Spotify’s ad exchange grew its programmatic ad base, but buyers want more

“We have seen basically just amazing growth in both revenue, active advertisers, consumption of our formats and performance across the board,” said Per Sandell, co-lead, global head of advertising at Spotify. “This is really the moment where we’ve been able to take control of that programmatic ecosystem.”

At media agency Rain For Growth, Spotify spend increased 190% between May 2025 and March of this year; programmatic guaranteed (PG) spending rose 12%, and private marketplace (PMP) 64%. “Campaigns have driven strong, highly efficient performance for clients,” said Christina Skirvin, senior media manager, integrated media investment.

The company intends to further invite brand demand by expanding its backroom toolbox — as of this week, it offers automated bid adjustments and the ability for brands to run split tests on creative – and introducing new types of ad units, including sponsored playlists and swipeable carousel units. Brands like Priceline and Cricket Wireless have already piloted the formats.

Alex Norström, Spotify’s co-CEO, told analysts during its most recent earnings call that the platform had pulled in “record levels of advertisers” in the last year, the result of efforts to build out its ad tech stack. Central to those efforts was its ad exchange (the imaginatively titled “Spotify Ad Exchange”) launched one year ago.

The exchange, available through just under 50 DSPs including Google’s DV360, Yahoo DSP, Adform and Magnite, was intended to open the programmatic spigot wider and enable the music and podcast platform to double down on profitability after 17 years in the red. The company added a partnership with The Trade Desk in October.

“The ecosystem is complicated, given the distribution channels, but we’ve been really trying to make that as easy as possible with SAX and SAM [Spotify Ad Manager],” said Sandell.

Spotify holds an enviable position in its field, claiming 30% of the global music streaming market per Statista, and is the gateway for many advertisers seeking to reach music streaming and podcast audiences. Because paying subscribers are also served podcast ads, they’re an attractive vehicle for brands.

Meal kit brand Factor, for example, recently used the platform to reach sports and fitness podcast listeners, for a campaign positioning the advertiser as an aid to performance-oriented home cooks.

“Podcast has this intimacy that few other channels generate,” said Patrick Stal, CMO at Factor parent firm HelloFresh. 

Audio ad spending still accounts for just a fraction of overall global ad spend, though. Dentsu ad estimates suggest that overall spending continues to rise; the company’s analysts projected that audio investments will increase to $12 billion by 2028, up from $10.2 billion in 2025, the result of a steady 5.4-5.5% rate of growth. But audio’s share of global ad spending continues to be squeezed – WPP Media estimates that audio will account for just under a 4% share of global ad revenue in 2026.

Spotify’s ad revenue exceeded $2 billion last year, according to its earnings report, and grew 4% (constant currency) year on year, implying that the business outperforms the sector at large – but only just. It remains tethered to the ground by muted advertiser enthusiasm for the channel – these days a regular, but minor, element of most brand media plans.

“For brands where we’re buying audio, it’s a must-have partner,” said Mary O’Brien, head of programmatic at PMG.

Last year’s SAX launch was intended to broaden the aperture. The platform’s own figures suggested that’s worked, but media buyers told Digiday that audio spending remained a patchwork of direct and programmatic spend, with investment spread across DSP and SSP partners.

“Our experience with Spotify specifically has been mixed,” said Dana Heins, director of programmatic at NP Digital, in an email. The agency had seen client spending on audio increase in the last year, and while it had embraced the platform’s self-service ad tools, the channel proved pricier than anticipated.

PG had yielded the best performance, she said, though they generally came at a higher CPM rate than PMP deals. Inventory available to buy via PMP, however, wasn’t always sufficient to meet demand, Heins said, without sharing financial specifics.

“We’re hopeful that as Spotify continues to evolve its exchange and supply, this will become a more viable path for us moving forward,” she added.

One media buyer, who exchanged candor for anonymity, told Digiday its overall spending on Spotify had increased 20% year on year. The launch of SAX, they said, “has absolutely simplified our supply path and created a more direct, transparent connection to Spotify’s ad inventory”, but not prompted further growth in programmatic spending.

Direct deals are still favored by advertisers for podcast host-read spots, for example. “The main reason we’ll go direct is for host-read podcast capability,” said O’Brien. A spokesperson for Factor, for example, also noted that its podcast deals were principally arranged direct. 

For Spotify to increase its programmatic ad revenue – and accelerate its ads business overall – it’ll likely need to convince more advertisers to consider audio itself. In March, the company released a study arguing the case for audio, based on a survey of 5,000 consumers. Just over one-third (36%) were more likely to trust podcast or music ads than social media ones, and 94% of British consumers say they stop other online activities in order to listen to music or podcasts. The bottom line: advertisers can use audio to reach otherwise inaccessible audiences.

O’Brien likened the channel’s status on media plans to that of connected TV (CTV) several years back.

“We’re seeing it on more and more plans,” she said. “Budget wise, it hasn’t necessarily been prioritized, but I think that’s shifted. Clients are starting to pay more attention.”