Who said advertising revenue has to compete with subscription revenue? It is the challenge that “freemium” platforms carry with them since their inception and Spotify, the world leader in music streaming, more than all: today the greatest source of revenues is represented by premium subscriptions, advertising is worth about 12 % of the total turnover of the former startup founded by Daniel Ek, but the goal is to rise to 20 percent. “And Italy is strategic in this process, because we are talking about one of the national markets with the greatest presence of free users”. Speaking is Alberto Mazzieri, director of Sales for Spotify Italy.
The signs of the third quarterly 2021
In the background there are the data of the third quarterly 2021 of the Stockholm-based company, very interesting on the adv side: if overall the total turnover has grown by 27% up to 2.5 billion and it also shows a little of net profit (2.5 million), the revenues marked by the highest growth performance (+ 75%) are precisely those of advertising. In short, a good moment for the segment after the annus horribilis in which the pandemic exploded. «The moment is positive – underlines Mazzieri – and it can become even more so. The goal is to bring advertising to make a 20% contribution to Spotify’s overall turnover. Here in Italy we can count on a very large pool of free users of our platform ». Spotify does not communicate this type of data in detail, but we are around 60% of listeners who have not yet subscribed to a premium subscription but use the platform’s services on a regular basis.
The role of podcasts
“There is a large audience to turn to and we work every day to make it easier for advertisers and listeners to meet. A very useful opportunity to facilitate the meeting, podcasts are proving to be among the contents with the greatest room for growth », continues the manager. Currently, 3.2 million podcasts are on the platform, up from 2.9 million at the end of the previous quarter. The launch in Italy of Megaphone, one of the main podcasting platforms in the world since 2015, is a fundamental step with respect to Spotify’s mission to help publishers create more quality content, measure their impact and monetize their work more. The launch coincides with a significant increase in the supply and consumption of podcasts, as well as with the growth of advertising investments on these particular products.
A self service for advertisements
At the same time, the “All Ears on You” B2B campaign was launched which aims to stimulate advertisers, creators and publishers to take advantage of the opportunities that digital audio and Spotify offer them. And it is based on a study carried out in collaboration with Neuro-Insight that demonstrates how digital audio ads see the same level of engagement as actual content (93% of brain engagement goes to the ad when the listener switch to advertising). The last frontier for advertisers is then called Ad Studio, a real self service made available by Spotify through which it is possible to independently create advertising content that will then be reproduced on the streaming platform. «The trends of the market quarterly lead to great optimism. A good prerequisite – concludes Mazzieri – for an ambitious challenge: to grow the ad business, without cannibalizing the premium one ».