“At an event, Spotify India Head of Sales, Arjun Kolady, said the firm has seen a 94% rise in screen time spent on video when using the audio streaming app. “
He said in India, unlike in the west markets like the U.S., where radio is big, India is the opposite. “Video is big in India. Advertisers have been doing YouTube and other digital video formats for almost 10 to 15 years here.”
Spotify India’s Kolady, says, “What might come as a surprise—given Spotify is an audio streaming service – is, the lion’s share of ad revenue at Spotify India comes from video ads.” Again, this is not really a surprise because India remains a price-conscious market. Though, the 2024 FICCI EY report states that digital music revenues, which include YouTube, have together grown almost 9% in 2023 to Rs.18 billion; out of which about 77% was driven by ad revenues alone.
According to a report by research firm Tofler, Spotify India marked a 91% surge in its ad revenue in FY23, and subscription revenue grew 66%.
“Counter-intuitively, Spotify has probably the best video ads product in the market, so we have successfully led with video instead of leading with audio.”
Kolady adds that, along with the high demand for videos, “there’s a lot of demand for premium audiences among advertisers since they have high purchasing power and consumption patterns. Counterintuitively, Spotify has probably the best video ads product in the market, so we have successfully led with video instead of leading with audio,” he states.
He doubles down on the video ads prowess of the audio streamer, saying, “On all metrics and measurements, we are probably outperforming most of the other digital video products out there, especially if you compare it with video OTTs.
With 626 million active users worldwide, Spotify is an audio streaming powerhouse, but profits eluded it. Until now.
For the July Q2FY2024 quarter, Spotify pegged a record profit with revenues of almost Rs 31,000 crore (3.81 billion euros) and net profit of nearly Rs 2,500 crore (274 million euros), as against a net loss of Rs -2,700 crore (302 million euros) in the previous year.
A big chunk of this comes from the Swedish audio streamer adding seven million paid subscribers over this period. According to the company’s Q2FY24 results, its global ad-supported revenue increased 13% year-on-year.
While ad revenue from videos has picked up, Spotify India is now taking a multi-format approach for advertisers because, as Kolady says, in the pandemic, a lot of people’s time spent on the platform happens off-screen.
He says that the advertisement will not be troubled because they can capture all types of audiences with their multi-format ads. He claims that they don’t play video advertisements until the user interacts with the screen. “And when we know the app is in focus, which means a user is engaging with the screen, or they’re changing a song, or reading the lyrics, or picking a playlist, we serve a video ad.
“Most people end up being pleasantly surprised when they measure a video campaign on Spotify because it’s fully sound-on, viewable, and non-skippable.”
“Most of our large and evolved advertisers are running multi-format campaigns.”
But he cautions that if they need to lead with video to drive reach and frequency at scale—then they need to add audio and display ads to the mix. “So over time, most of our large and evolved advertisers are running multi-format campaigns,” he adds.
Lately, it has started doubling down in videos beyond ads. In March 2024, it has launched a new feature ‘Spotify Music Videos’ that will enable users to view the music videos on the platform. Though in beta mode for premium users, it has the addition of Video Podcasts and Short Vertical videos called Clips currently operating in 11 countries, not including India.
