We've seen a 94% increase in video screen time spent on Spotify India: Arjun Kolady

At a recent event, Spotify India’s head of sales Arjun Kolady said it has seen a 94% increase in the screen time spent on video when using the audio streaming app.

It is a surprising revelation, and yet it is not.

He says unlike the western markets like the U.S. where radio is big, India is the opposite.“Video is big in India. Advertisers have been doing YouTube and other digital video formats for almost 10 to 15 years here.”

What is surprising is the fact that despite being an audio streaming platform, most of Spotify India’s major chunk of ad revenue comes from video ads, says Kolady. This again is not surprising because India remains to be a price-conscious market. According to the 2024 FICCI EY report digital music revenues (including YouTube) increased almost 9% in 2023 to reach Rs.18 billion, 77% of which was advertising-driven.

According to various reports, Spotify India marked a 91% surge in its ad revenue in FY23, and the subscription revenue grew by 66%.

Kolady says along with the high demand for video, “there is a lot of demand for premium audiences among advertisers as they have high purchasing power and consumption patterns. Counter-intuitively, Spotify has probably the best video ads product in the market, so we have successfully led with video instead of leading with audio,” he states.

He doubles down on the audio streamer’s video ads prowess saying, “On all metrics and measurements, we are probably outperforming most of the other digital video products out there, especially if you compare it with video OTTs.”

Recording profits

With 626 million active users worldwide, Spotify is an audio streaming powerhouse, but profits eluded it. Until now.

In July Q2FY2024, Spotify marked a record profit with revenue of nearly Rs 31,000 crore (3.81 billion euros) and a net profit of nearly Rs 2,500 crore (274 million euros), versus a net loss of Rs -2,700 crore (302 million euros) in the preceding year.

A major chunk of the profitability is linked to the Swedish audio streamer gaining seven million paid subscribers during this period. As per the company’s Q2FY24 results, its global ad-supported revenue grew 13% year-on-year.

Multi-format approach

While Spotify India sees a rise in video ad revenue, it is now deploying a multi-format approach for advertisers because Kolady says a lot of people's time spent on the platform happens off-screen.

He explains that the advertiser does not have to worry about it as they can capture all kinds of audiences with their multi-format ads. He says they do not run video ads unless the user engages with the screen. "We know when the user is interacting with the screen, or they're changing a song, or reading lyrics, or picking a playlist, that is when we deliver a video ad."

“Most people are pleasantly surprised when they measure a video campaign on Spotify because it is fully viewable, with the sound on, and non-skippable.”

However, he advises advertisers that if they want to drive reach and frequency at scale, they need to lead with video, but also add audio and display ads. “So over time, most of our large and evolved advertisers are running multi-format campaigns,” he adds.

Recently the platform has started to double down on videos even beyond ads. In March 2024, the company launched a new feature ‘Spotify Music Videos’ that will allow users to watch music videos on the platform. Although the feature is currently in beta mode for premium users and only available for use in 11 countries excluding India, it already has video podcasts and short vertical videos called Clips.