Spotify launches Podcast Ads in UK in 'step change' for industry

UK and pan-EMEA sales chief Rak Patel signals key moment for podcast advertising, which Spotify is betting on to grow ad revenue.

Spotify Podcast Ads: available on shows such as 'The Receipts' and 'Jaack Maate’s Happy Hour'
Spotify Podcast Ads: available on shows such as 'The Receipts' and 'Jaack Maate’s Happy Hour'

Spotify has launched Podcast Ads in the UK and Germany as part of a global rollout in which the streaming giant is betting on podcasts to drive ad revenue growth. 

The ad inventory is being powered by Spotify’s proprietary Streaming Ad Insertion (SAI) technology, and reports on confirmed ad impressions rather than podcast downloads, as well as reach and frequency. The company says this enables advertisers to make even more data-driven decisions for their podcast campaigns. 

Advertisers can buy Spotify Podcast Ads on a title-by-title basis and run creative across preroll, midroll, or postroll ad placements within the show’s episodes. Spotify also offers a service in which they can offer advertisers select podcast hosts and a network of professional voice talent to help with the creative process.

Spotify's head of sales for the UK and pan-EMEA, Rak Patel, told Campaign that this is a “step change” for the podcast industry to offer brands metrics beyond episode downloads.

“The critical thing is we are able to give a marketeer the type of insight and data that they would get from a digital marketing campaign: impressions, audience insights, frequency, all of the things that are the nuts and bolts of what a marketer wants from any of their digital activity,” Patel said.

“What we're trying to bring in is: here are the numbers in terms of who's listening. Its real core is around giving a marketer that level of insight, so that they can then start to mix their media, understand the performance, see how it works with everything else that they're doing.”

The ads are available to buy only on podcasts that Spotify produces itself. The company did not specify what targeting options maketers could use, based on what data it collects about users, for example. 

The Swedish company has been on an acquisition spree in the past couple of years to bolster its podcast content suite and the ad tech tools that Patel says will enable marketers to effectively reach customers across lots of smaller “long-tail” podcasts as well as popular shows.

Spotify bought ad tech company Megaphone in October for $235m (£171m). Megaphone had created hosting, distribution and ad-inserting tools for podcast publishers such as ESPN and The Wall Street Journal.

In 2019 Spotify bought podcast networks Gimlet and Anchor, and last year also swooped in for big-ticket shows by Joe Rogan, Michelle Obama and Kim Kardashian.

Patel pointed to Anchor as Spotify’s way of servicing a glut of smaller, long-tail shows, while Megaphone is enabling to use its SAI tech at scale.

He said: “Anchor allows any individual to put any type of podcast onto our platform, and other platforms as well… We're able to bring that targeting capability that means we can go cross vertical, into the demographics that are going to be important for a brand… Megaphone will allow us to start to utilise SAI on a much grander scheme of reach of actual podcasts as well.” 

BT Sport is the first advertiser to take advantage of the new offering in the UK, launching ads across the Joe Rogan Experience this week. Spotify bought the exclusive rights last year to host Joe Rogan for a reported $100m (£73m), although the company has refused to confirm this figure.

As podcast listening has continued to grow strongly – now reaching an estimated 15.6 million listeners in the UK last year – the medium’s main players have been developing more sophisticated ad buying options driven by tech. Acast, the world’s biggest podcast company, launched personalised advertising and programmatic buying last year.

Advertising is a small portion – about 7% – of Spotify’s total revenue, but it sees podcasts as an important vehicle to bulk up that arm of the business.

During its third-quarter earnings call, the company said 22% of its total monthly average users engaged with podcasts over the previous three months, while podcast ad revenue had nearly doubled year on year. 

“Owning the ear has been something that Daniel [Ek, Spotify founder and chief executive] has spoken about for quite some time,” Patel said.

“Podcasts play such an important role in broadening out our audio appeal and podcasts have been right at the top of our deck board. It’s one of our biggest bets.”

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