Brief:

• Samsung and 3M are the first brands to test out podcast listener targeting on Spotify, the streaming audio platform with 123 million users of its ad-supported service worldwide, according to an announcement shared with Mobile Marketer. Before adding podcast targeting, Spotify had segmented audiences based on their music streaming habits.
• Samsung tested listener targeting to promote its Galaxy Buds wearables, while 3M sponsored the Spotify Original Podcast, Dope Labs, per the announcement. Podcast listener targeting is available in the United States, Canada, Mexico, Brazil, United Kingdom, France, Germany, Italy, Spain and Australia, The Drum reported.
• Brands can reach users who listen to specific podcast categories, including comedy, lifestyle and health and business and technology. The streaming audio company's podcast consumption hours surged 250% in 2018, with 49% of its millennial audience listening at least once a week, per the announcement.

Insight:

Spotify's podcast listener targeting feature comes as the streaming-audio company seeks to lure more advertisers, like Samsung and 3M, to its burgeoning podcast platform and to make spoken-word content easier to find. The company last week reformatted its app to separate podcasts from music tracks in the audio libraries of premium subscribers to improve discoverability, The Verge reported. Podcasting is a key part of Spotify's goal to become the world's biggest audio platform, according to researcher WARC, and the company is expanding its library of original content to appeal to a growing audience.

Spotify has been actively expanding its podcast and advertising options. The company this month partnered with Higher Ground, President Barack Obama and Michelle Obama’s production company, to produce exclusive podcasts, per an announcement. The company also has invested in original podcast content with its in-house Spotify Studios unit. Its recent acquisitions of Gimlet Media, Anchor and Parcast give the company more expertise to support its ad business. Spotify also has experimented with new audio ad formats, as seen in its collaboration with Unilever on voice-powered ads.

These efforts come as podcast ad spend increases overall. U.S. spending on podcast ads jumped 53% in 2018, according to a study by the Interactive Advertising Bureau and PricewaterhouseCoopers. U.S. podcast advertising will rise to $678.7 million this year and reach more than $1 billion by 2021, the report forecast. While Spotify mostly depends on subscription revenue from the 100 million users of its ad-free service, its ad revenue rose 24% in Q1 compared to Q1 2018, as the platform expanded ad inserts.

As the market expands, brands are experimenting with podcasting in a various ways, including sponsorships of originally produced episodic shows. In February, BMW collaborated with The New York Times' branded content studio to create a six-episode podcast for foodies. Sporting goods retailer Intersport also partnered with Nike on an educational, training-focused podcast about long-distance running. Brands also are creating their own shows that are relatively low-cost and give them full creative control over how to engage with audiences through audio. Jack Daniel's Tennessee Whiskey, Giant Food and Sephora are among the brands that have created their own podcasts to reach target audiences with exclusive content.

Spotify's targeted audience podcasting can differentiate its service from rivals like Apple Music, Amazon Prime Music, Pandora and YouTube Music in a competitive market. Half of all podcast listeners tune into Google's YouTube, according to WARC, and both Spotify and Apple compete to hold roughly one-quarter of podcast listeners. Apple Music reportedly had overtaken Spotify in U.S. subscribers by last year. That growth has fueled greater friction between the companies. Spotify this year filed an antitrust complaint against Apple in the European Union, leading regulators to formally open an investigation last month. Spotify claimed Apple had abused its App Store dominance to favor its own Apple Music service, per the Financial Times.