Programmatic audio is a tough sell.
Advertisers find it challenging to vet audio inventory at scale, which means most digital audio campaigns – particularly in the podcast market – are conducted via direct deals.
Which puts digital audio platforms in an interesting place, where they still sell most audio ad spots directly but use programmatic more for their display and video ads.
That’s the motivation behind why SoundCloud is now selling its display and video ads via open auction and programmatic private marketplace (PMP) deals that combine multiple types of inventory. The deals are available with PubMatic, an SSP SoundCloud was already plugged into. But programmatic audio is not included in this integration.
Display and video over audio
The focus on display and video over audio inventory is somewhat surprising given SoundCloud is an audio-first platform.
That’s because programmatic audio, particularly outside of the US market, “is still fairly nascent” compared to programmatic display and video, said Jonathan Kopitko, senior director of global advertising partnerships at SoundCloud.
By combining different types of media, SoundCloud can court new programmatic buyers, he said. The hope is that, once advertisers realize the value of SoundCloud’s logged-in user base and its first-party data, they’ll be willing to buy more inventory across media types, perhaps eventually including audio, he added.
Audio formats are “behind the marketplace” when it comes to programmatic, Kopitko said. But to “make sure we’re set up for success in the future,” SoundCloud wants its programmatic pipes set up for when audio takes off, he said.
Leaning into PMPs
But for now, audio is a direct-sold world. In the US, 26% of digital audio is sold programmatically as of this year, according to eMarketer.
In the US, Canada and the UK, SoundCloud sells between 30% to 60% of its overall inventory, including audio, display and video, programmatically, he said. Outside those markets, programmatic tops out at around 30%.
To attract programmatic demand, SoundCloud’s setup includes display placements in its desktop and app experiences. Starting in 2016, it added pre-roll video before playback of its audio content.
Other digital audio platforms have also been expanding beyond audio ad inventory. For example, Spotify has likewise rolled out new forms of display and video inventory over the past few years.
This type of inventory appeals to marketers. Some of the agency partners that PubMatic works with on building optimized supply paths for programmatic deals have specifically requested SoundCloud’s inventory, said PubMatic CRO Kyle Dozeman. SoundCloud’s logged-in user base and the platform’s appeal among devoted musical subcultures and Gen Z are differentiators, he added.
SoundCloud’s pre-roll video also fills campaign gaps by providing audience extension for CTV buys, Kopitko said, “because [buyers] may not be finding all their Gen Z audience in these CTV environments.” About 70% of SoundCloud’s audience is under the age of 35, he said.
However, “the conversation still needs work in regards to where audio sits, and whether an audio video experience can be directly connected to a connected TV experience,” he said.
Because SoundCloud has a logged-in user base, SoundCloud sees itself poised to take advantage of the move to use deterministic IDs over cookies. ID providers can use its logged-in users’ email addresses to create anonymized identifiers for targeting and attribution, Kopitko said.
SoundCloud is in the early days of exploring UID2 integration and is also open to other alternative ID integrations if the demand exists, though it’s also proceeding cautiously, over sensitivities around how its first-party data gets used in the programmatic supply chain.
