According to a new report by Axios, Spotify is launching its own ad exchange (or SSP?) to capture more ad revenue from SMBs and to make it easier for existing brands, including big one, to spend more. The first DSP Spotify will integrate with is The Trade Desk, via OpenPath, though it sounds like there are more coming.
Both Spotify and TTD tentatively confirmed the story to Axios, and shortly after, TTD’s CEO, Jeff Green, posted on LinkedIn to doubly confirm the scoop. “Digital Audio might be the most on-sale corner of the internet,” says Mr. Green. “The time spent to ad spend ratio has the highest disparity of any channel… Spotify has been leading this massive consumer shift. And I could not be more excited that The Trade Desk is helping them bring this value to life for advertisers.”
Interestingly, the focus for now is on video. According to Axios, the partnership will connect TTD’s North American clients to Spotify’s video inventory, with audio coming later. Additionally, Spotify will adopt Universal ID 2.0. Very nice win for TTD, both on inventory and identity.
Why This Matters:
Video seems to be a big focus for Spotify, no? In September, it was revealed Spotify plans to work with creators to bring more video content to the platform. The company has also been promoting music videos, and has seen its video podcast library explode. Related to all of this, earlier today, we reported on Spotify’s video integration with DoubleVerify. Clearly, the company has growing interest in video as a revenue driver. (It’s a different format entirely so the growth potential is huge.)
On the audio side, programmatic audio represents a massive opportunity. According to eMarketer, while programmatic audio advertising is still a minority of digital audio ad sales, it is growing quickly, driven by advancements in technology that enable better targeting and smarter buying. The increasing popularity of digital audio platforms like Spotify and Pandora has also contributed to this growth. The TTD and Spotify relationship showcases the potential here.
Experts React:
Per Axios via an unnamed Spotify spokesperson: “We’re excited for the important learnings to come from the initial period with The Trade Desk, but have no further news to share at this time.”
A bit of a muted response but a confirmation is a confirmation!
Our Take:
More can be done to get programmatic audio where it needs to be from a spend perspective. A year ago, we read an AdExchanger article that highlighted how programmatic audio will only grow if more platforms make their inventory available programmatically.
“You need to make that inventory available,” said Paul Kelly, CRO at A Million Ads (AMA), a company that offers dynamic creative for digital audio. Once more inventory is pushed to programmatic pipes, he said, “you’ll see spend follow.”
That seems to be happening here with Spotify’s push, whether it be an ad exchange or something else.
