Spotify Is Reportedly Building Its Own Ad Exchange — With An Initial Focus on Video

As it pursues continued video expansions, Spotify is reportedly building its own ad exchange. Photo Credit: Thibault Penin

Spotify is reportedly building its own automated ad exchange, with an initial focus on video as opposed to audio.That’s according to Axios, though Digital Music News has shed light on all manner of adjacent developments throughout 2024. Just in passing, that includes WPP-partnered Spotify’s apparent embrace of video (referring to podcasts, film/TV, and other content yet) as well as more than a few related hires.

Since October’s beginning alone, the company has posted job listings for advertising legal counsel, a senior manager for advertising FP&A, an advertising performance lead specializing in marketing research and intelligence, an advertising senior product designer, and an advertising backend engineer, to name some.

And it’s against this backdrop, on top of Spotify’s continued push for operational efficiency and profitability, that the mentioned outlet says the self-serve “Spotify Ad Exchange” is rolling out.Per the same source, the Exchange can be integrated directly with certain demand-side offerings to afford clients access to available advert space. First up under the initiative is a pact with The Trade Desk (NASDAQ: TTD), the self-described “media buying platform built for what matters” that ranked Spotify fifth on its “Best of the Open Internet” list in May.

A Spotify-advertising plugin pilot reportedly kicked off on Trade Desk last week, with an early aim of connecting North American advertisers to openings on the service’s videos. Though it perhaps goes without saying given Spotify’s foundation in audio, higher-ups reportedly intend to expand the undertaking to cover music, non-video podcasts, and audiobooks sometime down the line.

Also reportedly in the cards are automated pacts with different ad-tech operations, but concrete details about the plans are few and far between at present. Zeroing in on what we do know, however, besides reportedly moving to attract content creators, Spotify in mid-October expanded its music videos beta to 85 more countries.

The move (as well as the reported emphasis on video advertising) arrived amid a well-documented subscription-growth slowdown in established markets – and following May calls from Sony Music head Rob Stringer to begin charging for ad-supported listening in the same markets.Logic, evidence, and competitors’ business models suggest Spotify, having now leveraged its longstanding freemium funnel to surpass 626 million monthly users (including 246 million paid subscribers), isn’t wild about this potential change.

But that’s not to say we won’t see further efforts to squeeze additional revenue from ad-supported listening. (Incidentally, Trade Desk itself is optimistic about the possibility of capitalizing on advertising to unlock new revenue in emerging markets like India.)

While time will reveal the results delivered by these efforts, the market still seems decidedly bullish on Spotify (NYSE: SPOT), shares in which cracked yet another 52-week high, $389.48 apiece, on Tuesday.