Spotify’s huge growth proves the promise of audio — again

To the point:

If advertisers aren’t already dancing to the beat of audio, it might be time to do so.

Spotify released Q4 2024 earnings on Tuesday, reporting 7% year-over-year growth in advertising revenue. Ad-supported monthly active users grew 12% year over year, to 425 million, and paid subscribers grew by 11%, to 263 million.

The company said that both music and podcast advertising growth was driven by impressions sold and that automated sales channels were the largest contributors.

“We have a pretty distinct and unique inventory of audio engagement, which is very high and so very sticky,” Chief Business Officer Alex Norstom said on the earnings call.

“... The difference now from before is that we are going to implement automation and programmatic and the idea with that is simply to just be saying, ‘hey, we're open for business now and we're going to have our supply meet every increasing demand that's out there.’”

So what:

Spotify’s success reflects the growing power of audio for advertising campaigns. But it’s still a small channel compared to behemoths like connected TV and retail media, despite data that shows its prowess:

• One Emarketer report last year projected that consumers in the U.S. would spend over 21% of their total media time listening to audio in 2024 — yet the channel would account for just an estimated 4.5% of total advertising spend.
• In Q4 last year, Americans ages 18 to 34 spent over half of their digital time listening to podcasts or ad-supported streaming audio, according to Nielsen and Edison Research.
• About 100 million Americans listen to at least one podcast a week, up by 31% from 2023, according to another Edison Research report published in April.

Emarketer analyst Meaghan Yuen called audio an “underappreciated ad medium.”

More context:

To address (no pun intended) that challenge, Lee Brown — Spotify’s VP and global head of advertising — told The Current Report last month at CES that the company has invested “to open up the platform and make it accessible for marketers, and make it addressable as well.”

Last year, for instance, Spotify launched an ad exchange and partnered with The Trade Desk to open up its inventory.

According to a recent Digiday report, advertising data firm Guideline estimated that programmatic buys grew on the platform by 58% year over year. Though Spotify said it’s still early.

“Our ad business today has been heavily reliant on direct sales and top-funnel brand spend,” Christian Luiga, Spotify’s CFO, said on a Q3 earnings call in November. “So with this, we have now diversified and changed our platform.

“What we do see is that 2025 will be a year of testing and trying this, and we will see the impact going into 2026,” he added. “It is early days.”

The Current is owned and operated by The Trade Desk Inc.