Spotify is expanding its podcast advertising capabilities with the acquisition of a major advertising platform, Megaphone.
A few words about podcast advertising campaigns
Podcast advertising, like most advertising campaigns on the web, has a cost per thousand impressions/downloads.
A podcast is usually divided into three parts for advertisings. A pre-roll, a mid-roll and a post-roll. Each part can contain one or two advertisements. So you can have six ads on a podcast.
But it may be better to have only one pre-roll ad and one mid-roll ad.
The cost of advertisements per podcast ranges from 5 to 70 US$, depending on the quality of the podcast, the advertiser, etc.
Let’s say that if your podcast has a price of 30US$ per minute, which is about average, the pre-roll may be a little less, the mid-roll will be 30 US$ and the post-roll will be less. Listeners sometimes skip the pre-roll. If they are in the middle of the episode, they are probably listening to the whole commercial, and they can skip the post-roll.
There are several ad networks that allow you to place ads (such as Midroll, or any of the podcast networks such as Megaphone). PodcastOne, Audion, Adswizz… They generally take 20% commission. These ads are called “premium” because they are placed on your podcast as soon as it is released and remain there either for sixty days or until the podcast reaches the number of downloads that the advertiser has purchased.
Spotify’s acquisition of Megaphone
Spotify has acquired Megaphone, a leading podcast advertising and publishing platform, to expand the advertising options for podcasters. The US$235 million purchase is one of the largest ever made by by Spotify.
Megaphone is used by more than 20,000 podcast publishers and advertisers, including The Wall Street Journal, Slate, Vox Media, ESPN, How Stuff Works, and many others.
Spotify’s acquisition of Megaphone will create new opportunities for podcasters and podcast advertisers.
New advertising tools for podcast publishers
In its latest report, Spotify states that 22% of its users listen to podcasts. In addition, advertising revenue from podcasts has increased by almost 100 per cent year-on-year.
The acquisition of Megaphone therefore enables Spotify to offer podcast publishers more ways to monetise their content.
Spotify and Megaphone will enable advertisers to advertise on Spotify’s original and exclusive podcasts, while increasing the reach of Megaphone’s target market.
The Megaphone Targeted Marketplace is used by leading brands to reach their target market with podcast ads, such as Google, AT&T, Microsoft, Sony, Starbucks and Walmart. The list of Spotify’s podcast advertising partners is therefore expanding considerably as a result of this acquisition.
Megaphone also offers a suite of podcast publishing and analysis tools, which will also be available to Spotify creators.
In return, Spotify will make its own advertising solution, Streaming Ad Insertion, available to customers of this solution for the first time.
Once Spotify and Megaphone have merged, podcast publishers will be able to use Streaming Ad Insertion to sell advertising slots using a model based on confirmed ad impressions.
Introduced earlier this year, Streaming Ad Insertion provides podcasters and advertisers with key data such as actual ad impressions, frequency, reach, as well as anonymised age, gender and device type.
In the past, podcasts were broadcasted via RSS feed downloads, which made this type of data collection difficult or even impossible. The move to streaming is a game-changer, and Spotify can leverage its technologies for planning, reporting and measurement, just as it does for music streaming.