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Spotify Rolls Out Creative Lab To Bolster $2B Ad Business

Spotify is launching an internal creative agency called the Spotify Creative Lab to encourage marketers to produce attention-grabbing ad campaigns that leverage the streaming platform’s various assets. The move aims to bolster Spotify’s advertising business, which eMarketer predicts will generate $2.06 billion in revenue for the company this year.

The Spotify Creative Lab currently comprises around 40 people globally. It is led by Kay Hsu, who joined Spotify in January after serving as vice president of digital creative at Clinique. An early Creative Lab client was PepsiCo’s Rockstar Energy drink, which created a live concert featuring the British rapper Stormzy that was streamed within the Spotify app.

Spotify’s Global Head of Sales, Brian Berner, stated the Creative Lab launch is a culmination of recent user growth, interest from marketers, and the expansion of Spotify’s content offerings beyond music to areas like podcasts, audiobooks, and video. According to eMarketer, advertising represents a small portion of Spotify’s business, with 89% of its revenue from premium subscriptions.

While trailing advertising giants like Alphabet and Meta, forecast to post $204.92 billion and $154.16 billion in ad revenue this year, Spotify is betting its differentiated user attention will appeal to marketers. Users, on average, spend 2.4 hours per day on the platform.

Spotify confirmed it is testing a generative AI ad product that allows advertisers to create audio ads using creator and podcast host voices quickly.

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David Adler is an entrepreneur and freelance blog post writer who enjoys writing about business, entrepreneurship, travel and the influencer marketing space.

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