Inside Spotify’s Ad Exchange Takeover - Next in Media

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Transcript48 lines

[00:01]
Paris Sandoz
We've also recently launched plugins for Claude and Codex as well that kick into our Ads API directly. And so, you know, if a buyer wants to use Ads Manager or they want to buy from the command line, they're now able to do that. And we're seeing just rapid, huge amounts of creation coming from the folks that are using Claude to create their ads with our cli. Now, you know, you're just, you're on Claude and you don't do anything.
[00:23]
Podcast Host
You don't have to be an engineer. You don't get.
[00:25]
Paris Sandoz
Yeah.
[00:26]
Charlie Ibarra
This episode is brought to you by Creator TV by sabio. Creator Led Entertainment is moving from the feed to the tv. And Creator TV is leading the shift with free streaming channels, original series, on demand programming, and live Creator sports. For brands, that means new ways to reach passionate audiences through culturally relevant entertainment. From high impact CTV media and integrations to event sponsorships. Creator live TV spots and social extensions bring your brand into the creator led TV era. @creatortv.com this week on Nexting Media, I spoke with Per Sandoz, Spotify's global head of advertising and product. But the music platform's push into custom ad products, including video, generative audio, AI ads and custom playlists. Per and I sat down at can of the Fabric Studio where we also dug in how the company is helping to evolve measurement and attribution in a space that really cuts across multiple media strategies and tactics.
[01:14]
Podcast Host
Let's get started. Hi, everybody. Welcome to Next to Media where we. We're here shooting live in Cannes. I'm here with Paris and El. You are the vice president of product and. And Kohli of the ad group for Spotify. By that.
[01:25]
Paris Sandoz
Right? Yeah. Thanks for having me. I'm thrilled to be here in this beautiful location. You guys have a great space and it's always a great week to be here.
[01:30]
Podcast Host
Yeah, thanks for grabbing some time for this.
[01:31]
Paris Sandoz
Yeah, thanks.
[01:32]
Podcast Host
It's craziness. So you guys are often trying to do an interesting balancing act. You have the power of audio advertising. You're increasingly becoming more of a video product.
[01:43]
Charlie Ibarra
How does that shape the way you
[01:45]
Podcast Host
view your ad products, what you're trying to build for customers?
[01:48]
Paris Sandoz
Yeah, it's a great question. You know, I think what Spotify really boils down to is our focus on fandom. And if you think about the platform as a whole, it's really about finding these experiences that you don't have regrets, finding the right moment that you want, whether that's, you know, driving to work, you're on the subway celebrating the Knicks win. Yeah, go Knicks. Or, you know, you're, you're kicking back and trying to relax a little bit and learn something. And, you know, I think for us, what we've been trying to do is build a platform and a product that allows users to really connect to the medium that they want to consume in, whether that's audio. It's a music video, it's a video podcast, it's one of our billions club concerts that we've brought out. What we've been trying to do is make sure that everybody can experience the way that they want to be a fan in the medium that they want. And so that's obviously been a strong technical challenge for us as we need to build, you know, more advanced players, more advanced, you know, CDN services. Think about the global reach of Spotify. And so it becomes a really fun intersection of a software plus a hardware problem as we start to build these solutions. And I think we've done a very elegant job of evolving the platform from being audio only to being a multi format platform. And that's been a really fun journey for us and one that I think we're really proud of, the progress we've made.
[03:01]
Podcast Host
You have a slew of newer products, right, like ranging from their playlist sponsorships and kind of helping brands come into Spotify and grab the big moments or the bigger credit. Can you talk about like some of that strategy?
[03:14]
Paris Sandoz
Yeah, absolutely. So one of the things that, you know, I personally think is quite important about an ad product is you want to find a way to piggyback on top of that organic experience that exists. And I think this is one of the things that we've done kind of an increasingly good job on, which is kind of mirroring and mimicking the patterns that a user has throughout their journey. I'm sitting on the home screen of Spotify. I click on my playlist that I want to go to. I'm now in the context of Discover Weekly, I'm discovering new music. But as a user, what we've done from an ads perspective is we've allowed that playlist to become sponsored, which means that there's a full takeover of the image that sits behind the playlist. We interject a limited and a reduced ad load there. So we're really giving the user back a very positive value exchange for consuming that content from the brand. And so the brands get to take over this incredible IP that we've been developing for the last two decades of some of our premier playlists and then focusing that and giving them this kind of area of reduced interruptions. And we remind the user that those reduced interruptions are from the brand. And so it's really, I think, quite compatible from a brand perspective, from a user perspective and a platform perspective. And I think if you look at a lot of ad products out there, they're not kind of that win, win, win scenario. Whereas as we've been trying to develop, particularly our sponsorship products, we want everybody from the user to the advertiser, to us at Spotify to feel like they're involved in something that is positive in that experience.
[04:34]
Podcast Host
And you're pretty upfront with consumers like this. You almost communicate the value exchange in a lot of your products. Is that pretty intentional?
[04:40]
Paris Sandoz
Yeah, I think it's intentional. And you know, from our perspective, I actually really think that it's important to have a transparent value exchange when you're there. And so our sponsor Playlist product, this is one where we actually went back and forth with the product teams and the engineering teams that we're working on. Just even just the verbiage down to kind of the way that we say there's a limited amount of interruptions or this limited ad experience is provided by the brand. And we tested a lot of those, did a fair amount of testing and figured out what worked really best from the return on ad spend, investment, as well as a time spent and a consumption perspective. So we look at that as we build these products and we're very clear with that value exchange. And I think that's important and something that, you know, as we think about the future of advertising, the future of computing, an area where I hope more people are pushing for that level of transparency because it is important for you to know what type of content you're about to consume. Is it a sponsored piece of content? Is it an organic piece of content? Does it contain sponsored information? And that level of transparency I think is absolutely critical to the future of the Internet that we have today.
[05:40]
Charlie Ibarra
I'm here with Charlie Ibarra, he's the co founder and head of content at Creator Television. Charlie, tell me about the creator Ad
[05:46]
Podcast Host
spot and why it's an important evolution
[05:47]
Charlie Ibarra
of the traditional TV commercial.
[05:49]
Yeah, the Creator Ad Spot is a creator led approach to television advertising. Traditionally, when creators appear in TV commercials, they're often simply cast as talent. With the Creator adspot, they become creative partners, helping develop, produce and star in the work that allows brands to combine the reach and impact of streaming television with the authenticity and deep audience resonance creators bring.
[06:12]
Okay, so what is a Creator Ad Spot unlock for brands and what makes Creator Television uniquely positioned to deliver for brands.
[06:18]
It unlocks advertising that feels more coaching well and relatable and native to how audiences consume content today. Which campaign can also extend beyond ctv. Through a companion social post from the Creator, Creator Television brings together geek creator relationships, television prevention expertise and sabio's advanced CTV audience targeting technology, allowing us to pair the right creator and message with the right audience.
[06:44]
Terrific.
[06:45]
Podcast Host
Thanks, Charlie. On the other end of the spectrum, you guys are still relatively early in your exchange product, right?
[06:51]
Paris Sandoz
Yeah.
[06:51]
Podcast Host
Can maybe catch us up on and what that looks like and what kind of new demand you're seeing coming through that channel.
[06:57]
Paris Sandoz
Yeah, so we're a little bit over a year, I think we announced it in April of last year what we call Spotify Ad Exchange.
[07:04]
Podcast Host
Right.
[07:04]
Paris Sandoz
And because it is advertising technology, you have to put an acronym on it. It's the rule. And so what we've done is we've called that product sax, which is a fun music acronym for us. And so we've been really happy with the progress that we've made in the kind of on our whole ad tech journey over the last 18 months. And what we've been focusing on is I guess, kind of like three areas that I would break down. First is really access, the second is measurement and the third is making sure that the, you know, the Spotify taste data is being able to be used across both our self serve platform and our Ad Exchange in the way that we do targeting and kind of, you know, data utilization. And so for us, the Spotify Ad Exchange has been, and along with our Spotify Ads Manager has been incredible for the expansion of active advertisers on the platform. And what we've seen is that there's a lot more access now that is capable in audio. And if we go back a decade in audio or we even go back five years in audio, that was an area where it was really hard to get access to our pools. Finite pool supplies. Yeah. And you know, you had to probably transact with paperwork. You and I might have faxed something back. Yeah. And you know, you were, you were buying in really targeted markets. And what we've done with Saks and our Spotify Ads Manager is really find a way to expand that access. And so our Ads Manager product, much like many others that are on the Internet, free to use, we've got a generative AI creative tool in there if you need help making creative. We've brought that generative AI creative tool now to our exchange as well. So you can create creative with us, download it upload it to your DSP of choice. And the access side of that has really allowed us to scale active advertisers both spending across our PMP or our programmatic guaranteed as well as open marketplace. And so, you know, we've got tons of advertisers who are being now exposed to audio for the first time and really understanding that power there. And with the Exchange, we've also been developing our own first party brand, Lift products, incrementality products utilizing our Pixel or our conversion API and bringing that functionality into the Exchange. And so we're operating both kind of as an Exchange provider because we've built our own Exchange that sits on top of our ad server. But we've brought a lot of those fundamental areas of platform logged in based products as well to the Exchange, which I think is really unique. Being able to use our first party measurement solutions free of charge on top of those channels. And then, you know, with our PMP style creation, we've also brought in all of our targeting audiences around fandom, you know, I'm a fan of this brand or this musician or this podcasting. And then our targeting categories that we've built a fair amount of machine learning around, we've surfaced those in the way that you can build a PMP or PG deal and bring that directly into the way that you're buying. And so for us, I think the Spotify ad exchange has really been kind of this culmination of bringing together our measurement stack, our ad buying stack with access as well as, you know, kind of this idea of all of the rich data signals that we have on Spotify. And if you think about how you as Spotify use it every day, yeah, you're creating playlists, you're listening to songs, you're skipping songs, you're listening to a podcast, you know, maybe you've spent the last five hours listening to the acquired podcast and then you're hopping over to something else and all of those signals. And I think we're in like the billions and billions of signals that are generated a day on top of our data set. And this allows us to have very precise and very unique targeting data on top of our very large logged in user base.
[10:14]
Podcast Host
I'm imagining the newer brands are they're probably gravitating towards the generative tools because they don't have creative. But are they as sophisticated in using their own first party data or the PMPS and things like that, or is that really the domain of the big guys?
[10:29]
Paris Sandoz
So, you know, I think that there has Been a lot of data utilization progress that has existed now over probably the last, I would say 12 to 13 years in advertising. And you have to give a bunch of that credit to some of the platforms that came before us in building their own first party tech. But the ability to upload first party data as a custom audience or onboard that through your data provider of choice, you can then leverage that in our Ads Manager product or with our PMP or PG deals. And so bringing your own data, byod, if you will, has definitely been something that we've seen happening in audio. When it comes to areas of generative AI and creative utilization and building those creative through the technology that we offer, we've seen rapid expansion in that area. And I think that also speaks to one, how nascent audio has been historically. And just it was kind of small on a budget line. We talked about a little bit about the size and scale of those buys. And so I think a lot of, you know, brands small and large were just not creating that asset. And we've provided ways for them to have that access. And we've now seen over 7,000 advertisers use our generative AI creative tool since we launched it. And so that's, you know, kind of rampant very fast. And we've been really happy with that because I think when you're a brand investing, you're seeking return. And this is not that different than, you know, a financial conversation or some of those areas about how you think about a portfolio and your media spend is really a portfolio approach. And so I think now with the introduction of the ability to mix audio in, we're seeing a lot more return coming from these advertisers that are leading in be able to move fast and use these new sets of tools that are out there across the ecosystem. We've also, and I'll take a small tangent here, but we've also recently launched plugins for Claude and Codex as well that kick into our ads API directly. And so if a buyer wants to use Ads Manager or they want to buy from the command line, they're now able to do that. And we're seeing just rapid, huge amounts of creation coming from the folks that are using Claude to create their ads with our cli. And you know, you're kind of boiling that down to, you know, natural language processing, text to speech and kind of these very simple ways to make ads. And I think that has taken a lot of the barrier away that used to feel in advertising of this is hard to create, this is complex. I need a full time employee or an agency now, you know, you're just, you're on cloud and you don't have
[12:46]
Podcast Host
anything, you don't have to be an engineer, you don't have to be expert.
[12:48]
Paris Sandoz
Yeah.
[12:49]
Podcast Host
What about, you know, audio historically has been not, not the easiest thing to plug into various ROI models. You talk about a lot of your products are open, addressed out. Are you. We're in this era where everyone's, there's increased pressure on outcomes. Are you guys getting that pressure and how are you kind of responding to that?
[13:05]
Paris Sandoz
I think that pressure is industry wide and I think it's a good thing. Right. You know, everybody is seeking transparency, they're seeking performance, they're seeking ROAS numbers. And ROAS is really, when you look at it from that perspective, it's a common denominator between all your investment channels. And so we're absolutely getting that pressure. And we've done a lot of work over the last year on our first party measurement solutions as well as third party partnerships that we've done kind of with all the big players that are across the board, everything from an apps flyer on the mobile side to somebody more like a Nielsen or a Kantar that are doing the Lyft products. And so we've had to build these full funnel advertising and measurement solutions because it's critical to have that happen right now. And to your point about audio, I do think that we know a lot about how we think about historical audio advertisements that we've heard in our lives, but we also don't really value them the same way. And you put, yeah, you know the
[14:00]
Podcast Host
strengths are there but you know the strengths.
[14:01]
Paris Sandoz
And like this is like one of my favorite things about audio is like I'm a huge lover of hip hop, which I'll tie back to this one. And if, you know, I hum like I'm loving it, you know exactly what that's from, right? And you know exactly what that sound bite that jingle is from. And that's something that is, you know, now 25, 30 years old and you probably think about Justin Timberlake doing them, but for me I actually think about Pusha T, who was a rapper who pretty big in the hip hop world with his group clips. They have new album, it's fantastic if you haven't listened to it yet. But they were actually the original writers, Pusha T for that jingle. And so it spawned this whole amazing like creativity area where now he's done this for other brands and he's working with other jingles because these jingles are Something that are so ingrained the way that we think about ads and you know, like our whole life, these little audio areas have kind of just been with us and I don't think we think about the staying power of advertising. And so it is a question there
[14:59]
Podcast Host
of like, it's hard to put that in. Mmm.
[15:01]
Paris Sandoz
Does audio need a different attribution model? Do you need to think about how audio works on a brand and a performance perspective. Perspective and how do you value that? And so I think there's some new muscles about how we weight it in mmms and some of the newer models, particularly with kind of as you move more into the Bayesian side of it, you, you can really actually put the right value on it and the right time decay functions into those ecosystems.
[15:21]
Podcast Host
That's fascinating. That, that, that's a, that's a game changer. If you can kind of figure out how to, how to plug that in and translate that into a. I might
[15:28]
Paris Sandoz
even boil it down to. I think that audio is a game changer.
[15:30]
Podcast Host
Yeah.
[15:30]
Paris Sandoz
The way that we've been thinking about it, I think is an area where we'd love to see more investment, but these fast moving brands that are getting on top of it now are delivering massive ROI for their businesses. So excited about the progress.
[15:42]
Podcast Host
All right, well, on that note, awesome conversation. Bert, thanks so much for your time here.
[15:45]
Paris Sandoz
Thrilled to be here. Thanks for having me.
[15:46]
Podcast Host
Great seeing you.
[15:48]
Charlie Ibarra
Thanks again to my guest this week, Spotify's Paris Sandal. And my partner is at sabio. If you like this week's episode, please take a moment to rate and leave a review. We have lots more to bring you, so please hit that subscribe button. We'll see you next time for more on what's next in media.
[15:59]
Paris Sandoz
Thanks for listening.

Summary6 min read

Next in Media with Mike Shields

Episode: Inside Spotify’s Ad Exchange Takeover
Date: July 21, 2026
Guest: Paris Sandoz, Global Head of Advertising and Product at Spotify

Episode Overview

This episode dives deep into Spotify’s enormous evolution as an advertising platform, focusing especially on its recent launch and expansion of the Spotify Ad Exchange (SAX). Paris Sandoz explains Spotify’s push into multi-format ad products, explores how new technology is lowering barriers for smaller advertisers, and details Spotify’s approach to transparency, measurement, and the value exchange with users. The discussion is layered with insights on how AI and data are transforming marketing outcomes, attribution, and user experience.

Key Discussion Points & Insights

1. Spotify’s Multi-Format Evolution

Fandom-First Strategy
- [01:48] Paris emphasizes, “Spotify really boils down to our focus on fandom” and the commitment to letting users “connect to the medium that they want to consume in, whether that's audio, music video, video podcast, or a billions club concert.”
- Embracing all formats means overhauling both software and underlying hardware to deliver seamless experiences.
Technical Challenges
- [01:48] Building multi-format platforms presented complex technical demands: advanced players, robust CDNs, and global scalability—“a really fun intersection of a software plus a hardware problem.”

2. Playlist Sponsorship & Transparent Value Exchange

Adaptive Ad Experiences
- [03:13] Paris describes how Spotify “mirrors and mimics the patterns that a user has throughout their journey,” like enabling brands to sponsor playlists, making ad experiences more native and less intrusive.
- Sponsored playlists offer “reduced interruptions,” which Paris frames as a triple win: “compatible from a brand perspective, from a user perspective and a platform perspective.”
Transparency as a Guiding Principle
- [04:40] Paris explains Spotify’s intentional transparency: “I think it's important to have a transparent value exchange… We tested a lot… and figured out what worked really best from return on ad spend.”
- Being upfront about sponsored content is “absolutely critical to the future of the Internet that we have today.”

3. The Spotify Ad Exchange (SAX) & Data Utilization

Overview & Naming
- [07:03] “Because it is advertising technology, you have to put an acronym on it… we call that product SAX, which is a fun music acronym for us.”
- Launched just over a year ago, SAX marks Spotify’s shift to self-serve, accessible ad buying in audio.
Democratizing Access to Audio Advertising
- [07:04] Paris highlights the leap from “faxing paperbacks” to “expanding that access” through Ads Manager and SAX, opening up audio advertising to new, smaller brands: “We've got tons of advertisers who are being now exposed to audio for the first time.”
Integrating AI & Generative Creative Tools
- [08:35] “We've got a generative AI creative tool in there… You can create creative with us, download it, upload it to your DSP of choice.”
- Over 7,000 advertisers have used these tools since launch ([11:50]).
Measurement & Unique First-Party Data
- Spotify pairs SAX with robust first-party measurement tools (like brand lift and incrementality via Pixel and conversion API), available “free of charge on top of those channels” ([09:07]).
- The key differentiator: “very precise and very unique targeting data on top of our very large logged in user base” ([09:52]).
Programmatic, Audience-Based Buying
- PMPs (private marketplaces) and PGs (programmatic guaranteed) now tap into “targeting audiences around fandom” using billions of daily user signals.

4. Lowering Barriers & the Rise of AI-Driven Creative

Supporting Small and Large Advertisers
- [10:14] The ability to “bring your own data” (BYOD) allows both small and large brands to onboard and target custom audiences easily.
Generative Creative Tools in Action
- The generative AI tool and API plugins (Claude, Codex) enable advertisers to build campaigns using natural language, making ad creation “simple” so they “don’t have to be an engineer” ([12:45]).
- Paris notes: “We're seeing just rapid, huge amounts of creation coming from the folks that are using Claude to create their ads with our cli” ([00:15], [11:59]).

5. Measurement, Attribution, and Audio’s Branding Power

Attribution Pressures & Solutions
- [13:05] “Everyone's seeking transparency, they're seeking performance, they're seeking ROAS numbers. And… it's a common denominator between all your investment channels.”
- Spotify has built full-funnel measurement, partnering with third parties like AppsFlyer, Nielsen, and Kantar.
Unique Brand Impact of Audio
- [14:01] Paris reflects on audio’s staying power: “I'm loving it… You know exactly what that's from, right?… Pusha T… was the original writer for that jingle.”
- Audio advertising creates deep, lasting brand associations—“these little audio areas have kind of just been with us… I don't think we think about the staying power of advertising.”
Evolving Attribution Models
- [15:00] “Do you need to think about how audio works on a brand and a performance perspective… as you move more into the Bayesian side of it, you can actually put the right value on it and the right time decay functions into those ecosystems.”
Audio as a “Game Changer”
- [15:29] “I think that audio is a game changer… these fast-moving brands… are delivering massive ROI for their businesses.”

Notable Quotes & Memorable Moments

On Value Exchange:
- [04:40] Paris Sandoz: “I actually really think that it's important to have a transparent value exchange… Is it a sponsored piece of content? Is it an organic piece of content?… That level of transparency is absolutely critical.”
On Opening Up Audio to Brands:
- [07:04] Paris Sandoz: “We’ve now got tons of advertisers who are being now exposed to audio for the first time and really understanding that power.”
On Generative Tools and Access:
- [00:00] Paris Sandoz: “If a buyer wants to use Ads Manager or they want to buy from the command line, they’re now able to do that... just rapid, huge amounts of creation coming from the folks that are using Claude to create their ads with our cli.”
On Audio’s Brand Power:
- [14:01] Paris Sandoz: “If I hum ‘I’m loving it,’ you know exactly what that's from, right?... these jingles are something that are so ingrained in the way that we think about ads.”
On Audio as a Media Channel:
- [15:27] Paris Sandoz: “I think that audio is a game changer. The way that we've been thinking about it... these fast moving brands… are delivering massive ROI for their businesses.”

Important Timestamps

00:00–01:14: Opening remarks, multi-format evolution, lowering creative barriers with AI
03:00–04:34: Playlist sponsorship, organic/native ad approach
04:40–05:40: Transparency and value exchange philosophy
06:50–09:52: Introduction & strategic vision for Spotify Ad Exchange (SAX); expanding access, data-driven targeting
10:14–12:45: Use of first-party data, generative AI tools, API/plugin innovations
13:05–15:29: Measurement, attribution, impact and staying power of audio, new models for valuing audio advertising

Tone & Style

Paris Sandoz is candid, enthusiastic, and focused on the twin goals of technological innovation and user-centric design. The conversation is peppered with industry insight but keeps a conversational, engaging energy throughout.

Conclusion

This episode gives a rare, detailed look into Spotify’s dynamic transformation and how technological and data innovations are shaping the future of audio and advertising. With a strong emphasis on transparent value exchanges, easy access, AI-powered creative, and rich measurement, Spotify is positioning itself not just as a music platform but as a multi-modal, next-generation ad ecosystem. Paris Sandoz’s optimism and expertise shine through memorable moments about the real, lasting impact of audio and the democratization of digital advertising.

Loading summary

Transcript48 lines

[00:01]
Paris Sandoz
We've also recently launched plugins for Claude and Codex as well that kick into our Ads API directly. And so, you know, if a buyer wants to use Ads Manager or they want to buy from the command line, they're now able to do that. And we're seeing just rapid, huge amounts of creation coming from the folks that are using Claude to create their ads with our cli. Now, you know, you're just, you're on Claude and you don't do anything.
[00:23]
Podcast Host
You don't have to be an engineer. You don't get.
[00:25]
Paris Sandoz
Yeah.
[00:26]
Charlie Ibarra
This episode is brought to you by Creator TV by sabio. Creator Led Entertainment is moving from the feed to the tv. And Creator TV is leading the shift with free streaming channels, original series, on demand programming, and live Creator sports. For brands, that means new ways to reach passionate audiences through culturally relevant entertainment. From high impact CTV media and integrations to event sponsorships. Creator live TV spots and social extensions bring your brand into the creator led TV era. @creatortv.com this week on Nexting Media, I spoke with Per Sandoz, Spotify's global head of advertising and product. But the music platform's push into custom ad products, including video, generative audio, AI ads and custom playlists. Per and I sat down at can of the Fabric Studio where we also dug in how the company is helping to evolve measurement and attribution in a space that really cuts across multiple media strategies and tactics.
[01:14]
Podcast Host
Let's get started. Hi, everybody. Welcome to Next to Media where we. We're here shooting live in Cannes. I'm here with Paris and El. You are the vice president of product and. And Kohli of the ad group for Spotify. By that.
[01:25]
Paris Sandoz
Right? Yeah. Thanks for having me. I'm thrilled to be here in this beautiful location. You guys have a great space and it's always a great week to be here.
[01:30]
Podcast Host
Yeah, thanks for grabbing some time for this.
[01:31]
Paris Sandoz
Yeah, thanks.
[01:32]
Podcast Host
It's craziness. So you guys are often trying to do an interesting balancing act. You have the power of audio advertising. You're increasingly becoming more of a video product.
[01:43]
Charlie Ibarra
How does that shape the way you
[01:45]
Podcast Host
view your ad products, what you're trying to build for customers?
[01:48]
Paris Sandoz
Yeah, it's a great question. You know, I think what Spotify really boils down to is our focus on fandom. And if you think about the platform as a whole, it's really about finding these experiences that you don't have regrets, finding the right moment that you want, whether that's, you know, driving to work, you're on the subway celebrating the Knicks win. Yeah, go Knicks. Or, you know, you're, you're kicking back and trying to relax a little bit and learn something. And, you know, I think for us, what we've been trying to do is build a platform and a product that allows users to really connect to the medium that they want to consume in, whether that's audio. It's a music video, it's a video podcast, it's one of our billions club concerts that we've brought out. What we've been trying to do is make sure that everybody can experience the way that they want to be a fan in the medium that they want. And so that's obviously been a strong technical challenge for us as we need to build, you know, more advanced players, more advanced, you know, CDN services. Think about the global reach of Spotify. And so it becomes a really fun intersection of a software plus a hardware problem as we start to build these solutions. And I think we've done a very elegant job of evolving the platform from being audio only to being a multi format platform. And that's been a really fun journey for us and one that I think we're really proud of, the progress we've made.
[03:01]
Podcast Host
You have a slew of newer products, right, like ranging from their playlist sponsorships and kind of helping brands come into Spotify and grab the big moments or the bigger credit. Can you talk about like some of that strategy?
[03:14]
Paris Sandoz
Yeah, absolutely. So one of the things that, you know, I personally think is quite important about an ad product is you want to find a way to piggyback on top of that organic experience that exists. And I think this is one of the things that we've done kind of an increasingly good job on, which is kind of mirroring and mimicking the patterns that a user has throughout their journey. I'm sitting on the home screen of Spotify. I click on my playlist that I want to go to. I'm now in the context of Discover Weekly, I'm discovering new music. But as a user, what we've done from an ads perspective is we've allowed that playlist to become sponsored, which means that there's a full takeover of the image that sits behind the playlist. We interject a limited and a reduced ad load there. So we're really giving the user back a very positive value exchange for consuming that content from the brand. And so the brands get to take over this incredible IP that we've been developing for the last two decades of some of our premier playlists and then focusing that and giving them this kind of area of reduced interruptions. And we remind the user that those reduced interruptions are from the brand. And so it's really, I think, quite compatible from a brand perspective, from a user perspective and a platform perspective. And I think if you look at a lot of ad products out there, they're not kind of that win, win, win scenario. Whereas as we've been trying to develop, particularly our sponsorship products, we want everybody from the user to the advertiser, to us at Spotify to feel like they're involved in something that is positive in that experience.
[04:34]
Podcast Host
And you're pretty upfront with consumers like this. You almost communicate the value exchange in a lot of your products. Is that pretty intentional?
[04:40]
Paris Sandoz
Yeah, I think it's intentional. And you know, from our perspective, I actually really think that it's important to have a transparent value exchange when you're there. And so our sponsor Playlist product, this is one where we actually went back and forth with the product teams and the engineering teams that we're working on. Just even just the verbiage down to kind of the way that we say there's a limited amount of interruptions or this limited ad experience is provided by the brand. And we tested a lot of those, did a fair amount of testing and figured out what worked really best from the return on ad spend, investment, as well as a time spent and a consumption perspective. So we look at that as we build these products and we're very clear with that value exchange. And I think that's important and something that, you know, as we think about the future of advertising, the future of computing, an area where I hope more people are pushing for that level of transparency because it is important for you to know what type of content you're about to consume. Is it a sponsored piece of content? Is it an organic piece of content? Does it contain sponsored information? And that level of transparency I think is absolutely critical to the future of the Internet that we have today.
[05:40]
Charlie Ibarra
I'm here with Charlie Ibarra, he's the co founder and head of content at Creator Television. Charlie, tell me about the creator Ad
[05:46]
Podcast Host
spot and why it's an important evolution
[05:47]
Charlie Ibarra
of the traditional TV commercial.
[05:49]
Yeah, the Creator Ad Spot is a creator led approach to television advertising. Traditionally, when creators appear in TV commercials, they're often simply cast as talent. With the Creator adspot, they become creative partners, helping develop, produce and star in the work that allows brands to combine the reach and impact of streaming television with the authenticity and deep audience resonance creators bring.
[06:12]
Okay, so what is a Creator Ad Spot unlock for brands and what makes Creator Television uniquely positioned to deliver for brands.
[06:18]
It unlocks advertising that feels more coaching well and relatable and native to how audiences consume content today. Which campaign can also extend beyond ctv. Through a companion social post from the Creator, Creator Television brings together geek creator relationships, television prevention expertise and sabio's advanced CTV audience targeting technology, allowing us to pair the right creator and message with the right audience.
[06:44]
Terrific.
[06:45]
Podcast Host
Thanks, Charlie. On the other end of the spectrum, you guys are still relatively early in your exchange product, right?
[06:51]
Paris Sandoz
Yeah.
[06:51]
Podcast Host
Can maybe catch us up on and what that looks like and what kind of new demand you're seeing coming through that channel.
[06:57]
Paris Sandoz
Yeah, so we're a little bit over a year, I think we announced it in April of last year what we call Spotify Ad Exchange.
[07:04]
Podcast Host
Right.
[07:04]
Paris Sandoz
And because it is advertising technology, you have to put an acronym on it. It's the rule. And so what we've done is we've called that product sax, which is a fun music acronym for us. And so we've been really happy with the progress that we've made in the kind of on our whole ad tech journey over the last 18 months. And what we've been focusing on is I guess, kind of like three areas that I would break down. First is really access, the second is measurement and the third is making sure that the, you know, the Spotify taste data is being able to be used across both our self serve platform and our Ad Exchange in the way that we do targeting and kind of, you know, data utilization. And so for us, the Spotify Ad Exchange has been, and along with our Spotify Ads Manager has been incredible for the expansion of active advertisers on the platform. And what we've seen is that there's a lot more access now that is capable in audio. And if we go back a decade in audio or we even go back five years in audio, that was an area where it was really hard to get access to our pools. Finite pool supplies. Yeah. And you know, you had to probably transact with paperwork. You and I might have faxed something back. Yeah. And you know, you were, you were buying in really targeted markets. And what we've done with Saks and our Spotify Ads Manager is really find a way to expand that access. And so our Ads Manager product, much like many others that are on the Internet, free to use, we've got a generative AI creative tool in there if you need help making creative. We've brought that generative AI creative tool now to our exchange as well. So you can create creative with us, download it upload it to your DSP of choice. And the access side of that has really allowed us to scale active advertisers both spending across our PMP or our programmatic guaranteed as well as open marketplace. And so, you know, we've got tons of advertisers who are being now exposed to audio for the first time and really understanding that power there. And with the Exchange, we've also been developing our own first party brand, Lift products, incrementality products utilizing our Pixel or our conversion API and bringing that functionality into the Exchange. And so we're operating both kind of as an Exchange provider because we've built our own Exchange that sits on top of our ad server. But we've brought a lot of those fundamental areas of platform logged in based products as well to the Exchange, which I think is really unique. Being able to use our first party measurement solutions free of charge on top of those channels. And then, you know, with our PMP style creation, we've also brought in all of our targeting audiences around fandom, you know, I'm a fan of this brand or this musician or this podcasting. And then our targeting categories that we've built a fair amount of machine learning around, we've surfaced those in the way that you can build a PMP or PG deal and bring that directly into the way that you're buying. And so for us, I think the Spotify ad exchange has really been kind of this culmination of bringing together our measurement stack, our ad buying stack with access as well as, you know, kind of this idea of all of the rich data signals that we have on Spotify. And if you think about how you as Spotify use it every day, yeah, you're creating playlists, you're listening to songs, you're skipping songs, you're listening to a podcast, you know, maybe you've spent the last five hours listening to the acquired podcast and then you're hopping over to something else and all of those signals. And I think we're in like the billions and billions of signals that are generated a day on top of our data set. And this allows us to have very precise and very unique targeting data on top of our very large logged in user base.
[10:14]
Podcast Host
I'm imagining the newer brands are they're probably gravitating towards the generative tools because they don't have creative. But are they as sophisticated in using their own first party data or the PMPS and things like that, or is that really the domain of the big guys?
[10:29]
Paris Sandoz
So, you know, I think that there has Been a lot of data utilization progress that has existed now over probably the last, I would say 12 to 13 years in advertising. And you have to give a bunch of that credit to some of the platforms that came before us in building their own first party tech. But the ability to upload first party data as a custom audience or onboard that through your data provider of choice, you can then leverage that in our Ads Manager product or with our PMP or PG deals. And so bringing your own data, byod, if you will, has definitely been something that we've seen happening in audio. When it comes to areas of generative AI and creative utilization and building those creative through the technology that we offer, we've seen rapid expansion in that area. And I think that also speaks to one, how nascent audio has been historically. And just it was kind of small on a budget line. We talked about a little bit about the size and scale of those buys. And so I think a lot of, you know, brands small and large were just not creating that asset. And we've provided ways for them to have that access. And we've now seen over 7,000 advertisers use our generative AI creative tool since we launched it. And so that's, you know, kind of rampant very fast. And we've been really happy with that because I think when you're a brand investing, you're seeking return. And this is not that different than, you know, a financial conversation or some of those areas about how you think about a portfolio and your media spend is really a portfolio approach. And so I think now with the introduction of the ability to mix audio in, we're seeing a lot more return coming from these advertisers that are leading in be able to move fast and use these new sets of tools that are out there across the ecosystem. We've also, and I'll take a small tangent here, but we've also recently launched plugins for Claude and Codex as well that kick into our ads API directly. And so if a buyer wants to use Ads Manager or they want to buy from the command line, they're now able to do that. And we're seeing just rapid, huge amounts of creation coming from the folks that are using Claude to create their ads with our cli. And you know, you're kind of boiling that down to, you know, natural language processing, text to speech and kind of these very simple ways to make ads. And I think that has taken a lot of the barrier away that used to feel in advertising of this is hard to create, this is complex. I need a full time employee or an agency now, you know, you're just, you're on cloud and you don't have
[12:46]
Podcast Host
anything, you don't have to be an engineer, you don't have to be expert.
[12:48]
Paris Sandoz
Yeah.
[12:49]
Podcast Host
What about, you know, audio historically has been not, not the easiest thing to plug into various ROI models. You talk about a lot of your products are open, addressed out. Are you. We're in this era where everyone's, there's increased pressure on outcomes. Are you guys getting that pressure and how are you kind of responding to that?
[13:05]
Paris Sandoz
I think that pressure is industry wide and I think it's a good thing. Right. You know, everybody is seeking transparency, they're seeking performance, they're seeking ROAS numbers. And ROAS is really, when you look at it from that perspective, it's a common denominator between all your investment channels. And so we're absolutely getting that pressure. And we've done a lot of work over the last year on our first party measurement solutions as well as third party partnerships that we've done kind of with all the big players that are across the board, everything from an apps flyer on the mobile side to somebody more like a Nielsen or a Kantar that are doing the Lyft products. And so we've had to build these full funnel advertising and measurement solutions because it's critical to have that happen right now. And to your point about audio, I do think that we know a lot about how we think about historical audio advertisements that we've heard in our lives, but we also don't really value them the same way. And you put, yeah, you know the
[14:00]
Podcast Host
strengths are there but you know the strengths.
[14:01]
Paris Sandoz
And like this is like one of my favorite things about audio is like I'm a huge lover of hip hop, which I'll tie back to this one. And if, you know, I hum like I'm loving it, you know exactly what that's from, right? And you know exactly what that sound bite that jingle is from. And that's something that is, you know, now 25, 30 years old and you probably think about Justin Timberlake doing them, but for me I actually think about Pusha T, who was a rapper who pretty big in the hip hop world with his group clips. They have new album, it's fantastic if you haven't listened to it yet. But they were actually the original writers, Pusha T for that jingle. And so it spawned this whole amazing like creativity area where now he's done this for other brands and he's working with other jingles because these jingles are Something that are so ingrained the way that we think about ads and you know, like our whole life, these little audio areas have kind of just been with us and I don't think we think about the staying power of advertising. And so it is a question there
[14:59]
Podcast Host
of like, it's hard to put that in. Mmm.
[15:01]
Paris Sandoz
Does audio need a different attribution model? Do you need to think about how audio works on a brand and a performance perspective. Perspective and how do you value that? And so I think there's some new muscles about how we weight it in mmms and some of the newer models, particularly with kind of as you move more into the Bayesian side of it, you, you can really actually put the right value on it and the right time decay functions into those ecosystems.
[15:21]
Podcast Host
That's fascinating. That, that, that's a, that's a game changer. If you can kind of figure out how to, how to plug that in and translate that into a. I might
[15:28]
Paris Sandoz
even boil it down to. I think that audio is a game changer.
[15:30]
Podcast Host
Yeah.
[15:30]
Paris Sandoz
The way that we've been thinking about it, I think is an area where we'd love to see more investment, but these fast moving brands that are getting on top of it now are delivering massive ROI for their businesses. So excited about the progress.
[15:42]
Podcast Host
All right, well, on that note, awesome conversation. Bert, thanks so much for your time here.
[15:45]
Paris Sandoz
Thrilled to be here. Thanks for having me.
[15:46]
Podcast Host
Great seeing you.
[15:48]
Charlie Ibarra
Thanks again to my guest this week, Spotify's Paris Sandal. And my partner is at sabio. If you like this week's episode, please take a moment to rate and leave a review. We have lots more to bring you, so please hit that subscribe button. We'll see you next time for more on what's next in media.
[15:59]
Paris Sandoz
Thanks for listening.