Leaked Spotify Decks Shows How It’s Competing for Video Ad Dollars

Spotify just reported its most profitable quarter ever, helped by a 13% increase in ad sales and 12% growth in subscribers to its premium (ad-free) services.

But ad-sales growth slowed from an 18% increase in the first quarter. Advertising makes up 12% of Spotify’s total revenue, even though Spotify has been trying to get that share to 20%.

It’s also a bit player in the ad market. Emarketer predicted Spotify would make $2.06 billion in revenue this year, trailing other long-tail players like Pinterest, which is forecast to generate $3.65 billion, and ad giants Alphabet and Meta, which are forecast to bring in $204.92 billion and $154.16 billion, respectively.

On Spotify’s Q2 earning call, execs attributed the ad weakness to volatility in the ad market and strong subscriber growth, which has shifted the company’s revenue mix in favor of subscriptions.

Spotify’s automated and self-service ad offerings are gaining traction with advertisers, though it may have more work to do to be seen as a competitor for social-media video ad dollars, said Andrew Sandoval, VP of biddable media at Croud, a digital ad agency.

“Audio is a different space than Snap/Pinterest,” he said in an email. “Sure, they compete for those dollars, but Spotify isn’t competing for that user attention necessarily.”

Spotify’s current pitch to brands, laid out in a 50-page advertising deck obtained by Business Insider, touts a GWI study showing 92% of Spotify users use it as part of their daily routine, giving advertisers many moments to reach consumers. Spotify says its ads beat TV and social media on metrics like reach and attention and can drive users to purchase.

Spotify wants advertisers to know it doesn’t just sell audio but video and display ads and that it offers advertisers multiple ways to buy and measure ads in a brand-safe environment. It pitches itself as popular with Gen Z and a home for big-name creators from Taylor Swift to Trevor Noah.

Scroll down to see select slides from Spotify’s advertising deck.