People will walk alongside the New York Stock Exchange (NYSE) on the morning that the streaming music service Spotify will begin trading shares at the NYSE on April 3, 2018 in New York City.
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Since 2019, Spotify has spent hundreds of millions of dollars investing in podcasts. Now it needs to show investors that it will pay off.
Spotify’s podcast library is enhanced by high-profile deals like the likes of Gimlet Media, Anchor, Parcast and the Ringer. He also acquired the exclusive rights to Joe Rogan’s podcast, worth about $ 100 million alone, which has a cult-like following and is consistently ranked at the top of the podcast charts. He has since signed TikTok winner Addison Rae, Kim Kardashian West, DC Comics, Michelle Obama and the Duke and Duchess of Sussex.
Now it has to show that these investments were worth it. Analysts say Spotify’s new approach to advertising will help.
“As soon as the pieces are in place to mount podcasts in a smart way, I think it ‘s just going to explode the dollars that are coming into podcasts. direct medium made for ads, “Stifel analyst John Egbert told CNBC.
According to an eMarketer forecast, podcast spend is expected to exceed $ 1 billion in 2021. And Spotify has new tools that will help advertisers get more from the listeners podcasts, which could help to bring more and more revenue in advertising revenue in the coming years.
Traditionally, it has been difficult to quantify the return on investment in podcast advertising. Broadcasters may know how many listeners have put down a show, for example, but they do not always know whether someone has listened or listened to commercials.
Spotify’s “Streaming Ad Insertion” tool, which it introduced earlier this year, adds audio ads to podcast streams on its platform, allowing more targeting and measurement. For example, advertisers can use the tool to see the age, gender, and type of device of those who have heard an ad. That information is valuable to advertisers, but initially the tool was only used for original and exclusive Spotify podcasts. Now it opens that up for all podcast publishers with a recent $ 235 million raise with tech ad company Megaphone.
Megaphone offers technology for podcast publishers and advertisers looking for targeted slots on podcasts. The agreement will give advertisers more scale when it comes to who they can reach, and allow podcast publishers to make money from their shows. Many large companies are already using Megaphone to target podcast audiences. Customers include Google, Microsoft, Verizon, Walmart and AT&T, according to their website.
These types of investments in ad tech are expected to continue. “You’ll see them invest more in technology to better podcast and monetize in several markets and monetize the customers with support,” Jeffrey Wlodarczak of Pivotal Research Group told CNBC about the coming year at Spotify.
As insert advertising tech becomes more prominent, and as podcasts become more and more popular, some advertisers may become more comfortable with spending a lot of money. of the other third-party podcasts available through Spotify.
“I think what’s going to be important for Spotify is to monetize other third-party shows,” Egbert said. “It’s interesting if they monetize their own podcasts, but the real magic would help. , using the unparalleled scale, to bring more ad dollars to a podcast that never came to the center before. “
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