IP: What are DAI and SAI?
BB: Dynamic Ad Insertion (DAI) is a combination of multiple files. The show is the first part, the specific ad being the second, then back to the content, and so on. It's like creating a unique playlist of content and ads for every listener but sending it to them as one MP3.
A user (listener) requests an episode by downloading, streaming, or pressing play. The host receives user info and inserts ads based on location, demographic data, and other criteria. In case of a DAI placement, the ad is placed at the time of episode download, not when the listener gets to the ad break.
Streaming Ad Insertion (SAI), on the other hand, places ads in real-time, when the episode is being streamed. Only when the listener gets to that specific spot does Spotify pause the episode and make an app-based call on which ad should play.
SAI monetizes the podcast like an app, while DAI monetizes the podcast like a podcast.
IP: How do they work?
BB: In the case of DAI, Megaphone makes the complete decision on which ad gets served at the time of download, regardless of podcast player.
But take, for example, that we're listening to a JRE episode on Spotify before it goes exclusive. Megaphone, as the hosting provider, when it receives a request for an ad, will see it's from Spotify and not fill any of the ads. This is SAI.
Megaphone will pass the episode over to Spotify and tell them there are four slots at whatever minute markers. Spotify thus gets precedence on the ads played via Megaphone.
One can reach every single download with IP based targeting, the other can reach only Spotify listeners if the podcast is hosted by Megaphone, but has more granular listener data than IP.
IP: Is one superior?
BB: I don’t think so. SAI legitimizes DAI.
Spotify’s acquisition of Megaphone is them accepting that SAI's reach is limited.
P.S - Bryan and I recommend this "a16z" episode, featuring Spotify’s chief R&D officer Gustav Söderström, discussing how players in the audio space might evolve and “disrupt themselves.”