New Ad Exchange Positions Spotify to Compete With Ad Giants

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Spotify is piloting a new ad exchange to enhance its automated ad services, with an initial focus on video. The initiative marks a strategic move for Spotify to compete more effectively with larger platforms like Meta and Google for advertising revenue.

Until now, most of Spotify’s programmatic ad solutions have been limited to programmatic direct deals, where ads are purchased through Spotify’s sales team rather than an auction system. With SAX, Spotify aims to expand its automated ad options by partnering with other DSPs, following its initial collaboration with The Trade Desk.

Inside sources familiar with the effort told Axios the platform aims to streamline ad spending for both small and medium-sized businesses as well as existing clients, including major brands. The new exchange can be integrated into various demand-side platforms, enabling advertisers to connect directly with Spotify’s ad inventory. Spotify’s first DSP partner for the Spotify Ad Exchange, or SAX, is The Trade Desk.

The partnership, which began testing last week, currently focuses on linking The Trade Desk’s North American clients to Spotify’s video ad inventory, with plans to expand to audio ads soon.

Spotify has been trying to bolster its video side as YouTube continues to steal the streamer’s podcast audience. Edison Podcast Metrics now reports that 31% of weekly podcast listeners aged 13 and up prefer YouTube, compared to 27% for Spotify and 15% for Apple Podcasts. Spotify also announced the expansion of its music video offerings to nearly 100 markets worldwide, which will further grow its video advertising capabilities.

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