The ads business of Spotify is the ‘one area that hasn’t yet met expectations,’ according to the company’s founder and CEO, Daniel Ek.
The streaming platform delivered healthy results in its Q2 earnings call today, which were primarily driven by subscriber and MAU growth, but saw its ad-supported revenue fall by 1% year on year.
Ek said Spotify has been ‘moving too slowly’ with its ads business, and it’s taking ‘longer than expected’ to see the results they anticipated.
But Ek believes that the company is facing ‘an execution challenge’ with regards its ads business, rather ‘a problem with strategy’.
‘While I’m unhappy with where we are today, I remain confident in the ambitions we laid out for this business and we’re working quickly to ensure we’re on the right path. And we are seeing some promising signs in our programmatic business,’ he added.
Alex Norström, co-president and chief business officer at Spotify, also said that there is a ‘ton of potential’ in the ads business and that they just have to ‘move faster’ in order to see it have an impact on their financials.
Norström further said that Spotify’s subscribers currently make up 3% of the world population and that they can imagine ‘reaching 10% or even 15%’. With that in mind, he called Spotify ‘an enviable brand’ that gives advertisers access to ‘a highly engaged loyal user base’.
Although ad-supported revenue may have dropped, Spotify has grown its monthly active advertisers by over 40% year on year. Norström also said that its brand partners have expressed excitement about the platform’s new tools and automated ads.
Going forward, Spotify plans to tackle its execution challenge by ‘driving adoption, launching even more new tools for advertisers and improving the performance of all of [its] inventory in order to fully monetise [its] new biddable channels.’
Featured image: Alexander Shatov / Unsplash
