Spotify's ad business is facing significant challenges, with ad revenue making up only 11% of total revenue, far below the targeted 20%. CEO Daniel Ek acknowledged the slow progress, attributing the poor performance to execution issues rather than strategy. The second-quarter ad revenue declined by 0.7% year over year, raising concerns among analysts about a potential plateau. To improve, Spotify is urged to enhance brand access to cultural moments and invest in better content partnerships and storytelling formats. Recent leadership changes indicate a recognition of the need for improvement in this sector.
In a world demanding seamless media execution and measurable impact, Spotify has struggled to connect ambition with action. It needs to give brands access to cultural moments, not just audio slots.
As of June, Spotify aimed for advertising to constitute 20% of its overall revenue, yet it only accounted for 11%, with a slight decrease in second-quarter ad revenue.
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