Now Streaming On Spotify: Real-Time Podcast Ads

Measurement has been the bane of the podcast industry’s existence, as advertisers have had to rely on a faulty download metric as the best proxy for a listener hearing their ad.

That’s about to change – at least, on Spotify.

The audio streaming giant will start dynamically inserting audio ads into podcast streams on its platform, enabling real-time targeting and granular audience measurement on its original and exclusive shows, executives said Wednesday at the Consumer Electronics Show in Las Vegas.

“Advertisers have no idea how their ads are working [on podcasts],” said Jay Richman, VP and head of global advertising business and platform at Spotify, at a press event. “They have no idea if their ads are being heard.”

While advertisers were able to target audiences in podcasts previously through dynamic ad insertion, these ads were stitched into the audio file before it was downloaded by a listener through an RSS feed, making it impossible to target audiences in real time. After the ad was inserted, advertisers had no way of knowing who actually listened to a podcast after downloading it, let alone heard the advertisers’ message.

Because more podcasts are being streamed directly on Spotify, marketers can leverage its ad platform to insert messages into podcasts in real time. Advertisers can use Spotify’s registration and behavioral data to target users on podcasts based on their music listening behavior and vice versa. If Spotify knows that a user listening to hip-hop also likes personal finance podcasts, for example, it can use that to make smarter targeting decisions, Richman said.

Marketers will also be able to buy on guaranteed CPMs, rather than downloads, and to measure impressions, reach and frequency with third-party verification.

“We have the opportunity, because we’re inserting the ad in real time, to guarantee the impression,” Richman said.

The podcasting advertising market could surpass $1 billion by 2020, according to the IAB. But marketers are cautious due to the channel’s shortcomings in effectiveness measurement, said Bre Rossetti, EVP of strategy at Havas. Havas tested Spotify’s ad insertion product with its client PUMA and saw 180% lift in ad recall thanks to better targeting.

“This is really needed in the industry right now,” Rossetti said. “Targeting and understanding who has listened to your podcast has been a black box.”

But Spotify’s announcement is just a baby step toward making the entire podcast industry more addressable and measurable. Right now, the offering is just available across Spotify originals and shows it has exclusive sales rights to – a portion of the 500,000 podcasts on its platform – meaning the product is far from scaled.

“This is very early days,” said Julie Clark, global head of automation revenue and podcast monetization at Spotify. “We are launching across a smaller segment of our portfolio, so more sophisticated measurement aspects will be available later in the year.”

Spotify hopes to access sales rights to more inventory from shows streaming on its platform, but many podcasters are already working with vendors or selling out inventory on their own. So Spotify will have to convince them that the targeting and measurement capabilities it can bring to the table are worthwhile to fork over their inventory.

In the podcast world, however, any baby step toward better targeting and measurement is exciting for buyers.

“Podcasts are like mobile or digital video five years ago. There’s a huge amount of time spent but ad dollars haven’t followed,” Rossetti said. “This type of product is going to unlock that.”

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