While engaging in such marketing risks, and simultaneously foreseeing their potential, Spotify will hopefully be more readily able to discern information regarding its company (listener and buyer information) as well as more specific information regarding its platform.
Spotify differs from other advertising agencies, in that it knows more specific information about its users than most other platforms. It tailors to the audience members' interests, likes, and dislikes in profound ways. The advertisements that are brought through Spotify can be referred to as SAI (Streaming Ad Insertion) technology, which the company introduced in January 2020. Megaphone, formerly known as Panoply Media, has more recently reformatted its business in order to focus more on its technological aspect.
With Spotify's acquisition of Megaphone, SAI marketing will able to reach even more monthly listeners, thus permitting Spotify to become even more popularized.
The deal with Megaphone and Spotify costs approximately $235 million, and the primary value in having both companies combined would be that the advertising would be more marketable and strategic, appealing to even more of listeners' interests. It is estimated to appeal to approximately 60,000 individuals across America, especially catered to millennial women. Megaphone's ultimate goal is to help Spotify obtain the tools available for advertising purposes, and to enhance other such advertising technologies.
Overall, the combined forces of Megaphone with Spotify are predicted to improve engagement rates by 22%, and advertising revenue is expected to pick up by 100%. It will enable streaming companies to become available to third-party podcast publishers, and to utilize the SAI system so that advertisers can purchase targeted podcast spots. Because of this new feature from Spotify, advertisers will be able to purchase spots for podcasts.
The Megaphone's revenues have dramatically improved from prior years, in spite of initial decreases at the beginning of 2020. The combination of Spotify with Megaphone is predicted to be a success for the music streaming platform, no matter what the risks or costs associated with it, which will in turn allow users to further enjoy the services.