Spotify hopes to change the podcast-advertising game — which has been largely stuck in the static past.
The streaming music and audio company announced the launch of Streaming Ad Insertion (SAI), a new proprietary podcast ad system that will let advertisers buy targeted spots that are inserted into podcasts when they’re streamed to listeners. With the new system, Spotify is promising to provide a wealth of data about ad performance.
While podcasting is a digital medium, the industry has tracked audiences based on downloads. That’s been the coin of the realm for podcasting for more than a decade. But that means ads must be hard-coded into podcasts themselves, and by the same token audience reach and engagement measurement in this paradigm is not nearly as granular as with targeted ads on websites and social networks.
Spotify’s Streaming Ad Insertion (SAI) system provides the company’s suite of planning, reporting and measurement capabilities for Spotify original and exclusive podcasts. That includes data such as actual ad impression, frequency (number of times a listener heard the ad), reach and anonymized audience analysis (age, gender, device type). According to Spotify, it’s the first time this type of data is available to advertisers and podcast creators.
The company said footwear brand Puma was one of the first advertisers to test SAI. Puma ran host-read ads that were dynamically inserted into Spotify original podcast “Jemele Hill Is Unbothered” and with the enhanced targeting the ads resulted in ad recall lift of 180%.
“With this technology, we are offering the intimacy, quality and efficacy of traditional podcast ads with the precision and transparency of modern-day digital marketing,” Spotify said in a statement. “In short, we’re keeping what podcast listeners, creators, and advertisers love about podcast ads and making the medium addressable for digital advertisers.”
Spotify has invested heavily in podcasting, which included its acquisitions of Gimlet Media, Parcast and Anchor last year. The company says podcast consumption increased 39% from the second quarter of 2019 to Q3 last year.
In 2019, an estimated 90 million U.S. consumers were listening to podcasts monthly, up 23% from 73 million last year, per Edison Research and Triton Digital. And as listening grows, ad revenue should follow: In the U.S. podcast ad revenue is projected to grow from $479 million in 2018 to over $1 billion in 2021, according to a forecast from IAB and PwC.