At the start of February, you may have seen that Spotify revealed its plans to become the ‘Netflix of podcasting’ by plotting to spend a budget of $500,000,000 (half a billion to those of us who aren’t used to seeing that many zeros!) on podcasting acquisitions. They started by purchasing podcast makers Gimlet and Anchor, for a reported $230M and $60 respectively. All of this plotting is exciting, but what could it actually mean for those looking to harness podcasts audiences? Let’s dive in…

Spotify lays claim to 36% of the global streaming market and by acquiring Gimlet and Anchor, Spotify is making a move to grow their stake in this market and to own premium podcast content. Gilmet previously called itself the ‘HBO of audio’ and boasted big-name podcasts like ‘Reply All’ and ‘Homecoming’, which inspired the Amazon Prime series of the same name, and Anchor champions individual content creators making their first steps into the industry, claiming that it powers 40% of new podcasts entering the market. So, it’s not hard to see why these two podcasting powerhouses were first on Spotify’s half a billion dollar hit list.

With these acquisitions, (including the recent hire of former Lifetime programming executive, Liz Gately, who was responsible for overseeing the release of surprise stalker-thriller hit ‘You’ and docuseries ‘Surviving R. Kelly’), what can we expect to see from the streaming giant in the future?

Exclusive Spotify podcast content

Spotify now accounts for nearly 20% all podcast listening, which is a big jump from the 7% reported just half a year ago. The platform has already been at work releasing a handful of original shows, such as Amy Schumer's 3 Girls, 1 Keith and The Joe Budden Podcast, and with the appointment of Liz Gately, it’s likely that we will be seeing a big push for Spotify exclusive content. Gately will be focusing on shaping the company's original podcasting strategy, overseeing the teams in New York and L.A and developing projects in the comedy, sports, YA Fiction, scripted, news and documentary and music genres.

With this move to produce a lot more exclusive content, there could be a move to have more options for monetisation through Spotify. Monetisation on podcasts is nothing new, many small podcasts who may not receive many (or any) brand deals or advertisements offer exclusive content, ad-free episodes, gifts and more in exchange for monthly donations through websites like Patreon. Below you can see an example from UK true crime podcast ‘They Walk Among Us’, who offer different exclusives depending on the monthly donation.

podcasts like TWAU offering content for money as well as advertising slots, how might this change on spotify?

However, with the growth of Spotify’s podcasting arm, it’s possible that they will introduce podcast hosting, ad platforms, monetisation and reimbursement models; much like what Spotify does with the musicians on their platform.

For the podcasts that don’t earn enough downloads/listens each month to warrant integrated ads, this monetisation model could be a good alternative or addition to Patreon; offering micropayments to said podcasters.

Advertising on Spotify podcasts

Some podcasts are lucky enough to have brands like MVMT and Hello Fresh contact them or their podcast network for advertising slots, meaning that the 45% of us who pay for Spotify premium will still be advertised to (unless we also want to pay monthly Patreon donations to our favourite podcasters as well). However, there are bountiful options on Spotify’s ad centre for those who are looking to reach a specific audience.

spotify ads are a great choice for those looking to break into podcasts and digital advertising

Imagery from Spotify for Brands

There were 191 million monthly active users of Spotify according to the company’s official Q3 2018 report. Of these, 87 million (that 45% we mentioned) were Spotify Premium subscribers, this means that almost 55% of users are using their free option. As we said, this leaves plenty of scope for those who are interested in utilising Spotify’s ad centre to reach people, avoiding pricey ads that would be incurred by approaching a podcaster directly.

For example, according to AdvertiseCast, the industry average rates for podcast advertising are:

  • $15 for a 10-second ad CPM
  • $18 for a 30-second ad CPM
  • $25 for a 60-second ad CPM

CPM stands for cost per mille or cost per 1,000 listeners. So, say you were a local UK theatre looking to advertise your Summer programme, you would want to advertise your programme to people who would definitely be interested in theatre. The Musicals & Theatre podcast from Magic Radio may be a good choice, podcasts don’t advertise their listener numbers online, but let's estimate that this podcast has 50,000 listeners. This means it would cost you $750,000 (£56.5K roughly) to have a 10-second ad with this podcast, so Spotify’s self-service ad platform would be a good way for those with lower budgets to do their best at hitting their target audiences, and with Spotify’s acquisition plans chugging along nicely, we should be seeing more and more podcast targeting options becoming available.

spotify has digital advertising options that could improve ad options on podcasts

Imagery from Spotify for Brands

Stay tuned for a blog on running Spotify ads…

What could it all mean?

Overall, we don’t know until we know, but, it’s likely that this will be the dawning of an exciting new era for podcasters, advertisers and (most of all) Spotify.

With the influx of new content and Gately’s aim to target some key interest areas, there will be a much wider scope of audio talent and entertainment, and with that, there will be a wider scope of targets for wily digital advertisers - both with bigger and smaller budgets.

All in all, it looks like Spotify is well on it’s way to becoming the Netflix of audio. We can’t wait to see what happens next.

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