Spotify ups ante on ads with higher revenue ‘ambition’

Spotify ups ante on ads with higher revenue ‘ambition’
Advertising Week Europe (L-R): Berner and Marioni.

Spotify’s ad sales chief has outlined four distinct priorities in the long-term plans for ads on its platform as its global ads chief signalled a greater ambition to grow its ad revenue.

Speaking at Advertising Week Europe in London yesterday, Brian Berner, global head of advertising sales and partnerships at Spotify, said the streaming giant has increased its focus on data intelligence and multiformat spots as critical parts of its longer-term plans to grow advertising revenue.

1. Advertising set to be ‘a larger part’ of the business

Berner said that it was “no secret” Spotify wants advertising to “continue to be a larger part of the company’s bottom line”, and the “ambition is to be at least 25% of the overall business model”.

This is an increase on the previous 20% target cited by Spotify founder and CEO Daniel in October 2021.

A Spotify spokesperson clarified that the company’s ad revenue target remains at 20%.

Spotify latest earnings reported ad revenue is 11% of its total quarterly revenue of €3.64bn.

In a recent podcast with The Media Leader, Spotify UK & Northern Europe ad sales chief Ed Couchman said the company in the long term had an ambition for ad sales to reach $10bn.

2. More ‘tactical’ with data

Berner said that tactically speaking in advertising, “the biggest thing right now” was whether the cookie will go away.

He added that this was “arguably the most complex privacy landscape” beyond GDPR with different state and national laws, and new legislation incoming.

Berner said that agencies and advertisers would “continue to see” Spotify innovate and focus on streaming intelligence moving forward, especially since it was a platform which would always have first-party, authenticated, logged-in users.

He added: “As you continue to be mindful of not having your marketing budget go to waste, as your company is continuing to be more stringent around effectiveness and optimisation within marketing budget, I think the more that we can leverage our data and serve the right message to the right user at the right moment, is going to be absolutely critical.”

3. Lean in to multi-format

Berner stressed that user attention in the Spotify platform was “unique” where you are “not fighting” a scroll, a newsfeed, or multiple ads.

This has led them to think about visuals and video differently, and that they were “figuring out multiformat” in terms of when to have an audio versus a video ad on the platform.

He stressed: “Brand storytelling still exists on Spotify. We’re not pushing 3-second spots and I’m not saying that is the demise of the 3-second spot, but Spotify is somewhere where you can legitimately break through the clutter.”

Interviewer Massimo Marioni asked Berner how he convinced advertisers about this move into video, when historically Spotify has been an audio-only experience.

He said the story had to start with user data, and that they were “simply seeing the demand for video consumption” from Gen-Z users.

Berner revealed CTV was “becoming massive” for the company, and along with gaming consoles “has always been one to think about different canvases” where it is “a better experience for a visual to appear versus an audio”.

Spotify’s investment in video is having “the biggest impact” on new advertising formats it is testing, according to Berner, with new formats launching in Q4 this year and later next year being “all about different services” like the homepage.

He added: “What we’re starting to see is that [the homepage] is becoming great real estate and as you scroll down and you jump in to music listening or Discover, we can dynamically serve video ads which is just one example of how we’ll be imagining the services and reimagining the user experience and where video may be more impactful.

4. Better understand mood

The average Spotify user goes to the platform and leaves 15% happier, Berner said, which is something the company is “trying to think through more”.

This statistic came from a Spotify x Kantar Brand Halo Study for a B2B OOH brand campaign in the US from March 2024 and was compared to people scrolling on social media.

Berner added: “You go to Spotify to be happy or relaxed or such a mood, and that’s another thing that we’re trying to get a better understanding for marketers is: how does that then transcend to user attention and user receptiveness to marketing or messaging and being open.”

Editor’s note: This story was amended after publication to clarify that Berner stated Spotify’s “ambition” was to have at least 25% ad revenue, as opposed to its 20% target being changed.

Adwanted UK are the audio experts operating at the centre of audio trading, distribution and analytic processing. Contact us for more information on J-ET, Audiotrack or our RAJAR data engine. To access our audio industry directory, visit audioscape.info and to find your new job in audio visit The Media Leader Jobs, a dedicated marketplace for media, advertising and adtech roles.

Media Jobs