Spotify CEO expresses dissatisfaction with advertisement sector
In a bid to enhance its advertising business, Spotify, the popular music streaming platform, is stepping up its game. According to CEO Daniel Ek and co-president Alex Norström, the company's ad business is facing an execution challenge, not a strategic problem [1][3].
Ek admitted that the company has been "moving too slowly" and it's taking longer than expected to see improvements in advertising revenue. Despite user and subscriber growth, ad revenue has fallen by 1% year on year [1]. However, Ek remains confident in the business’s ambitions and emphasizes the need to speed up execution to realize those goals.
Norström also highlighted the potential for growth in Spotify’s ads business, noting the large and engaged user base. He stressed the need to "move faster" to impact the financials positively. Despite ad revenue decline, the number of monthly active advertisers has increased by over 40% year on year, and brand partners are enthusiastic about new advertising tools, including automated ads [1].
To address these challenges, Spotify plans to drive adoption of its ad products more aggressively, launch additional new tools aimed at advertisers, improve the performance of all inventory, particularly by better monetizing its new biddable ad channels (i.e., programmatic advertising), and continue expanding innovations like video podcasts and interactive ad formats [1][3].
These steps reflect Spotify’s aim to convert its strategic vision for advertising into stronger financial performance by improving operational execution [1][2][3]. Ek stated that the company has not met expectations in its ads business and is working quickly to ensure it is on the right path. Brand partners have expressed excitement about Spotify's new tools and automated ads, suggesting a promising future for the company's ad business.
Despite the challenges, Spotify's focus remains on accelerating execution around its Ad Exchange and new advertising technologies to unlock the business's full potential amid a competitive and economically uncertain environment [2]. With its large, loyal user base and innovative ad formats, Spotify is well-positioned to capitalize on the growing advertising market.
[1] The Verge, "Spotify says its ads business is facing an execution challenge, not a strategic one", July 29, 2021. [2] CNBC, "Spotify's ad-supported revenue lags, but the company remains focused on execution", July 29, 2021. [3] TechCrunch, "Spotify's ad business is growing, but it's not growing fast enough, execs say", July 29, 2021.
- Spotify's CEO, Daniel Ek, acknowledges the need to speed up the execution of the company's ad products, aiming to improve health in the business's financial performance and better monetize technology like its new biddable ad channels.
- Despite a decline in ad revenue, Spotify's focus on technology, such as video podcasts and automated ads, along with its large, engaged user base, positions the company well for growth in the health sector and the wider advertising market.
