Spotify said on Tuesday it has entered into an agreement to acquire ad tech company Megaphone in a $235 million deal. CNBC reports the companies declined to say whether the deal was in cash, stock or a mix of both.
Megaphone offers technology for podcast publishers and advertisers seeking targeted slots on podcasts. It offers podcast hosting, distribution and ad-insertion tools for podcast publishers like ESPN and the Wall Street Journal, and advertisers can use the company’s technology to find audiences across the podcast content of those publishers.
Spotify has been on a podcast acquisition tear in the past couple years, striking deals for shows from those including Joe Rogan, Kim Kardashian and Michelle Obama and buying companies like The Ringer and Gimlet Media. Now, it’s taking steps further to monetize all that content with the help of a new acquisition.
The deal should give advertisers more scale in terms of who they can reach on Spotify and let podcast publishers opt-in to have their shows monetized.
After the transaction closes, Spotify said it will make its “Streaming Ad Insertion” tool available to all podcast publishers through Megaphone’s technology, the first time it will open that tool beyond its own original and exclusive podcasts. The company has said that tool makes ads “targetable—they’ll be relevant to the people who get them; measurable—we’ll more easily prove that they’re effective; and interactive…”
Advertising has constituted a relatively small portion of Spotify’s revenue, but the company’s leadership has said it’s optimistic about the advertising opportunity.
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