Spotify is modernizing how marketers advertise on podcasts, introducing a slew of new tools at CES in Las Vegas Wednesday that make the old medium feel slightly more new.
The company is calling its new product “Streaming Ad Insertion,” or SAI. With podcasting, ad insertion is the ability to place audio adverts in shows, all while targeting specific consumer segments using data. Previously, prerecorded ads lived within podcasts indefinitely, hindering marketers from achieving the scale they often desire. Now, however, two people listening to the same podcast will more than likely hear different ads.
Spotify’s advertising solution will be viewed as a double-edged sword by many within both the advertising and podcasting industries. On one hand, it helps solve the scale issue. But, at the same time, many believe introducing dynamic ad insertion will disrupt the intimacy often associated with the so-called podcast experience, as some believe that consumers aren’t as annoyed by commercial messages when they’re read by the host in the show’s tone of voice.
Spotify says intimacy won’t be an issue, as both hosts and producers will read all ads, which in turn will then be inserted into the show in real time, the company says. The company says athletic apparel maker Puma was among its first partners to test SAI on Spotify’s original podcast, “Jemele Hill is Unbothered.”
Streaming Ad Insertion also allows advertisers to plan, report and measure ads read by the show's host, which includes how many people heard the ad, their age, gender and the type of device they used.
Previously, podcasts were measured by how many people downloaded a show. Many in the industry often compared this to running ads in print, as marketers had a general sense of how many people they were reaching and who they likely were, but ultimately didn’t have granular insights about who had actually heard the ad.
Spotify says it’s been able to solve this problem thanks in large part to a shift in how consumers listen to podcasts. The medium has historically been consumed through downloads via RSS, but a pivot to streaming audio through platforms such as Spotify has opened the door to capture more insights.
The move makes sense for the company given podcast growth on Spotify. The latest figures from the company indicate that 14 percent of its total monthly active users tune in to podcasts on its platform. Consumption, meanwhile, has increased 39 percent quarter-over-quarter, adding that it has more than half-a-million titles available on its platform.
More than $678 million was spent on podcast advertising in the U.S. last year, up 42 percent year-over-year, according to the Interactive Advertising Bureau. That figure is expected to climb to $1 billion next year, the IAB says.