Spotify rebuilds ad business around automation, AI to secure bigger media budgets

Last year, its ad business was “moving too slowly,” as CEO Daniel Ek put it last year, according to Business Insider. Now, the streamer has overhauled its ad tech stack with Spotify Ad Exchange, rolled out generative AI tools for voice overs and ad scripts. Spotify’s current pitch to advertisers is its sponsorships, live events and more automated ad buys.

If it sounds outside of Spotify’s usual positioning, that’s because it is.

“It’s more multi-format,” said Brian Berner, Spotify’s vp of advertising partnerships at Spotify. Berner joined a recent episode of the Digiday Podcast to share Spotify’s ad business roadmap. He spoke during this year’s Cannes Lions International Festival of Creativity — where he was clear execs were not “going to alienate audio.”

Spotify has always held a comfortable position in the audio ad market. Its bright green audio sound waves logo is one of the more recognizable — at least when it comes to audio platforms. The question is will media buyers treat it as a nice-to-have, rather than a permanent line item — a premium, brand awareness play?

That’s starting to change as Spotify’s goal to reposition itself in marketers’ media plan comes into plain view.

Spotify recently rebuilt its ad tech stack for automated media buying as the industry heads toward more automation. Increasingly, marketers are looking to plug and play as opposed to dealing with media companies directly.

“We built that plumbing. We just want to make it easy for brands to be able to access our signals, our formats, and understand how Spotify is performing as an overall part of their media mix,” Berner said.

Marketers aren’t sold on ad tech alone. CMOs are more responsible for business outcomes than ever. The do more with less marketing dollars crowd has a close eye on return on ad spend. That said, measurement is also part of Spotify’s argument to convince marketers those ad dollars are proving worth their spend.

“Our specialty, it’s our 1P [first-party] measurement, so the Spotify pixel has been a big focus of ours because that does allow for better closed-loop understanding of conversions,” Berner said. To a marketer, that likely signals Spotify’s performance play.

Still, the streamer is careful not to alienate its core offering: audio. Podcasts are expected to rake in close to an additional $1 billion per year in the U.S. by 2029, according to eMarketer.

“We’re seeing a lot of the growth happen within all of our visual, within our high-impact sponsorships, we’re seeing it happen within video, we’re seeing it happen within experiences,” Berner said. “But it’s additive, it’s not coming at the expense of audio.”