“I don’t know a single 20 year-old who owns a radio”. That’s according to Jad Adumbrad, of RadioLab fame, in an interview with PBS NewsHour.
That’s likely a stretch, but Mr. Adumbrad has a point about the transition to digital radio. Statista estimates that by 2019, as many as 191 million Americans will be listening to digital radio channels and services in one form or another. This trend has implications for both monetization and user experience.
For the 90-plus years commercial radio has been in place, advertising has been the main revenue driver. But currently, and somewhat counter-intuitively, the most popular streaming audio services, which include on-demand music and radio, have not focused on an ad supported business model. Instead, these services rely upon paid-subscription models as the primary source of revenue.
For example, Spotify, the music streaming service, currently hosts over 30 million paid subscribers and 70 million ad-supported listeners across 59 different global markets. 70% of users listen to the ad-supported Spotify Free version for streaming music, representing a monetization opportunity.
In order to help realize that potential, we announced today that Spotify is taking a lead and partnering with AppNexus on programmatic audio to support new and better ways of monetizing ad supported audiences. Spotify is leveraging its rich user data and embracing digital advertising to further competitive its advantage.
Why is this the right time for programmatic audio? First, there has been no open standard in place, making it challenging to bring buyers and sellers together and limiting market receptivity. Second, the music streaming space was in a more formative state, but now it’s exploding across the globe, overtaking traditional sales of both physical media and digital downloads. Third, it’s necessary to handle monetization at scale with a market that could rise to hundreds of millions of music listeners. AppNexus can do that with technology infrastructure that processes five million queries a second and 100 billion RTB auctions per day.
AppNexus and Spotify chose to address the standards challenge together by working with the IAB and other partners on the addition of audio to the OpenRTB 2.4 Protocol. Among other things, OpenRTB 2.4 includes support for programmatic audio via a new audio object. Beyond the fact that we’re honored to partner with Spotify, the OpenRTB 2.4 protocol furthers AppNexus’ commitment to providing a dynamic, open marketplace able to support digital media formats of any and all kinds.
Today’s dynamic internet ecosystem of music and video streaming, interactive gaming, app stores, the “Internet of Things,” GPS, cloud cognitive software and augmented reality requires a data-driven monetization engine that is based on open standards and can customize the user experience across channels.
AppNexus powers a platform for digital advertising across all digital media types, including display, mobile, native, instream and outstream video, and now audio. Our programmatic audio features follow a number of recent advances including the launch of a Video SSP, technology to reduce latency to improve user experience, video viewability measurement for free across the platform, and a partnership with Microsoft to monetize their video supply.
In addition to collaboratively creating and supporting an open standard for programmatic audio, AppNexus is building products to help grow this market. Now in closed Beta, select audio buyers will be able to target Spotify inventory leveraging Spotify’s first party data on age, gender, playlist, and genre in a deal and private marketplace environment. AppNexus audio buyers will have access to the same tools they have today for their display and video buying including the ability to upload creatives, transcode them into multiple formats and bitrates, and deliver creatives via the Content Delivery Network (CDN).
This advance in programmatic audio benefits the entire advertising ecosystem: it allows advertisers to connect with listeners at moments when digital advertising typically isn’t able to reach them such as driving, walking, and working, it provides listeners with more engaging and relevant ad experiences, and enables audio publishers to better monetize their inventory.
We’re excited about this new move into programmatic audio with Spotify.