STOCKHOLM, Oct. 19 (Reuters) – Spotify (SPOT.N) plans to hire hundreds to boost ad sales in Europe and beyond, as the music streaming service seeks to boost revenue for customers who don’t pay monthly fees but make up the bulk of its user base.
âWe’re increasing our advertising marketing workforce by over 70% in Europe, Australia and Canadaâ¦ and that’s on a pretty big basis,â Lee Brown, head of advertising activities at Spotify, said in an interview.
“We are investing in our advertising business. In terms of long term strategy, I think the days when advertising represented less than 10% of our overall revenue are over.”
Spotify also hired an ad industry executive with 25 years of international experience to lead international sales, Brown said, although he did not give a name.
The company, which earns revenue from paid subscriptions and serving ads to non-paid users, has seen its advertising business return to growth this year after being hit by the pandemic.
Of its 365 million monthly active users, 210 million are ad-supported, which is roughly 12% of its total revenue.
âAn advertisement not only creates revenue for the business, but it also cuts costs, as it leads to fewer songs played and, in turn, slightly lower royalties to be paid,â Morningstar analysts said.
An increase in podcast content – Spotify carried 2.9 million podcasts in the second quarter, up nearly 12% from the previous three months – helped boost ad revenue as podcasts attract more users and, being longer, allow more time for advertisements.
The company is looking to add more tools for advertisers and will make its Megaphone podcast advertising and publishing platform available in Germany, France, Spain and Italy.
Megaphone, acquired by Spotify last year, gives podcasters tools to create ads for their own programs, for which they earn revenue, and to measure their reach. It currently hosts around a third of the top 200 shows on Spotify and Apple (AAPL.O).
Spotify has spent hundreds of millions to boost its podcast business. Its competition with Apple has intensified after the two launched paid subscription platforms for podcasters earlier this year.
The Swedish company is expected to overtake Apple for podcast listeners for the first time this year, according to research firm eMarketer.
Reporting by Supantha Mukherjee, European correspondent for technology and telecommunications; Editing by Jan Harvey
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