The platform has bet big on creators like Jemele Hill and Alex Cooper, but all ears are on its ad tech.
Podcast ads are going to be a more prominent part of Spotify's ads business, and that has been a huge focus for the company.
While Spotify has established itself as the preeminent force in podcasting, the industry still lacks much of the infrastructure it needs to support a robust advertising business.
- For instance, although Spotify boasts having 4.4 million podcasts on its platform, only 14% of them currently earn the company any money.
- Other challenges, such as the complex task of bringing brand safety to audio content, also remain unsolved.
- The company needs to overcome the technical limitations holding the medium back.
Marketers attention on audio
The gradual uptick in listenership has encouraged marketers to devote a larger share of their spend to the medium.
- In 2020, Spotify signed an advertising deal with Omnicom Media Group worth $20 million.
- In 2021, Spotify generated $215 million in ad revenue from its podcasts.
Podcast advertising will top $2 billion this year and $4 billion by 2024, according to a May report from the Interactive Advertising Bureau.
Despite the rise in podcast ad spend, Spotify faces a number of challenges in its quest to turn the channel into a profit centre. Last year, for instance, podcast advertising accounted for only 2% of its total revenue.
Despite these advances, one unsolved challenge still looms large: brand safety. Marketers want to know the environment their campaigns will run in, but the improvisational nature of audio makes that challenging. To tackle the issue, Spotify has partnered with Integral Ad Science to build a tool that will allow it to classify podcasts based on their content.