It's also showing podcast ads on phone screens, which listeners can see and click on. Spotify might not know quite as much about users as Google or Facebook does, but it knows enough to target ads to podcast listeners much better than no targeting at all. Its Streaming Ad Insertion (SAI) tool dynamically inserts ads into podcasts depending on individual listener demographics. And the advertisers have never had a great way to measure the reach or effectiveness of podcast ads.īut Spotify is trying to change the podcast ad game in a huge way. Traditionally, every podcast listener hears the same host-read ads regardless of the particular demographics of the listener. Podcast ads have never been well targeted or effective, especially when compared with the online ads we're used to on Alphabet's Google, Facebook, Facebook's Instagram, and others. But the company has some big levers to pull to boost profits over time, including podcast advertising and allowing labels and artists to essentially advertise on its huge platform (called the 'two-sided marketplace' initiative).

Spotify is considered a fairly low-profit-margin business today because its music streaming business needs to pay out the majority of its revenue directly to the music labels and other music rights holders. Apple even stopped releasing the number of Apple Music subscribers in mid-2019, almost certainly because it would compare poorly to Spotify's numbers. But given Spotify's dominance globally and its rapid growth trajectory, it's clearly running circles around its big-tech competition.

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