Spotify Aims to Track Podcast Ads -- WSJ
January 09 2020 - 3:02AM
Dow Jones News
By Anne Steele
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 9, 2020).
Spotify Technology SA has launched a new digital tool that for
the first time will let advertisers know how many people heard a
given ad in a podcast, as the streaming giant continues its push
into a rapidly growing business that has struggled to produce
reliable data on listeners.
The largest music-streaming platform globally has been investing
heavily in podcasting in an effort to keep its users engaged, lure
listeners from radio and increase profit margins. Podcast content
is generally cheaper to license than music. Spotify is the
second-largest podcast platform behind Apple Inc., and last year
acquired a trio of podcasting companies for $400 million.
U.S. ad revenue from podcasts was estimated to grow 42% to
$678.7 million last year, according to the Interactive Advertising
Bureau and PricewaterhouseCoopers LLP, and is projected to top $1
billion by 2021.
Spotify reported podcast consumption on its service rose 39%
from the second quarter to the third quarter last year.
For years the podcast industry has measured audience and reach
through the number of times an episode is downloaded and with
survey data. While a key measure of popularity, a download doesn't
necessarily mean a consumer listened to a podcast, and most
services make it easy to skip through ads. Though advertisers have
been flocking to podcasts -- particularly for ads read by hosts --
specific data on the performance of those ads hasn't been widely
available.
Spotify's new offering, called Streaming Ad Insertion, operates
much like the ads on the company's free music tier.
Podcasts have been delivered traditionally by downloads, making
specific data collection about the ads in them nearly
impossible.
By delivering ads via streaming, Spotify is able to track more
precisely the number of impressions and frequency, as well as
audience insights including age, gender, listening behavior and the
type of device a consumer heard the ad on.
The technology is available initially only for Spotify's
original and exclusive podcasts in the U.S. The company made nearly
four dozen deals last year for such content, according to a person
familiar with the matter.
The company expects the move to help podcast creators better
make money off their work.
Spotify tested the technology with footwear brand Puma SE on
host-read ads during its podcast "Jemele Hill Is Unbothered." The
company said it was able to track a significant increase in the
number of listeners who were able to recall the ad -- an important
measure of effectiveness.
Bre Rossetti, executive vice president of strategy at Havas
Media Group, which tested the new ad tech with Puma, said there has
been a misalignment between consumer time and ad dollars spent on
podcasts -- not because advertisers don't believe that consumers
are listening, but because the proper targeting and measurement
technology hasn't been there.
"It's solving for something that is desperately needed in
podcasts which is transparency when it comes to targeting and
measurement. In some ways we all expect this from podcasts because
they are a digital medium, but to date it just hasn't existed," she
said.
Spotify said it will explore rolling out the new ad tech more
widely -- outside the U.S. and to third-party podcasts.
The launch follows a year in which large media companies
including iHeartMedia Inc., Sirius XM Holdings Inc. and Entercom
Communications Corp. made big bets on podcasting.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
January 09, 2020 02:47 ET (07:47 GMT)
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