Spotify just unveiled a major upgrade to its advertising platform. The goal? Make it easier for brands to create, buy, and measure ads on the platform. This move marks a big step forward for automated buying and creative innovation in digital audio.
At the heart of this upgrade is the new Spotify Ad Exchange. For the first time, brands can access Spotify’s engaged users through real-time auctions, with full segmentation and measurement capabilities. This new programmatic offering is already available to advertisers in the US, Canada, Europe, Australia, New Zealand, India, Singapore, Brazil, and Mexico.
What’s New
Spotify’s also enhancing its self-service platform, Ads Manager, with more advanced segmentation features, new measurement solutions, and results-based objectives. These updates let advertisers of all sizes create, optimize, and measure their campaigns more effectively.
The company’s also introduced Spotify Gen AI Ads, which lets brands generate scripts and voiceovers without extra cost. This makes it easier to create scalable, high-quality audio ads. Other new tools include Spotify Creative Lab, which helps brands create unique campaigns, and Spotify AUX, an internal advisory team that connects brands with artists, creators, and fans.
Measuring Success
Spotify’s rolling out new measurement tools designed specifically for its platform, along with partnerships with third-party providers. The company’s redesigned its own measurement system and expanded its tools through strategic partnerships, letting advertisers evaluate performance across all stages of the conversion funnel.
The new App Installation Objective, for instance, lets advertisers target users who are more likely to download their app. The Web Traffic Objective optimizes campaigns to attract users who are more likely to visit their website.
Spotify’s also updated its Brand Lift tool, which helps advertisers understand how their campaigns impact brand metrics. Both Brand Lift and Spotify Pixel will be available in Ads Manager. The company’s investing in partnerships with third-party providers like DoubleVerify and IAS, and adopting technologies like The Trade Desk Unified ID 2.0 and LiveRamp’s RampID.
Growth and Expansion
Spotify’s just achieved its first full year of profitability, with 20% year-over-year growth in total revenue. Ad revenue has more than doubled since 2020, driven mainly by brand advertising, which has increased by 141% since 2020.
The platform currently collaborates with tens of thousands of advertisers. As it moves towards a more performance-oriented ad model, Spotify expects to significantly expand its client base in the near future.
Automated channels are projected to generate $2 billion in ad investment in digital audio by 2025. Automated planning and buying have become the industry standard, accounting for over 90% of digital ad spend in display in the US.
Audio and Video Ads: A Winning Combination
Since launching its pilot program last year, over 5,000 advertisers have participated in tests. Spotify Ads Manager revenue grew over 50% year-over-year in Q4 2024.
Video consumption on Spotify is on the rise, with viewing time increasing 44% year-over-year in the US. Combining audio and video ads on Spotify boosts purchase intent by 27% and incremental sales by 66%, compared to audio-only ads.
Since launching AI Ads, 40% of advertisers creating audio ads with Spotify Ads Manager’s creative tools are now using AI technology.