. We’ll be able to bring new products to our partners, like Spotify’s SAI technology to support even greater revenue generation for publishers and another way for advertisers to reach their desired audience.

JAY: For our publishers this is really exciting because it means we can help you earn more from your work. You can opt-in and have your content monetized, matching your loyal fans with even greater demand from advertisers. And like Brendan said, we're very excited to be making our SAI ad technology available to podcast publishers on Megaphone. That means, as a podcast publisher, you'll soon be able to offer more valuable podcast audiences to advertisers by allowing them the option to buy on a confirmed ad impression.

And for our advertisers, we can now offer podcast audiences at even more scale. Digital advertisers can maximize impact with premium title-based sponsorships on Spotify’s Original & Exclusive podcasts (The Ringer, Gimlet, Parcast, and Spotify Studios) along with top podcasts like The Joe Rogan Experience and The Michelle Obama Podcast while scaling reach with audience-based buys bought across our listener network.

Jay, there are so many young emerging podcast companies, what about Megaphone caught your eye?

JAY: Well it’s no surprise we’ve been investing in podcasts a lot lately. Across the past couple years we’ve focused on strengthening our capabilities for creators through acquisitions like Anchor, and for listeners through investments in studios like The Ringer, Gimlet and Parcast, and exclusive content like The Michelle Obama Podcast and The Joe Rogan Experience while reimagining what the listening experience can be. And of course for advertisers through advancements in technology like Streaming Ad Insertion, or SAI. SAI is an amazing development for the industry. Now that it’s been perfected on Spotify shows, we will begin opening it up to more podcast publishers through Megaphone. Megaphone represents a great path to scaling SAI to some of the largest podcast publishers in the world. Together we will grow the podcast industry for both publishers and advertisers—all while providing listeners with an increasingly personalised ad experience.

Brendan, what makes you excited to join the Spotify Advertising family?

BRENDAN: There are so many things that stand out. First, the scale and reach of the company’s technology across the globe is something that really stood out to me. I love the commitment the ads team has made to podcasting, specifically in developing products like Streaming Ad Insertion. As a platform, Spotify has the unique ability to not only distribute but also directly monetize content in partnership with publishers. The launch of SAI earlier this year, showed Spotify’s ability to really innovate and advance the industry. Finally, I’d say I’ve been incredibly impressed by the people at Spotify. The company’s commitment to culture, the focus on innovation, and people’s passion about the brand all stood out to me as I’ve gotten to know Spotify.

OK one last question from—what’s one podcast you wish more people knew about?

BRENDAN: The best part about podcasting is how “niche” they can be. I’m a big Pittsburgh Steelers fan so The Terrible Podcast is my go to for Steelers talk. As a family, we enjoy hearing how some of our favorite company’s got started so How I Built This is always a go to on long car trips.

JAY: I always tell people to check out S Town, a bizarre piece of investigative journalism told in a really compelling way by the makers of Serial and This American Life.

Want to learn more? Check out the announcement on For the Record.

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