Spotify ‘took some intentional pain’ to rebuild its ad stack. Is it paying off?
The Media Leader Interview | Cannes Lions 2026
Spotify’s VP of product discusses solving the ‘math problem’ of rising ad tier users but a fall in ad-supported revenue, and how Spotify has innovated its tech stack, measurement, and AI creative tools to attract more business.
I love a math problem.”
Spotify’s ad-supported revenue fell -5% year-on-year in Q1 this year, even as ad-supported monthly active users (MAUs) rose 14% year-on-year. What gives?
Per Sandell, VP of product at Spotify, tells The Media Leader the streaming giant has “taken a very intentional period of time to do a full rebuild of our advertising technology stack”, resulting in a period of lessened business performance that, he says, should turn the corner by H2 this year.
“We’re expecting to return to good growth, good contribution the back half of this year,” he says. “We’re now able to position ourselves as not only big, not only unique, not only audio, but a performant player across how a brand and an agency can invest.”
Sitting in an air-conditioned room on Spotify’s plage de la Croisette amid the Cannes Lions Festival of Creativity as its main stage blares talks from speakers and music sets, Sandell says it became “fundamental” for Spotify to take full ownership of its tech stack, which it had previously been “mostly renting” from an undisclosed tech giant.
“We took some intentional pain the last couple of years to rebuild fully our own stack,” he says. That includes building its own ad server; an API; an ads manager to buy video, podcast and audio inventory (“one of the more fun ones to use,” Sandell argues); and a programmatic ad exchange, dubbed Sax, which launched last April and is now integrated into more than 40 demand-side platforms (DSPs).
“Our journey has really been about transitioning customers from our old way of doing business in direct, into a programmatic area,” Sandell continues, adding that over one-third of ad revenue are now derived from biddable programmatic channels. The goal, he says, has been to fix the “access problem” that audio as a media channel has historically suffered from.
Investing in the creative side of audio
Could one of the reasons for the spike in ad-supported users be because of continual price increases? Sandell declines to comment on pricing strategy, but when asked whether he is worried price hikes will cause people to return to music piracy, he says he “hopes that’s not the future we have ahead of us, and I think we’ve done a lot to prevent that.”
According to Sandell, Spotify is ambivalent over whether a user pays a premium subscription or is monetisable through its ad tier. “It’s less about the ratio, and more about how we think about the individual business lines as drivers of growth,” he says. “If we can continue to build a product that gives you value, and that value is more than the price you pay for Spotify, whether it’s a subscription or it’s your time you have with ads, that’s a successful outcome for us.”
The latest value add for consumers? Spotify is acting as a middleman to assist “superfans” of artists in reserving access to live concerts. The new feature, Reserved, was announced in May for US-based Spotify Premium subscribers. Using listening data, Spotify holds two tour tickets for artists’ “most dedicated fans”, offering them a window to purchase before the tickets go to general sale.
“You’re going to see a pretty rapid expansion there,” Sandell says of the feature, which he billed as a genuine benefit to loyal customers. It arrives amid an era of music fandom marked by rising concert ticket costs and allegedly illegal resale tactics by the likes of Live Nation and its subsidiary, TicketMaster.
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What about value adds for advertisers? Beyond building a new adtech stack, Sandell says the market is “hungry” for more audio formats and more inventory within podcasts. But, he argues, the industry “has underinvested in the creative side of audio.”
He explains: “Finding ways to unlock more advertisers to have audio creative has been one of the biggest areas that we’ve been executing against.”
This includes via new generative AI creative tools, which have created over 20,000 AI-generated audio ads for over 7,000 advertisers since launch. The tools can generate ads in more than 12 languages, pulling from over 100 voices licensed by voice actors and providing background music, with payments fed back to rights holders.
Sandell views AI creative as an “on-ramp into the audio highway”, a way for brands to “crawl” in audio before they walk and run into the channel as marketing budgets increase with scale.
“What we’re really wanting to see is brands start to scale the amount of creative they have on the platform,” he says. “Targeting segments, different types of media, personalised copy. You might have a different message about fandom and basketball in New York right now than in [San Antonio,] Texas,” he jokes, referencing the recent NBA Finals.
When asked how Spotify’s embrace of AI audio ads could impact the wider artistic community, namely voice actors, Sandell responds: “Podcast remains one of the areas where bespoke voice talent in the most impactful. Something like Good Hang with Amy Poehler, she’s doing those host reads, and that’s where you get that level of authenticity.” Brands with larger budgets, he recommends, should consider direct integrations with talent as a more powerful way to get their message across in audio.
But not everyone has the time or money to make those investments, he continued. “Doing the proofreads, doing the copywriting, move quickly with those teams… that’s where generative AI really makes sense; how you get started in audio. And then once you find success, work to scale that with your own agency, your in-house team, with partners in the podcast ecosystem.”
‘A choice in the way you want to grade the homework’
In addition to investment in creative tools and Spotify’s tech stack, the streaming giant has also built more measurement optionality into its Ads Manager. In the last year, Spotify has launched a conversion API, brand lift solutions, and pixel-based conversions.
“That investment in measurement, once we have our own stack that really powers our ads business, is much more possible now. You can partner faster, you can execute faster, you can prove success faster,” says Sandell.
The measurability of streaming audio, and podcasting in particular, has come into question in recent years as consumers have taken to commonly skip host-read ads. Sandell acknowledges this is a “normal consumer behaviour”. A recent survey from YouGov, however, found that while more than half of podcast listeners in Great Britain skip podcast ads, many are still taking action afterwards.
It’s also challenging to gauge whether an individual is paying attention to an audio ad compared with a visual ad, though work is progressing in this area.
Still, the lack of standardisation of podcast measurement has led some leaders, such as Goalhanger CEO Jack Davenport, to call for the creation of a podcasting joint-industry currency (JIC).
“This is an industry problem that we have across the board. You can’t be to the level of dystopia” in tracking individuals’ attention to advertising, Sandell says, “but you do need to have a good measurement stack to support them. I think what this comes down to is that you need to have all the measurement partners your brands, your clients, and your agency partners want. Every third-party measurement partner, you need to support it. If you can, you do.”
Sandell argues it is important for brands to “grade the success of their media channels themselves”. When asked whether Spotify would better integrate with joint-industry currencies (JICs), however, he is noncommittal, instead citing brands’ use of mixed-media modelling (MMM).
“As long as you’re able to have a common currency with your client about what is performance, you can find a way to optimise and measure for that,” he offers. “The most important way to show the power of audio is incredibly strong measurement, and having the ability to have a choice in the way that you want to grade the homework.”
Advertisers have been opting to grade homework based on performance metrics and, Sandell acknowledges, “down-funnel, optimised objectives.”
That short-termist behaviour could cause audio companies to stop focusing on the power of the medium to build brand in favour of optimising for sales conversion, but Sandell prefers not to consider a strict dichotomy between the long and the short of it.
“It’s more a delivery-optimised mechanism of what you need a user to do as a result of an advertisement. If your brand wants reach, or wants them to visit a web page after they hear this, that’s where this optimisation comes from.”
Providing ammunition to CMOs that proves the power of audio on business outcomes, he implies, is no bad thing. “Yes, [brands] definitely want sales, but at the same time, having a way to tell that story, plus get a return, is where our multiformat strategy comes into play. Because you may tell a different story with your audio creative than you do with your video or display.”
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Multiformat growth
It’s not just audio that Spotify must now measure, but video as well. Podcasts are now vodcasts, with Spotify investing to make it “as seamless as possible” for users to move between listening to and watching a podcast on the platform.
The growth in the popularity of podcasts and their move into video have raised questions about the sustainability of investment in creators. Spotify paid a quarter of a billion dollars to Joe Rogan in 2024 as part of the platform’s renewal of its contract with the popular podcaster, and for the trouble the company still did not retain exclusivity over The Joe Rogan Experience’s distribution.
But Sandell insists that the pressure to pay ever-larger sums to podcasters and artists isn’t exerting downward pressure on costs. He adds: We think it’s the right strategy to build the best possible product, the best possible ecosystem, and make sure creators want to come to us.”
For advertisers, Sandell encourages clients to invest in a multiplatform approach, with ads across video, display, and audio.
“I think audio is at the same point that vertical video was at in 2015-2016,” he continues, adding: “A [podcast] conversation is much more human. And it feels like we’ve got a real opportunity here with audio to make these ads feel much better than blindly scrolling past them online.
“There are very few platforms that exist today that have the size and scale of our logged-in base, have audio, have video, and have display. There are maybe two or three other players that are of our size, scale, and diversity of formats that we have, and the amount of raw user data that we can use for targeting.
“It took us a little bit longer than we wanted to to get here. But we now feel very good about our future.”