Podcast: How Spotify Blazed A Trail In Audio Ads

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Spotify walks a fine line with its ad experience. Ads should be relevant and not too frequent, but just annoying enough to motivate users of its free version to convert to paid.

“You do see drop-offs in the first several days to the first several weeks of a decent number of people, based on the messaging,” Les Hollander, global head of audio monetization, says in the latest episode of AdExchanger Talks. “We want to keep them engaged with contextually relevant messaging, fewer ad breaks and the right content.”

The typical converting subscriber punches in her credit card info within six to 12 months of trying out Spotify’s free version, after which ads vanish from her music stream.

For advertisers that want to reach the rest of Spotify’s users, the company offers a tapestry of options: sponsored sessions, takeovers, open exchange buys, private marketplaces and audience segments based on geolocation, listening habits and other data points.

In this 30-minute conversation, Hollander surveys all those options and contextualizes Spotify’s opportunity within the broader radio market. He notes US advertisers spent about $1 billion on digital audio in 2016 and $15 billion on terrestrial radio. Spotify’s opportunity is large if it plays its cards right.

“It’s a big marketplace,” he says. “It’s ripe for disruption.”

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