Between 2019 and 2022, Spotify $SPOT spent more than a billion dollars on acquisitions related to podcasting, across both content and advertising/analytics technology. And early this year, the company abruptly changed its strategy. (1/X)

2/ Spotify hired a television veteran to scale its content strategy in 2018, and the company subsequently went on a spending spree, buying up podcast publishing tech & exclusive publishing rights to tentpole content such as The Ringer, The JRE, Gimlet Media, and Call Her Daddy.

3/ Ostensibly, the strategy sought to aggregate exclusive rights to broadly-appealing podcast content and drive monetization through both incremental subscriptions and advertising. For a time, it seemed to work.

5/ And then it didn't: advertising revenue growth slowed and the lavish sums spent on podcast content exerted a drag on gross margin. In January of this year, Spotify laid off 6% of its staff and parted ways with the architect of its podcast strategy, Dawn Ostroff.

6/ The problem with the strategy is that podcast advertising is inherently difficult to measure, and the broadly-appealing podcast content Spotify acquired has no contextual relevance for advertisers. It's not appealing to direct response advertisers that want to drive outcomes.

7/ The TV content/advertising playbook is a poor fit for digital products, where the towering opportunity with advertising is DR. This requires niche content with contextual relevance. Brands care about reach; DR advertisers care about conversions. mobiledevmemo.com/understanding-the-role-of-brand-marketing-for-digital-products/

8/ Spotify introduced an audience network in February 2021, but it's unclear how much traction it has achieved or can achieve in the wake of ATT. ads.spotify.com/en-US/news-and-insights/2021-podcast-ads-announcements/

9/ Spotify has invested in measurement solutions, but without behavioral targeting, its broad content is only suitable for brand advertising.

10/ Full article here: Spotify and the quality of podcast advertising mobiledevmemo.com/spotify-podcasts-and-the-quality-of-brand-advertising/