Spotify is expanding its advertising base by rebranding its ad platform. But will the rebrand change the face of audio advertising?
The world of audio marketing and podcast advertising is about to get more interesting as one of the biggest music streaming platforms rebrands its ad technology. Spotify’s self-serve advertising hub is getting a major overhaul, as the audio streaming giant looks to attract a wider range of advertisers.
Part of this overhaul includes renaming its advertising hub from “Spotify Ad Studio” to “Spotify Ads Manager,” which the company did in July 2024. Spotify also introduced new ad formats, including video, and more expansive audience targeting. This is going to be crucial for the company’s advertising future, especially since its audience segments quadrupled to more than 100 last month.
Spotify is bringing a more simplified and revamped user experience to its ad tech, including an expanded menu of interest segments. This will offer brands more opportunities to reach and test audiences. Spotify is also adding an Audience Manager tool (set to release in early 2025) that will offer advertisers a dedicated place to manage their saved audiences.
As previously mentioned, Spotify recently added new ad formats to its Ad Manager. These formats let brands connect with consumers through both audio and video. One format, called Canvas, acts as an optional companion. It extends the looping visual feature that plays during songs to audio ads. Another format, Opt-in Video, allows brands to be prominently displayed alongside the music a consumer is streaming.
News of the rebrand comes after Spotify announced its partnership with Yahoo and its demand-side platform (DSP). This partnership opens Spotify’s ad inventory to programmatic buyers outside of its self-serve system.
Spotify in June 2024 also announced its first in-house creative agency, “Creative Lab.” With this agency, the company can help brands create custom marketing campaigns.
It is also working on a new AI tool called “Quick Audio,” which lets brands procure scripts and voiceovers using generative AI. This initiative offers customers more advertising solutions for their audio and video ads, in-app digital experiences, and interactive ad formats (including call-to-action (CTA) ads).
Spotify pushes the boundaries of audio advertising
This rebrand is just one way in which Spotify advertising is pushing the boundaries and limits of self-serve advertising. The company isn’t satisfied simply improving its audio and podcast marketing or music advertising, it instead takes a more holistic approach to developing its advertising portfolio. One that will likely see Spotify venturing into other avenues.
Chloe Wix, the Global Director of Product Marketing at Spotify, describes how ever-evolving consumer trends urged them to pivot and expand their advertising portfolio beyond just audio and podcasts:
“With this relaunch, we really want to emphasize the fact that we are much more than just audio and that the trends of watching and browsing on Spotify are beginning to proliferate in such a way that is causing us to invest in products that are able to, sort of, bring forward both the audio and the visual.”
The standardization of traditional Internet ads has simplified spending for advertisers. However, audio ads are more specialized, which causes some resistance on platforms like Spotify. To address this, Spotify has been developing video ads to complement its audio experiences. This approach aims to make brands feel more comfortable and confident with their campaigns.
This move is also part of a bigger, emerging trend. Ad platforms in various tech industries have been turning to programmatic channels to drive ad revenue, including Uber and Netflix. Many firms are also expanding their reach in advertising to stay competitive.
eMarketer forecasts that by 2025 21.45% of Spotify’s revenue will come from ads. However, Spotify faces a major challenge in maximizing ad revenue. Nearly 40% of its users subscribe to its ad-free premium accounts, limiting Spotify’s ad reach. The platform’s user behavior also presents challenges for visual ad formats, emphasizing the need to improve its audio advertising and pivot to other effective formats.
The future will tell how effective Spotify’s ad tech rebranding and expansion will be. Advertisers should also pay close attention since a streaming giant like Spotify expanding its programmatic ad capabilities will likely spell out bigger changes to come in the world of audio advertising.
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