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These 3 trends will dominate advertising: Spotify's Lee Brown

Spotify (SPOT) Global Head of Advertising Lee Brown joins Yahoo Finance's Brian Sozzi and Rachelle Akuffo at the 2024 Cannes Lions International Festival of Creativity to discuss the future of the business and how AI is changing the advertising landscape.

Spotify has been leveraging AI in its user experiences to offer its listeners everything from customized playlists to music discovery. On the advertising front, the company is rolling out a new tool called Quick Audio that will enable quick script generation and voiceovers for audio assets. Brown explains that over the next year, the major challenge will be "sifting through the AI landscape and what that's going to bring." He will be closely watching how the technology will impact creativity, targeting, brand safety, and performance, adding, "I'm a big advocate that it's going to play out in a very positive way for the advertising business."

As for Spotify's future, Brown points to being much more than a music company: "Four years ago, we were mostly known for our music company, and we still are. That's the heart of what we do. But we made a really strategic decision to become an audio company and introduce podcasts into the app. And that was at the time, they said, 'Hey, you have to keep music and podcasts separate.' That's what everyone else was doing. And we were sort of among the first that brought them together." He points to audiobooks as a recent expansion of this idea to bring multiple forms of content to the Spotify experience. Brown adds that podcasts can also be viewed as videos to provide users dual consumption modes, and while he reiterates that Spotify will always be audio-first, he believes "video as a companion format is something that will enhance the experience."

Alongside AI, Brown points to globalization and branding as major trends in advertising. He explains that marketers will be making ads more locally relevant to users, as well as focusing on building brand resiliency amid an inflationary environment.

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Click here to keep up with Yahoo Finance's coverage of 2024 Cannes Lions International Festival of Creativity.

This post was written by Melanie Riehl

Video Transcript

Joining us now here at K is Lee Brown, Spotify, Global head of Advertising and most importantly, former Yahoo.

Welcome home Lee.

Thank you so much.

So glad to be here.

We, we, we appreciate it here.

So lots of talk here on the ground about A I and it's been a topic for the past two years, but I really think A I means something to a company like Spotify.

How is this new technology changing your platform?

Yeah, certainly it's not new for us.

We've been leveraging it for a long time, obviously, with creation of uh playlists with uh uh personalization and discovery that we've had on the platform for so long that, you know, driven over 615 million listeners to the platform spending on average about 2.5 hours a day.

So that deep level of engagement gives us a lot of unbelievable data for us to train off of and for us to make the experience even better.

And I think there's just more that's more that's coming, we just released, you know, last year A I DJ.

I don't know if you X is here with us this year he's the voice of our A I DJ, which is something that we're really excited about.

And our listeners have responded so well too.

And this week we're, we're releasing a few advertising tools related to A I mostly around uh you know, creative and creative assets.

And so we have a new A I audio tool coming out that's called quick audio, that enables you to do quick, you know, script generation as well as voice over to create an audio asset because so many marketers are looking to bring, you know, believable creative.

And that's one of the biggest barriers to entry for the platform.

Now, a lot of people when they think about Spotify, they think of, of course, of the Joe Rogan podcast, these very expensive podcasts.

But how would you describe the next evolution of Spotify to someone who really, that was their entry point?

Oh, what a great question.

You know, four years ago, I think we were mostly known for a music company and we still are, that's the heart of what we do.

Um But we made a really strategic decision to become an audio company uh and introduce podcasts into the app.

And that was at the time they said, hey, you have to keep music and podcasts separate.

That's what everybody else was doing.

And we were sort of among the first that brought them together and really found that, you know, what you listen to both uh in music as well as on podcasts can come together into a really unique experience.

And just recently, we just launched audio books and so we have audio books now on the platform as well.

So you start to see other forms of content coming into the Spotify experience, which our listeners are, are loving and embracing.

And it's uh it's enabled us to have that sort of deep level of engagement.

So I think you'll start to see more of those new categories of content coming on with all the personalization and discovery that you expect from your Spotify experience.

Where are the ad dollars mostly flowing to within, within the free tier?

For sure.

So we have, you know, several lines of business music is certainly our largest lot of business, but podcasting is growing immensely fast and yes, yes, a dollars are going, you know, mostly in those you think about formats, audio and video, videos are still fast growing format for us because we have more and more as you to answer your question a little bit further.

A lot of listeners are like, not only coming to Spotify, to listen to their podcast, but they're coming to watch their podcasts.

And I think your podcast is on Spotify, which is great.

This is how you get more listeners it's tapping into your.

So it is a podcast airs on Yahoo Finance, but also airs a podcast for on Spotify.

And we find that listeners want to do that dual consumption.

They want to like audio first if they're, if they're walking or if working out or if they're cooking.

But if they want to see something like, oh, what is Brian talking about?

They want to shift modes to go to the foreground.

That's something that we're finding a lot of listeners are doing over time competing with youtube.

Do you want to be big in video like that?

Well, listen, I think we will, you know, always be audio first and that will be sort of at the heart of what we've been doing.

But I think video as an optional format or as a companion format is something that will enhance the experience or bring more value to that experience.

We're sort of taking the cues from our listeners as well.

And I have to ask you about the, the price going up in July, what does that tipping point look like?

It's going to be sort of a little too much for a consumer that's already a little bit stretched right now.

You know, I think uh the value of our bundle is something that we spend a lot of time investing in.

So, you know, we have, you know, 100 million plus tracks on the platform, we have 6 million plus podcasts on the platform 6 million.

Now we have, you know, 350,000 audio books on the platform.

And so if you think about the value of the bundle that we're bringing to the marketplace.

I think we're very confident also in the numbers that we're seeing from those increases.

We have a very loyal and very engaged user base from an ad perspective.

What's your biggest concern looking at over the next 12 months?

Listen, I think the biggest concern over the next 12 months really sifting through like the A I landscape and how, what's that going to bring?

Especially we're here in Cannes at the creative conference.

What's going to happen to creativity?

Is it going to help creativity?

Is it going to kill creativity?

And there's that whole debate around, you know, how will A I make advertising better, better targeting better brand safety, more relevance, better performance.

How does that all play out through machines?

And I'm a big advocate that I think it's going to play out in a very positive way for the advertising business.

But I think there's a lot just as we went through all the incarnations of mobile video, you know, direct response, I think we're about to go through one of those big sea changes within advertising and it's exciting.

Does it kill creativity?

I don't think so.

I think it will be a great compliment.

I think it enables you to scale creativity.

Uh We just launched last week Creative Lab, which is our in house creative agency and it is uh you know, enabling marketers to really build out these robust brand experiences that you know, take advantage of our creative cultural contextual relevance of Spotify, everything that fans love and you know, have marketers really lean into this hyper engaged audience of 615 million.

So I think it's going to be a great compliment to creativity Emily, is there anything that you think perhaps is being underrated by people about the changes ahead when it comes to the trends that you think are going to be dominating the marketing space.

Yes, great.

So yeah, right now, I think there's a few trends that are coming in globalization, first and foremost.

So how marketers are now buying globally and making sure that the audiences they're reaching at a local level.

So how do they adapt the message, make it more locally relevant for their audiences?

I think it is a trend that's coming.

Certainly A I and machine learning and performance based marketing is something that is going to be further accelerated because of the adoption of all this technology.

So I think that's a big trend coming and I don't want to get lost.

Uh the brand.

Uh You know, I think a lot of people um in time, certainly with the inflation, Yahoo finance, but the inflationary environment that we're in, I think uh marketers have a tendency sometimes pull back on some of the brand, but we'll see a resurgence of that coming back.

I think they will like, they'll, they'll recognize the value of creating that brand building that brand and the resiliency of that brand over time.