Spotify is making strides in advertising technology and is reportedly planning to delve into video content.
Spotify's Chief Financial Officer, Alex Norstrom, acknowledges that while the streaming platform has established a programmatic advertising infrastructure, the influx of advertisers has not been as rapid as anticipated. Norstrom attributed this to the broader market's softness in advertising pricing.
During the Q4 earnings call on February 4th, Norstrom discussed Spotify's sluggish advertising growth. He explained that progress in programmatic advertising takes time, with Spotify currently focusing on building its offering, set to mature in 2025. The company aims to achieve scale in 2026.
Monthly active users have increased by 12% year-on-year, reaching 675 million. Ad-supported revenue grew 7%, amounting to €501m. Automated sales channels, which are the leading contributors to Spotify's overall advertising growth, played a significant role in this revenue rise.
During the call, the executive team emphasized Spotify's foray into video podcasts. The company announced updates this quarter, including the launch of their video proposition at scale. They have witnessed a surge in popularity for video podcasts, now boasting more than 333,000 globally, with over 270 million users having streamed one.
At a creator event in Los Angeles in November, Spotify unveiled new features for premium users, allowing them to watch favorite podcasts ad-free and offering tools to aid video creators in monetizing their shows. Spotify's CEO, Daniel Ek, expressed satisfaction with these initial results, hinting at further innovation.
Furthermore, Spotify has rebranded Spotify for Podcasters as Spotify for Creators and introduced the Spotify Partner Program to provide monetization opportunities for creators. According to Ek, there has been a significant increase in video podcasters joining the platform, with many adopting the partner program as well.
These developments may suggest that Spotify is positioning itself to compete with video-focused platforms like YouTube and TikTok, potentially seeing less growth potential in the music sector and more in video content.
While the broader market's ad pricing scenario has impacted advertiser interest in Spotify, the company is steadily growing its ad-supported user base and revenue. Spotify's programmatic tech stack offers advertisers more buying options, strengthening its appeal as a flexible and scalable advertising environment. With continued expansion of automated tools and video ad formats, Spotify anticipates achieving scale over the coming quarters.
- Spotify, as it positions itself to compete with video-focused platforms like YouTube and TikTok, sees more growth potential in the video content sector, indicating a shift from the music sector.
- Acknowledging the softness in advertising pricing prevalent in the broader market, Spotify's Chief Financial Officer, Alex Norstrom, believes that the company's programmatic technology offers advertisers more buying options and strengthens its appeal as a flexible and scalable advertising environment.
- As Spotify grows its ad-supported user base and revenue, the company anticipates achieving scale over the coming quarters with continued expansion of automated tools and video ad formats in its entertainment offerings.
