Interviewer: Esther Kezia Thorpe

What does your role at Spotify involve, and how did you get here from the agency side?

So, I’m Marco Bertozzi. I’m VP of Europe sales. And I also have two hats. So, I run all the local sales teams in Europe and I run our international team, which we call [MAP], which is multi market activity currently out of London and New York.

Well it’s two years in and, 20 years before that was a media career and media agencies. I guess I got to a point where I thought I would like to try and see what it is to work on the brand side. Having a big background in programmatic, I work with a lot of the tech platforms in all their shapes and forms, so I got pretty close to them. In actual fact, my first meeting with Spotify was when they first started to sell ads progmatically and they came to all the trading desks. So, we started to get to know each other, and I sat on a few advisory boards and things like that. And then when I thought about where to work, I think Spotify just ticked all of my boxes at the time because I was looking for a company that had great content, that was technology and data driven, and that was my background from an agency side, and I really wanted to work for a brand that people lived and breathed every day. I think when you work in the media agencies or in any agency side really, it’s really B2B. And it’s great working for a company where people go, ‘Oh, you work for Spotify’…

What’s it been like moving from the smaller agency world, well to I suppose, this is a global platform?

Yeah, I mean, it’s interesting because actually Publicis Media and Publicist Groupe was a pretty vast organization as well in terms of offices and numbers of people, and so on. So, it’s kind of less about the scale of it. If anything that’s the plus, because we’re still a company of a size that you feel like you’re genuinely contributing and able to actually know people all over the organization.

I think being on the brand side, everyone is pulling in the same direction fundamentally. We have a very overarching goal, which paraphrased is really just to allow artists to make a living off what they do, and to get music in the hands of anyone who wants it. That for us is a common goal that we’re all pointing towards. And I think it makes how you go about your job a lot cleaner, a lot simpler. In the agency world there’s tons of different brands and matrices and people pulling in different directions and fiefdoms, and they make it work. And I made it work. But there is a simplicity I think to having that really single-minded focus.

And I think less about global platform or not. The biggest question I’m asked regularly, especially from ex colleagues, is what’s it like being in sales when you’ve been a major media agency person the whole time. It is a very interesting switch. And I think it’s one that you have to have a certain mindset to to do. Everything is much faster paced in sales. I think also the individual is very important. So, one person can genuinely make a difference to a market. If you bring a new leader in or anything like that, they really can change everything.

I’ve been a Spotify subscriber for quite a long time now. So it’s been quite a long time since I listened to the ‘five songs and an ad’. How has the ad business evolved over that time?

The ad business has been and continues to be a very successful part of what we do, and we have most definitely evolved in terms of how we offer, so, yes back then, it would have been audio ads and then maybe a bit of display…

Programmatic wasn’t a thing.

Yeah, maybe some display. Then we moved on to mobile and introduced video, and so, we’ve been on a journey. I think really now though we look at things very differently. If you think about where Spotify is, we really consider ourselves the center of culture, people are reacting to us all the time.

People turn to music in, it could be a big macro moment in the world, could be an awards ceremony…. But then it goes down to your very individual things, when you’re having a dinner party, when you’re celebrating. People turn to music and we reflect these cultural moments. So now everything we’re really doing from a brand perspective is bringing them into that situation and hoping that that sparks some real connections for them. And we are…as other companies, we’re keen to make sure that we use it responsibly, but we use first party data to help with identifying those key moments, and mindsets that people are in.

The holy grail is if you bring an advertiser with the right creative into that right moment, then we think we can generate some really interesting outcomes. And at the end of the day yes we have historically been music-focused, people think of us as music, but I guess one of the areas that I like talking about most is about understanding people through music. So, it’s really about the people, and not just about music. And as we talk to advertisers, that’s what we’re really focused on, is helping them realize that when they advertise with us, we can then generate these business outcomes.

And do advertisers ‘get’ that, because so much of the ad market has been around display, and reaching people around what they’re reading or clicking; do they ‘get’ the audio audience yet?

There’s a couple of things in there. First of all, we have an audio business, we have a video business. And the video business is very strong as well.

A lot of people in the past when they think of audio, they think radio. And we’ve moved on from that discussion in a big way because one of our core strategies is around ubiquity. So what that means is we want to make Spotify available wherever you want to listen to it. So that could be in a car, it’s connected speakers at home, it’s connected TV’s, it’s XBox and PlayStation, mobile, iPad, you name it. The list gets longer and longer.

So, what’s important about that, is it gives us a real layer of context about what people are doing. There is something like 80 percent of your audio listening time, you don’t have a screen available to you. If you think about maybe working out at the gym, or driving, or any of these things. Now that we know what people are doing, what context they’re in, we know something about them, we can put together some really sophisticated strategies for how brands can succeed in this audio world.

At the end of day, that’s our goal is to become the world’s number one streaming platform, audio platform. And we’re trying to explain to advertisers now that it can’t be all about video video video. I think there’s a bit of a cultural shift now about moving away from staring at screens endlessly as well. So, we’ve got that context as well coming into play.

And so we’re encouraging advertisers to think about how they’re building their sonic brand in a world where more and more things are happening, whether it’s connected devices, voice activation, music and then obviously podcasts and things that no doubt we’ll talk about.

But that’s our main thrust, and advertisers are buying it, and we’re proving it. The key thing for us is we work with the people; Nielsen Brand Effects, we work with Moat, we work with IAS, we work with someone like Placed to demonstrate footfall on the back of our campaigns as well.We’re working with all the industry leading partners to prove out these business outcomes. That’s what advertisers are buying into. And that’s where we’re seeing the success.

That segues nicely into Spotify’s recent acquisition of Gimlet and Anchor. So it’s clear Spotify believes that podcasts have a profitable future. Are we at the start of the boom, or we got a little bit of a way to go…?

So first of all, just taking a step back, Daniel [Ek]’s view was we’ve clearly been very focused on music, and we will continue to do that. But the audio marketplace is effectively valued at a tenth of the video marketplace in terms of how we value the the interactions, and his view is that that can’t be like that forever. And people are realizing that more and more.

Our goal is to become the number one audio platform in the world. And you can’t do that without thinking about the other ways that people are consuming audio. So, podcasting is an obvious thing.

What I like about podcasting is, to your point is it’s very demand driven. I think it’s crept up on the world, podcasting. It’s become this incredibly popular thing. Most importantly as well, with a young audience. I think there was possibly a time when people thought older people would listen to it. But it’s actually, the average age is 26 or something, of listening, and it’s growing crazily. It’s 250% up in terms of listening.

So, I think we’re very much at the start, because if you think about how people are consuming at the moment, our focus is, I think we’re the world’s second biggest podcasting platform now. But how you consume it is still…there’s work to be done. And obviously we want to bring all the good stuff that we brought to the music side of our business with algorithms, and playlists, and creating content for you, and making things discoverable and making it easy to discover things. We want to bring all that to podcasts as well.

The more of that we do, the more appetite there will be. We see it in the numbers. People who listen to podcasts on our platform spend more than twice as long on the platform, than those who only listen to music. So, right now we’re probably thinking, this could easily be 20 percent of the time people spend on our platform alongside the music. And I think we’ve seen in the programming side of things with all the usual companies that that appetite for content has grown and grown. Our purchase of of Gimlet is just giving us that opportunity to create really really outstanding content for people to consume, and hopefully as we do more and more of that and we make it easier to discover, they’ll come back and they’ll listen for longer.

I would see us very much at the start of this. And I think we’ve got a huge opportunity to revolutionize all of this.

And how does programmatic advertising fit into that vision?

Again it’s really early days. We’ve only just bought the company. All I’d say is…I wouldn’t necessarily jump to programmatic. I would just say advertising, we see it as an opportunity, a promising opportunity but right now it’s a little bit early to say. People are used to advertising in some shape or form with podcasts, so I think there’s a little bit of that head start in terms of how people think.

But as we do with everything else, we’ll work through that, and we will aim to create a really good experience for our listeners because that’s ultimately our number one goal is that they’re happy, they keep coming back, and they listen for longer.

Ads have got a bad rap in, well, not recent years, but they’ve certainly got a bad rap. What’s your take on interrupting the audio experience with advertising?

It’s interesting. I’ve always thought, and I don’t want to go back to radio having said we don’t want to talk about radio, but I’ve always thought that radio has kind of had a good rep for being quite personal and intimate, and that interaction.

I think from Spotify’s perspective, that there’s a couple of important key facts, which is, first of all, our ad load is very low compared to commercial radio. We actually don’t put that many ads in front of people per hour. And that’s important. But what we’re working on a lot is the quality of the ads, because we have this opportunity now to say, if we know what they do…if we know that someone is driving, or we know that they are playing on XBox or we know the type of music they’re listening to, we have the opportunity to develop creative that fits comfortably into that space. So, not only do slightly less ads, but do them in a way that blends with what they’re doing.

The other thing is that, it’s actually a very good value exchange. I think our listeners understand that they’re getting 40 million songs, and there’s three billion playlists on there that these people are leaning into, right! These are playlists created by our listeners. They understand what they’re getting for those ads. And I think that’s important, because then that is again, another opportunity for the brand advertisers to benefit from that.

You asked about the advertising. One of our video formats is a call to say, if you watch this this video, we’ll then give you 30 minutes ad free. So, again people are used to that format on our platform. It creates incredible viewability figures for us, which I will come on to in my second point. It creates incredible, very high, 70, 80, 90 percent viewability, because people are accepting how we’re putting these ad to them.

On a wider basis, because our platform is built like that, there’s no scrolling, there’s no ads around anything else. It’s 100 percent share-of-voice. So we’ve got all the ingredients.

The ads community in general is something where I personally think we just have to lift the bar. Our standards needs to be higher as an industry in terms of what we expect, or what advertisers should expect of us. And I see, one of the things that made me very comfortable about coming from buy side to sell side, is that I can look a client in the eyes and say, we’ve got a really quality advertising product here. People are watching it. We do have high viewability, we do have only professional content and brand safety. And as an industry we need to do more of that.

In fact, today we are launching a #loveads project. I’ve been talking about it for some time. It was really an internal proposition that we started for my team really. When I joined, when I looked at how good our products were, I felt like we should be really shouting about this and being proud of this, and we should love our ads. We do work in a big subscription business as well. So, it also helps give people a focus and identity.

What has been interesting about it is, it’s kind of permeated out into the world and journalists and clients and other people are saying, well what’s this #loveads thing, because it seems like a lone positive voice in what sometimes has become a slightly negative rhetoric. And so we’ve run with that a bit and we’ve been enjoying that, and I still get emails from people or on LinkedIn where they end with #loveads to me. They’re playing to my soft side!

Today we’re actually launching a really cool website that’s going out into the market, it’ll be open to everyone, where we’re asking people to put their favorite songs associated with advertising, and then rank them and vote for them… So, hopefully we’ll end up with top music associated with ads, with no particular goal, other than to say, we’re into this, we’re into ads.

What we’re doing is a bit of a micro thing, but I think our industry probably could learn from that, and in fact talking to the IAB and people like that, they’re thinking this is… We kind of need to go down this road for our whole industry. And I think that’s exciting. Immediately people react well to just positive sentiment instead of negative.

We’ve got what they call the triopoly now, with Google Facebook and Amazon dominating global advertising. What would it take for Spotify to get up there?

One of the things I’ve learned coming into Spotify is that we are very single minded about what we’re trying to do. We tend not to worry too much about some of those other companies. We just focus on our area of business. We’ve got the most amount of people dedicated to audio of any platform out there. We’ve got a single minded focus on what we’re trying to do. We are growing, consistently growing, so we’re over 200 million MAUs [monthly active users] now., and 96 million subscribers, and that continues to grow.

In our area of focus, then we would consider ourselves that kind of scale. There are 2.5 billion smartphones out there, so you could argue that there’s the opportunity for where we put our audio platform of the future. We work alongside all of these people. But we are very single minded about what we’re trying to achieve.

Spotify has a hybrid offering of subscriptions and ads to give its audience the experience they want. Could this work for other industries? I know Apple are looking to launch their own kind of ‘Spotify for magazines’.

It’s not my area of expertise, how the publishers do it. I think the concept of either micropayments or repetitive subscriptions makes a lot of sense to people. What I like for instance, if we take what Nick Hugh’s doing at the Telegraph, as a premium publisher, I think staying close to your audience is important. That’s something that we take very seriously at Spotify, is being very considerate about our listeners and making sure we put them first. And I think that relationship is important to everything else we do.

There’s opportunity, if you’ve got a strong brand, you’ve got strong content, I think there’s always an opportunity to benefit from some form of subscription.

And what are some of the key things you’re aiming to achieve with Spotify’s ad proposition just in the short term this year?

Our ambition is always to grow revenue really quickly! And that is what I’m always asked to do. So, we’ll continue along that line. We are relatively new into a few areas. We have a really cool self-service platform called Ad Studio, which is currently around the audio space. Advertisers are able to build their own campaigns in there, and their own audio ads as well, importantly. As you know with all the other companies, self-service is an incredibly important part of automation in advertising, so that’s one area we’ll continue to focus on and grow as quickly as we can.

We are going to grow podcasting. That’s obviously something, as I say we’re at the start of, but I think we see a massive opportunity.

And the data play is again, something that we’ve got a lot of first party data that we use regularly. But we’re also going deeper on how we use that for custom audiences and segments to really enrich what we’re doing with our advertisers.

So, there’s never just one thing. There’s always like a whole range of things. Everything is in growth ascendancy and I think the audio side of that is something that I just think’s going to be incredibly important. More or more advertisers are going to see that this is a great way to reach people, and it’s not about radio anymore. And hopefully we’ll be in place to benefit from all of that.

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