Spotify’s Lee Brown talks up the platform’s latest advertiser pitch

“It’s taking the incredible understanding that we have from [Spotify-acquired podcast measurement service] Podsights and extending it beyond just pods, bringing it to music, bringing it to all regions and enabling it for free. And giving that service to advertisers to let them have better understanding, better depth of insights against how their campaigns are performing not only on Spotify but anywhere their audio is running with the opportunity to introduce the Spotify pixel to help them in one dashboard track all of their audio and all of their analytics against audio in one place,” Spotify vp and global head of advertising business and platform Lee Brown said on the latest Digiday Podcast episode.

The new measurement tool is part of Spotify’s plan to get its advertising business to eventually represent 20% of its overall revenue. Since the fourth quarter of 2021, its advertising business’s share has hovered between 10% and 14%. Growing its advertising business will also be an important component to growing its podcast business, which has seen growth but contributes a smaller percentage of ad revenue compared to ads airing against music content. Spotify’s podcasting organization underwent a round of layoffs earlier this month that included the cancelation of six original shows.

During the annual advertising confab, Spotify will also show off the AI DJ that it unveiled earlier this year and that is designed to provide personalized recommendations for the platform’s users. “The way I like to describe it is it’s like the voice of our algorithm,” said Brown. 

Spotify has yet to apply generative AI technology to its advertising business, but Spotify head of podcast innovation and monetization Bill Simmons recently teased that the company is developing an AI-generated ad product. 

Asked about Spotify’s AI-based ad plans, Brown said, “We’re still in the early stages of developing out the long-term strategy. I think we’re testing across several different vectors within that space, whether it’s automating translation, automating scriptwriting, automating the creative process.”

Here are a few highlights from the conversation, which have been edited for length and clarity.

Spotify’s music- vs. podcast-related ad revenue

Both are growing very fast. Podcast is just [at] a different stage. And so, yes, it is a majority [of ad revenue] across music right now. But podcast is quickly gaining a higher and higher percentage of total sales.

Eyes (and ears) on AI

We’re actively testing [AI] with our AI DJ. We’re not actively testing it right now with any advertiser. But that’s something I’m incredibly passionate about and excited about: how AI can bring more scale and improve creativity.

Spotify’s programmatic pitch

We have opened up channels of programmatic sales within podcasts. We’ve also added it to our [Spotify] Ad Studio self-serve platform. And so we are bringing that opportunity for advertisers to purchase podcasts through that channel as well. 

The conversation at Cannes

I think a lot of Cannes will be focusing on the second half and heading into 2023. I think a lot of platforms and a lot of advertisers will be very glad to be done with the first half and see about what the operating environment looks like.