A Spotify exec explains its new podcast ad tech he thinks will convince big marketers to write 'consistent checks'

• Spotify announced Wednesday the launch of its new podcast adtech feature, called streaming ad insertion, or SAI.
• SAI will allow podcast advertisers to measure ad reach, recall, and more, providing data that has previously be unavailable or unreliable when it comes to podcast ads.
• This tech could help bring podcasting up to speed with other digital advertising mediums and lead to increased ad spend in 2020 and beyond, said Gimlet cofounder and Spotify podcast and studio operations head Matt Lieber.
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Spotify announced Wednesday that it's launching a new podcast adtech feature called streaming ad insertion (or SAI), further indicating the podcast industry's push to use tech to grow revenue in 2020.

The new SAI tech will power Spotify podcast ads with capabilities including ad sales, planning, insertion, and - perhaps most important - measurement.

Podcasting has steadily been picking up steam with listeners since the blockbuster launch of "Serial" in 2014, and some in the industry, like Gimlet cofounder and Spotify podcast and studio operations head Matt Lieber, say it has reached mainstream media status.

Spotify now offers over 500,000 podcasts, and podcast consumption on the platform increased 39% from Q2 to Q3 in 2019, the company said.

But there's a gap between the time listeners spend with podcasts and ad dollars flowing into the industry, Lieber said.

That's partially due to the fact that marketers and media buyers don't yet fully understand how to buy podcast ads, but also because ad tech in podcasting lags behind other digital mediums when it comes to measurement.

"When you ask marketers what the real obstacles are and why they're not spending more here, the answer is awareness - they don't know how - but it's really measurement," Lieber said. "They don't have the level of confidence in the measurement to write consistent checks."

Streaming is a game changer for podcast ad measurement

Podcasts have historically existed on platforms as RSS feeds. Listeners subscribe to a show, download it, and therefore experience ads that are baked in as opposed to dynamically inserted.

This static file format means that when it comes to ad measurement, podcasting looks more like a print medium than a digital one.

Advertisers can only get a general sense of who their content has reached based on the target audience of a podcast, but they have no way to know for sure how many people are actually absorbing and remembering the information or acting on it.

Dynamic ad insertion has been on the rise with podcasting in the past few years, allowing podcasters to update ads in their audio files and thus increase revenue opportunities, but it has done little to solve the measurement problem since episodes are still downloaded instead of streamed, Lieber said.

Streaming platforms like Spotify can show engagement second by second, allowing for the possibility of more specific audience targeting, better measurement capabilities, and data-driven podcast ad campaigns with streaming ad insertion.

"SAI is our attempt to bring podcast advertising up to par with a level of measurement and transparency and reliability that digital marketers expect from other digital advertising," Lieber said.

Instead of buying podcast ads based on downloads with no reliable way to tell if listeners have skipped an ad or even reached it in an episode, streaming ad insertion will allow advertisers track exactly who their ads have reached and grant them access to metrics like ad recall that they're used to seeing with other digital mediums.

Puma, for instance, was one of the first brands to test SAI, according to a statement from Spotify. Puma placed host-read ads in Spotify original podcast "Jemele Hill is Unbothered," and subsequently learned that the ads resulted in ad recall lift by more than 180% thanks to SAI targeting.

SAI is still in early stages, but Lieber says the tech is on track to increase ad spend without impacting listener experience

In addition to recall lift, SAI can also measure actual ad impressions, reach, listening frequency per user, and provide anonymized audience data like age, gender, geographic location, and device type. That data in particular could encourage more advertisers to buy into podcasts, Lieber said.

Spotify's podcast audience includes many younger millenials and teens from Generation Z, Lieber said, but with the rise of subscription streaming services, these users are experiencing fewer ads than generations before them.

Since podcast ads, and host reads in particular, are organic and intimate, advertisers are increasingly turning to podcasting to appeal to this "unreachable" demographic, Lieber said. SAI can tell these advertisers whether or not they've actually been successful in that endeavor.

Spotify will continue testing SAI with its original podcasts only over the course of the next quarter, Lieber said, and is currently working with several brands in addition to Puma. The company declined to name the brands.

Listeners might notice more relevant ads, but generally shouldn't experience any change in their podcast experience, Lieber said. Advertisers, on the other hand, might see significant advancements to the ways they understand and use podcast advertising.

"If we want to get brands and agencies to consistently commit seven to eight-figure sums, we need better measurement," Lieber said.