Programmatic Is 25% Of Spotify’s Revenue, Growing Twice As Fast As Direct

If Spotify’s third quarter earnings are any indicator, programmatic audio is taking off with buyers.

The digital audio platform told investors on Thursday that 20%-25% of its revenue comes from its self-serve programmatic platform and other automated buying features. That’s up from 18% in February, when the company went public.

The market is moving aggressively toward programmatic solutions, especially in Europe and the United Kingdom, said CEO Daniel Ek.

“We’ve made it a point of tactical emphasis from a product development standpoint,” he said. “The market is heading there and we’re driving there as fast as we can.”

Spotify rolled out a self-serve programmatic platform in September 2017 and will continue to see benefits from the shift toward that buying model for “many years,” Ek added.

Ad supported revenue at Spotify was up 30% in Q3 to $162 million, while ad-supported monthly active users grew 20% to 109 million. Overall revenue grew 31% year over year to $1.54 billion, and monthly active listeners were up 28% year over year to 191 million.

Average revenue per user (ARPU), however, declined in Q3 by 6% to $5.39.

CFO Barry McCarthy predicted that the rate of decline in ARPU “will continue to decelerate” as Spotify generates more growth through its student and family plans.

As Spotify pushes for more programmatic sales, the company is also ramping up its podcasting efforts, which it sees as a major opportunity. The majority of radio listening has not yet shifted online and it’s still early days for the podcast market overall. Spotify is experimenting with both fixed and variable deals with publishers.

“Our opportunity is gigantic,” Ek said. There aren’t too many companies in the world focused on that opportunity to bring audio online.”

Improving the user experience for podcasting is one way to help Spotify increase its share of podcasts, Ek said, including by fixing podcast discovery as well as adding functionality, such as the ability to fast forward through content.

Spotify, which spends a significant portion of its budget on negotiating deals with music labels, is also looking to podcasts as a way to diversify its revenue.

“If podcasts become a significant portion of the business, that will add its own margin structure and revenue stream separate from the music business,” McCarthy said.

read more here: adexchanger.com

Is Youtube Red Failing?

Alphabet just had its 2018 Q1 earnings call, but YouTube Red was barely mentioned. Could this be a sign that the company is distancing itself from the product?

Despite YouTube Red having been a high area of focus for the company in the past, the service barely received a mention on Alphabet’s Q1 2018 earnings call today. Aside from Google CEO Sindar Pichai saying the company will continue “invest further” in the service, nothing else was mentioned. While the snub doesn’t completely rule out the future of the SVOD service, it’s not a good sign when a company completely neglects mentioning a service that it has poured time and effort in. And this lack of mention is not new. In Alphabet’s Q4 2017 earnings call, the service wasn’t part of the scheduled conversation either.

This lack of mention could be a sign of things to come for the service, which has yet to really “take off” since launching in 2015. While the company has invested in developing a range of content from a Jake Paul Talk Show to a “Karate Kid” reboot, it has kept its spending on content at a minimum. Recently it was reported by Bloomberg that YouTube was hitting the pause button on its Hollywood expansion. According to the publication, Google has decided to hold spending at current levels for the streaming service over the next two years, people with knowledge of the matter said. YouTube only plans to spend a few hundred million dollars on TV shows and movies this year, according to the sources. While that sounds like a lot, as Bloomberg noted, a flat budget means the company risks falling further behind Netflix, Amazon and Facebook.

To make the case of YouTube Red more confusing, YouTube CEO Susan Wojcicki recently referred to it as a music service, leaving many to ask the question: What’s going on with YouTube Red?

While the current state of Youtube Red is a bit hazy, regular old YouTube continues to be a key revenue driver for the company, according to Pichai, who also said that over the last year, channels earning six figures on the platform grew by 40%.

Going forward Pichai says the company will continue to invest in live content, which has worked well for the service. The CEO noted that Beyonce’s performance at Coachella was one of the most viewed live performances on the service.

Despite the company once again being in the spotlight this week for placing ads against inappropriate content, the issues weren’t directly mentioned in today’s earning call. But the Google CEO boasted that in Q4 of last year, over 6 million videos deemed inappropriate were removed from YouTube– 75% of which were taken down before getting a single view.

read more here: thevideoink.com