Spotify, the popular audio streaming service, is now venturing into the realm of video advertising to provide brands with opportunities to run multi-media campaigns on its platform. Despite being primarily known for its audio content, Spotify is aiming to foster a sense of community and connection between fans and artists.
Alex Brownsell, head of content at Warc Media, highlights Spotify’s interest in expanding into video advertising, particularly with the rise in video podcast consumption. The platform’s focus has shifted towards increasing ad revenue to drive greater business profitability, moving away from heavy spending on original podcast content.
According to the latest Platform Insights report from WARC Media, Spotify’s advertising revenue is projected to reach $2.1 billion in 2024, showing a 13.0% year-on-year increase, with revenue expected to rise to $2.6 billion in 2026. The platform has experienced consistent growth in advertising revenue, especially in podcast advertising, driven by increased impressions in both original and licensed content.
Spotify is also looking to enhance its social features by allowing comments on podcasts and enabling users to share their listening habits with followers. This move aims to attract brands in sectors like financial services and automotive, seeking to reach younger audiences. Financial services are projected to be the third highest spending category on the platform in 2024, with an investment of $339.4 million.
In terms of user consumption, Spotify boasts over 626 million users globally, with growth primarily driven by regions like the Middle East, Africa, and Asia. The platform has seen a significant increase in engagement among Gen Z users, with a rise in video streaming and audiobook listenership. User engagement patterns vary throughout the day, with audio podcast consumption peaking in the morning and music streaming surging around lunchtime.
Spotify’s performance data indicates that combining video and audio advertising formats on the platform leads to a 66% increase in sales and a 27% boost in purchase intent compared to audio-only campaigns. The platform’s ability to deliver higher average incremental unique weekly reach over TV and social platforms underscores its effectiveness as an advertising medium.
As Spotify continues to evolve beyond its audio roots, it aims to position itself as a comprehensive multi-media platform catering to diverse user preferences. With a focus on enhancing user experience, fostering community engagement, and driving ad revenue growth, Spotify is poised to revolutionize multi-media campaigns in the digital advertising landscape.