Spotify has been overhauling its advertising business for the past year, trying to convince advertisers that it’s more than just buying audio.
As CEO Daniel Ek said last year, the company’s advertising business was “moving too slowly,” according to Business Insider. Now, the streamer has overhauled its ad tech stack using Spotify Ad Exchange and deployed generative AI tools for voiceovers and ad scripts. Spotify is currently pitching advertisers on sponsorships, live events, and more automated ad buying.
If that sounds outside of Spotify’s usual positioning, that’s because it is.
“It’s more multi-format,” said Brian Varner, Spotify’s vice president of advertising partnerships. Berner appeared on a recent episode of the Digiday Podcast and shared the roadmap for Spotify’s advertising business. Speaking at this year’s Cannes Lions International Festival of Creativity, he made it clear that executives were “not going to marginalize audio.”
Spotify has always had a comfortable position in the audio advertising market. The bright green Audio Sound Wave logo is one of the most recognizable logos, at least when it comes to audio platforms. The question is whether media buyers will treat it as a nice-to-have product, a premium brand awareness product, rather than a permanent product.
Things are starting to change as Spotify’s goal to reposition itself in marketers’ media plans becomes clearer.
As the industry moves toward more automation, Spotify recently restructured its ad tech stack to automate media buying. Rather than working directly with media companies, marketers are increasingly looking to plug and play.
“We’ve built that plumbing. We just want to make it easy for brands to access our signals and formats and understand how Spotify is working as part of their overall media mix,” Berner said.
Marketers can’t sell through ad tech alone. CMOs are more accountable than ever for business outcomes. People who want to do more with less marketing spend pay close attention to return on advertising spend. But measurement is also part of Spotify’s argument to convince marketers that ad dollars are worth spending.
“Our specialty is 1P.” [first-party] “The Spotify pixel is a big focus for us because it allows us to better understand the closed loop of conversion,” Berner said. For marketers, it likely indicates Spotify’s performance strategy.
Still, the streamer is careful not to alienate its core service: audio. Podcasts are expected to collect nearly $1 billion more annually in the U.S. by 2029, according to eMarketer.
“We’re seeing a lot of growth happening across all of our visuals, our high-impact sponsorships, within our videos, within our experiences,” Barner said. “But it’s additive and doesn’t come at the expense of audio.”
