🎶 Are You Listening?

As the number of content developers for podcasts booms, advertisers are itching for more data on the consumers of these podcasts

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Friday Close) 3,709.41 −13.07 (0.35%)

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USDINR (5 PM IST) 73.52 (1 Year +3.54%)

Are You Listening?

As the number of content developers for podcasts booms, advertisers are itching for more data on the consumers of these podcasts. Whom to target in order to market what kind of products and when? Those are precisely the insights Spotify plans to deliver as it readies for the podcast pow-wow.

Background: Many associate Spotify with music. Few realize the company has been steadily acquiring podcast producers. With podcast industry revenues projected to hit $60B in 2027, Spotify has been silently laying the groundwork in order to be the first among equals when it comes to cornering audio advertising dollars.

The company forked out more than $500M to acquire podcast producers Gimlet, Parcast, and Ringer, and cult favorite JRE. The company has also struck deals with Michelle Obama, Kim Kardashian, DC Comics, and Prince Harry and Meghan Markel to provide exclusive content.

Then came Anchor, the YouTube equivalent of podcasts for independent creators to produce and monetize content. Anchor is audio-only and distributes audio across multiple platforms. Spotify acquired Anchor for $150M.

What Lies Ahead? Until recently, marketers had a hard time measuring reliably measuring podcast effectiveness. While the number of downloads and monthly listeners was easy to get, understanding how long someone listened to a particular program or if they listened to any ads at all, was harder still.

Earlier this year, Spotify introduced the Streaming Ad Insertion tool for dynamic insertion of audio ads into podcast streams, for superior targeting and measurement of the listeners’ age, gender, and device type. That’s audio advertising gold!

Spotify’s current gross margin of ~25% is driven by its revenue-sharing deals with big music labels. As the company brings in exclusive podcasts that a majority of its listeners start consuming, the gross margins will have no way to go but up. That’s a much-needed fillip for a company that’s not yet profitable (but is cash flow positive).

Market Reaction: On Friday, Spotify closed at $336.10, up 2.45%

Company Snapshot 📈

SPOT $336.10 +8.04 (+2.45%)

Analyst Rating (30 Analysts) BUY 50%, HOLD 30%, SELL 20%

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