Spotify's programmatic self-serve platform is growing fast and now brings in 20% of total ad revenue, following the music streaming platform's announcement in Q1 that its programmatic revenue grew 94% in 2017.
In Q2, Spotify launched a new automated self-serve platform, Ad Studio, in several countries. This is driving programmatic growth by onboarding thousands of advertisers, the company said in a release. During Q2, ad-supported revenue grew 20% to $144 million year-on-year.
Over time, Spotify said that it expects the programmatic and self-serve products to become a significant portion of ad-supported revenue.
Subscriptions are a bigger revenue driver compared to advertising, although its subscription service is growing in in conjunction with the programmatic spend.
Subscription spend has tripled over the past year across the UK, as 89% of British adults have registered for a subscription service, according to a new study from Zuroa and YouGov. Spotify announced subscription revenue was up 27% year over year to $1.3 billion.
“Subscription businesses have access to vast amounts of data, enabling them to provide a service that traditional businesses are unable to offer,” said Pini Yakuel, founder and CEO of Optimove.
“This next generation of consumer prefers a personalised, on-demand product. The one-size-fits-all model no longer works, both in terms of product offering and in terms of customer engagement,” Yakuel commented.
In addition to programmatic, video is Spotify’s fastest-growing ad unit, although the platform sees opportunities to expand ad revenue by jumping into the programmatic audio space with the likes of podcasts.
Podcasts will become a significant portion of what the company does, and Spotify will continue to get exclusive deals with podcast hosts.