Spotify tunes up its ad tech as it looks to attract even more ad dollars
Spotify began monetizing its ad inventory via direct sales when it launched to the public in 2008, but this changed in 2015 as the music streaming service started to embrace programmatic media trading with the introduction of a private marketplace offering the same year.
The early stages of this process involved working with the IAB Tech Lab to help update the open RTB protocol to support audio ad formats, plus other integrations. Sources at the time described the earliest version of Spotify’s ad tech offering as plugging audience demand into third-party SSPs, with The Trade Desk named as one of Spotify’s earliest demand-side partners.
The music streaming service later partnered with outfits such as Google to launch a programmatic guaranteed offering. In early 2021, Spotify debuted the Spotify Audience Network, an audio spot marketplace that lets advertisers reach listeners with its original and exclusive licensed podcasts, as well as those hosted on Spotify-owned Megaphone and Anchor. More recently, it rebranded Spotify Ads Studio to Spotify Ads Manager, a move to reflect the evolution of its services, such as its self-serve platform.
What buyers want
Lindsey Freed, svp of investment and buying services at Basis Technologies, told Digiday that Spotify’s SSP gives it more control over the supply chain and may help operationally by managing placements and buyers more holistically. “Spotify can still integrate with other exchanges, so it’s questionable how much more incremental video ad growth this generates,” she added.
One buyer speaking with Digiday on background as they were not cleared to speak with press said they expect the development to attract further spend, as “being able to buy biddable audio inventory at scale is important for us and our clients, and has been somewhat challenging up to this point.”
They added, “Because The Trade Desk is a widely utilized platform by advertisers of all sizes, there should be a relative ease to testing this inventory and I suspect that will help bring new advertisers to Spotify. This move also opens up additional measurement and audience insights, which will be attractive for new advertisers and should also help existing brands feel more comfortable in growing their investment.”
Separately, Alex Block, evp of programmatic at Jellyfish, observed how the latest experiments from Spotify would lower the bar to entry, and could entice brands to experiment with ad placements on the platform, as it would likely reduce minimum spend requirements.
“It’ll be interesting to see the details around how they structure deals — whether it’s PG or PMPs, how they structure their data and audiences, what the formats are, is it desktop or mobile or both,” Block added. “All of those things are important for brands and agencies to know in the planning process, but the simple fact that they’re opening up their inventory programmatically is very attractive. Depending on how flexible access is, brands and agencies can easily optimize more dollars into Spotify based on performance.”
Meanwhile, Josh Rosen, president at Hotspex Media, observed how Spotify’s latest moves are likely to mirror those in the TV-streaming category, i.e., courting ad spend from SME marketers, the backbone of the success of market leaders such as Amazon, Google, and Meta.
“Small and medium-sized businesses look for and need streamlined ways of advertising to target their audience. Spotify’s SSP broadens the appeal by offering automated, scalable ad solutions that SMBs can access via demand-side platforms like The Trade Desk,” added Rosen. “Beyond that, it opens the door to advertisers who in the past may have found direct programmatic deals with Spotify too cumbersome or expensive to deal with. I am a fan of the inclusion of UID 2.0, since it adds a layer of privacy to its targeting.”
