Spotify does not just want more podcast listeners. It also wants more podcast advertising. So in an effort to grow its ad revenue Spotify has refocused and rebranded its Spotify for Brands division as Spotify Advertising. The Wall Street Journal says the move is geared toward bringing more small and mid-sized advertisers onboard. It is pitching ad packages that start at as little as $250.
Dawn Ostroff, Spotify’s Chief Content and Advertising Business Officer, said the aim is to pull dollars away from other big digital companies that have banked billions by working with scores of small and local businesses. “Our goal is to start to really compete with Snap and Twitter and deliver on the expectations advertisers have, including small businesses,” Ostoff told the Journal.
Spotify reported its ad revenue totaled $325 million during the second quarter, a 110% increase compared to a year ago. It was also up 28% from the $255 million in ad revenue logged during the first quarter. Spotify does not release podcast-specific revenue, but it said revenue from podcasts soared 627% compared to a year ago, driven largely by the acquisition of Megaphone last year.
Yet CEO Daniel Ek also conceded advertising was an area of the business where, in the past, he has not spent much time, but that has changed. “It’s becoming impossible to ignore. It’s now safe to say it’s becoming a second big revenue driver for Spotify,” he said during a July conference call with analysts.
To raise the profile of Spotify advertising, the company is launching its first branding campaign targeting marketers. The ads will run in the U.S., Canada, the U.K., Australia, Spain and New Zealand both on Spotify and in other media. The streamer worked with the ad agency FCB New York to create the campaign that looks like this –
Executives tell the Journal that Spotify is also working to bring more podcast publishers into its advertising marketplace, including independent creators, in a concession that the reach of its ad inventory is too narrow.
The Spotify Audience Network, which the company launched in the U.S. in April, is said to be helping. It allows marketers to buy advertising to connect with listeners across a broad range of content on- and off-Spotify, including Spotify Originals & exclusives and content from third-party Megaphone publishers. Spotify says it has allowed it to increase its monetizable podcast inventory in the U.S. by nearly three-times. Podcast publishers that have opted-into the network have seen a double-digit increase in fill rates, an increase in unique advertisers, and a double-digit lift in CPMs, according to Spotify.
Based on that success, Spotify expanded the Spotify Audience Network to Australia, Canada, and the U.K. this summer.