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Spotify launches new podcast-centric advertising tools

By | Published on Thursday 9 January 2020


Spotify is hoping to solidify its position in the podcast market by launching new tools for brands looking to advertise in or alongside podcast programmes on its platform. The firm is hoping to woo advertisers on the basis that, because its podcasts stream – whereas with traditional podcast apps the content is downloaded – it can provide much more data to brands about the programmes they choose to ally with.

Podcasts have been a big part of the Spotify conversation in the last couple of years, of course, as the firm has increasingly pushed podcast content to the fore in its app and marketing, while behind the scenes acquiring technology and talent from the podcasting world.

One big benefit of podcasts for Spotify is that, for podcast makers, apps and platforms are seen as delivery channels rather than B2B customers who pay for content. So unlike with music, Spotify gets most of its podcast material for free. The podcasters are used to making money by selling advertising (or advertorial and product placement) themselves or via separate ad platforms. Or they make money in other ways such as merch sales, or through Patreon or a Kickstarter campaign.

However, for Spotify to make money itself from podcast content it needs to monetise the medium. And if it can crack podcast monetisation and then share the benefits of that with the podcast makers, that could give it an edge within the podcaster community, who might then direct their listeners away from other podcast apps towards Spotify. And in particular away from the traditionally dominant podcast app of Spotify’s biggest overall rival Apple.

Obviously it helps that Spotify already has an ad sales business, even if the advertising side of its music service has always seemed like a bit of a lacklustre loss-leader to hook people in and then upsell them a premium subscription.

But with Spotify’s podcast business, advertising income could become a serious part of the mix. Even if – where brands buy product placement within a podcast – that means you have the problem of premium subscribers hearing advertising content, even though a key selling point of premium is that it’s ad-free. Nevertheless, opportunities abound.

Which is why it’s perhaps unsurprising that Spotify’s first big announcement of 2020 is the launch of a thing called Streaming Ad Insertion, what the company defines as a “new proprietary podcast ad technology that powers Spotify Podcast Ads”.

As noted, it’s all about providing advertisers with the kinds of data that has not been available from traditional podcast platforms – or the radio industry, for that matter, given Spotify is also competing with radio companies for ad spend.

Spotify explains: “This includes data such as actual ad impression, frequency (number of times a listener heard the ad), reach and anonymised audience insights (age, gender, device type). This is the first time this type of data is available for advertisers and podcast creators”.

“The shift in [podcast] consumption from downloads to streaming”, it then adds, “has opened the door for advances in data-driven podcast advertising, and here at Spotify, we’re moving beyond these constraints to reimagine what’s possible for this uniquely powerful and intimate medium”.

It then brags on: “With this technology, we are offering the intimacy, quality and efficacy of traditional podcast ads with the precision and transparency of modern-day digital marketing. In short, we’re keeping what podcast listeners, creators, and advertisers love about podcast ads and making the medium addressable for digital advertisers”.

Now, at launch the new ad tools will only apply to Spotify’s own podcasts, ie those that it creates in-house or carries on an exclusive basis. So in the short term it’s more about boosting Spotify’s own revenues rather than reinventing the wider podcast business.

Capitalising on the bigger opportunities in this space also means navigating tricky questions around the nature of Spotify’s relationship with third-party podcast makers, not to mention the challenges around licensing music for podcast programmes.

But Spotify is certainly getting ready to navigate those tricky questions and challenges. Yesterday’s big announcement signed off with: “This is only the beginning for Spotify Podcast Ads. Watch this space”. Oh, we will Spotify, don’t you worry. That we will.