Spotify is quietly looking for a new ad agency to handle its media planning and buying as it takes steps to broaden its business beyond music and podcasts and push further into performance marketing.
The audio streaming company is planning to part with its global agency of record since 2017, ad holding company IPG Mediabrands’ UM, according to two knowledgeable sources.
Spotify shared a statement saying: “Today, UM is Spotify’s agency of record. Spotify constantly evaluates its marketing goals and bigger picture media trends.” A UM rep deferred to Spotify for comment.
Spotify is projected to spend $240 million in global media in 2023, including $50 million in North America, according to marketing research firm COMvergence. Spotify also has an in-house agency.
In October, Spotify posted an operating profit, its first since 2021, as user and advertising growth along with price hikes boosted results. In its earnings call, CEO Daniel Ek said the company was able to show that growth by reducing marketing spend and shifting the mix in favor of performance marketing.
Spotify expects to make a decision on a new agency in December; Publicis is in the running for the business, per one of the sources.
Spotify has branched out from its roots as a music streaming company, spending $1 billion to build a podcast division through the acquisitions of Parcast and Gimlet and deals with big names like Joe Rogan and Michelle Obama.
But profits have failed to materialize, leading to three rounds of layoffs in podcasts, including 200 people this year. The company also laid off another 600 people in a separate reduction as CEO Daniel Ek admitted the company was too aggressive in scaling up. Head of content and advertising Dawn Ostroff, who had led the podcast push, left as part of the reductions. Spotify has since pivoted away from heavy spending on podcasts and made some of its shows available on other platforms to spur audience growth.
For its latest act, Spotify is expanding into audiobooks, an area dominated by Amazon-owned Audible. In October, it began offering 15 hours per month of audiobook streaming to US and UK premium subscribers, or about two audiobooks per month, hoping listeners will pay up for more. (The company had previously introduced a pay-as-you listen model.)
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