Spotifys increased focus on podcasts in 2019 includes selling its own ads

Having established itself as a top streaming service with now over 200 million users, Spotify this year is preparing to focus more of its attention on podcasts. The company plans bring its personalization technology to podcasts in order to make better recommendations, update its apps interface so people can access podcasts more easily, and broker more exclusives with podcast creators. Its also getting into the business of selling ads within podcasts, as a means of generating revenue from this increasingly popular form of audio programming.
In fact, Spotify has already begun to dabble in podcast ad sales, ahead of this larger push.
Spotify, weve learned, has been selling its own advertisements in its original podcasts since mid-2018 year, including in programs like Spotify Original Amy Schumer Presents: 3 Girls, 1 Keith, The Joe Budden Podcast, Dissect, Showstopper, and others. With more exclusives planned for the year ahead, the portion of Spotifys ad business focused on podcasts will also grow.
The company appears to be taking a different approach to working with podcasters than it does with it comes to working with music artists.
Spotifys increased focus on podcasts in 2019 includes selling its own ads

Today, Spotify gives artists tools that help share their work and be discovered it invested in distribution platform DistroKid, for example, and now lets artists submit tracks for playlist consideration. With podcasters, however, Spotify wants to either bring their voices in-house, or at least exclusively license their content.
Over the last year, we become very focused on building out a great podcast universe, said Headof Spotify Studios Courtney Holt, speaking at the Consumer Electronics Show (CES) in Las Vegas this week. The first step was to make sure that weve got the worlds best podcasts on Spotify, and integrated the experience into the service in a way that allowed people to build habits and behavior there, he said.
What we started to see is that the types of podcasts that really were working on Spotify were ones where they were really authentic voicesso we just decided to invest more in those types of voices, Holt added.
Spotifys collection of originals has been steadily growing over the past year. Last August, for example, Spotify nabbed an exclusive deal with the Joe Budden podcast, which is aimed at hip-hop and rap culture fans, and launched its first branded podcast, Ebb & Flow, focused on hip-hop and R&B. Its full original lineup today also includes Dissect, Amy Schumers 3 Girls, 1 Keith, Mogul, The Rewind with Guy Raz, Showstopper, Unpacked, Crimetown (Its first season was wide, second season is exclusive to Spotify), UnderCover, and El Chapo: El Jefe y su Juicio.
At CES, Spotify announced the addition of one more journalistJemele Hill is coming Spotify with an exclusive podcast called Unbothered, which will feature high-profile guests in sports, music, politics, culture, and more.
In growing its collection of originals, the company found that podcasters who joined Spotify exclusively were actually able to grow their audience, despite leaving other distribution platforms.
For example, the Joe Budden podcast had its highest streaming day ever after joining Spotify.
Spotifys increased focus on podcasts in 2019 includes selling its own ads

This has led Spotify to believe that influencers in the podcast community will be able to bring their community with them when they become a Spotify exclusive, and then further grow their listener base by tapping into Spotifys larger music user base and, soon, an improved recommendation system.
There are other perks for Spotify, too when users come to Spotify and begin to listen to podcasts, they often then spend more time engaged with the app, it found.
People who consume podcasts on Spotify are consuming more of Spotify including music, said Holt. So we found that in increasing our [podcast] catalog and spending more time to make the user experience better, it wasnt taking away from music, it was enhancing the overall time spent on the platform, he noted.
While chasing exclusive deals to bring more original podcasts to Spotify will be a big initiative this year, Spotify will continue to offer its recently launchedpodcasts submissionfeature to everyone else.
With this sort of basic infrastructure in place, Spotify now wants to help users discover new podcasts and improve the listening experience.
One aspect of this will involve pointing listeners to other podcast content they may like.
For instance, Spotify could point Joe Budden fans to other podcasts about hip-hop and rap. It will also leverage its multi-yearpartnership with Samsungto allow listeners pick up where they left off in an episode as they move between different devices. And it will turn its personalization and recommendation technology to podcasts including the ads in the podcasts themselves.
Think about what weve done around music the more understand you around the music you stream, the more we can personalize the ad experience. Now we can take that to podcasts, said Brian Benedik, VP and Global Head of Advertising Sales at Spotify, when asked about the potential for Spotify selling ads in podcasts.
The company has been testing the waters with its own podcast ad sales since mid 2018, Benedik said. The sales are handled in-house by Spotifys ad sales team for the time being.
Benedik had also appeared on a panel this week at CES, where he talked about the value of contextual advertising meaning, ads that can be personalized to the user based on factors like mood, behavior and moments. This data could be appealing to podcast advertisers, as well.
But to scale its efforts around podcast ads, Spotify will need to invest in digital ad insertion technology. Benedik told us Spotify is currently deciding whether thats something it wants to build in-house or acquire outright.
Spotifys rival Pandora went the latter route. It closed on the acquisition of adtech company Adswizz in May 2018, then introduced capabilities for shorter, more personalized ads in August.By November, Pandora announced it was bringing its Genome technology to podcasts, which allowed for a recommendation system.
Now Spotify aims to catch up.
The addition of podcasts has reoriented Spotifys focus as company, Holt said.
Were an audio company. Were trying to be the worlds best audio service, he told the audience at CES. Its a pure play for us. Were seeing increased engagement; theres great commercial opportunities from podcasting that weve never seen on the platformAnd, obviously, exclusives are to give us something that makes the platform truly unique to have people come to Spotify for something you cant get anywhere else is the sort of cherry on top of that entire strategy, Holt said.
Image credits: Spotify
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