Spotify announced this week that it will cut jobs again, just months after the last wave of layoffs. This particular wave will affect the podcasts division, causing about 2% of Spotify’s employees in that division to be laid off.
In a statement, Spotify said it is expanding its partnership efforts with leading podcasters around the world, with a personalized approach optimized for each show and creator, as this will better support the creator community. Spotify says it will be the basic axis.
As a result, Spotify has made the “difficult but necessary” decision to strategically reorganize the group and cut about 200 people from its global podcasts division and other divisions in order to adapt and build the best possible organization. Vice President Sahar Elhabashi said. Head of podcast business.
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But despite job cuts in the podcasting sector, Spotify remains the most-used audio podcast platform in most countries around the world, with over 100 million people on the platform since entering the space in 2019. I asserted that there are more podcast listeners than people.
It also reported a more than 1,400% increase in consumption, with podcast content now on Spotify growing from 200,000 titles to over 5 million shows. According to Spotify, podcast ad revenue also grew in the high double digits from 2021 to 2022.
Globally, podcasting as a medium is also growing rapidly, with more and more brands investing in this space as it matures. The IAB and PwC predict that by 2024 the value of this media in the United States will exceed US$4 billion.
If so, why would Spotify choose to downsize its podcasting division, and does its new strategy signal a shift in industry and trends?
According to Propel PRM communications manager Eitan Goldstein, the answer may lie in the fact that the entire podcasting industry is maturing and becoming more integrated. “An important consideration when considering these job cuts is how Spotify’s podcast team is structured,” Goldstein said.
The company acquired both Gimlet and Parcast in 2019 and operated more or less like separate entities. Now Spotify is consolidating these companies into his one entity called Spotify Studios. Given that both Gimlet and Parcast are podcast networks with their own rights, Goldstein said it’s likely he’ll have many parallel positions within the two companies as he’s spawned a number of services. said without saying anything. Redundancy.
“Given today’s economic climate, I wouldn’t be surprised to hear that these redundant positions will be phased out as part of Spotify’s efforts to streamline and reduce costs for its podcast service,” he said.
But this rationalization could be an indicator that growth in the podcasting industry is starting to slow to healthier levels, especially as the industry begins to move from a growth stage to a more mature one, he said. Point out.
This means that the podcast industry will not grow by leaps and bounds each year, but will grow at a slower, more sustainable rate that is better suited for long-term success.
Indeed, podcasting as a medium has exploded in popularity largely due to its low barriers to entry. “In fact, it’s become a running joke that literally anyone with an opinion and an internet connection can start a podcast, which is partly what drives the medium’s recent massive growth. It works,” Goldstein said.
“But as the industry matures and consolidates, I believe the strongest podcasts will survive. I think it’s starting to slow down to a healthy state.” Rates become more stable. “
As a result, there may be significant reductions in terms of low-level podcasts, which may lead to a reduction in the overall number of podcasts. “But I believe this will enhance the remaining podcasts, as they can stand out through their staying power.”
Adland players’ changing attitudes towards podcasting
Goldstein said of how the change will eliminate lower-level podcasts with little substance, Goldstein said that as the industry matures further, the medium may eventually be considered part of mainstream media. Yes, and I expect people to start talking about podcasts soon. It’s the same breathing as TV, radio and newspapers.
In fact, people in the advertising industry seem to agree that podcasts are gaining legitimacy as an advertising medium. A recent study by Propel found that the number of times a PR professional suggested a podcast to him in Q1 2023 was 21.23% more than he was in Q4 2022.
Average open and response rates for podcast PR pitches continued to increase this quarter. In fact, according to Propel, the open rate increased from 69.95% to 75.16%, and the response rate he increased slightly from 14.61% to 15.06%.
This is not surprising as advertising on podcasts has proven to be a hugely successful endeavor by Adland players. In a blog post, Spotify said advertisers across the industry saw an average conversion rate of 1.28% for their podcast campaigns, with pre-rolls being the most effective placement. Consumer insights companies such as GWI also said 12% of consumers surveyed said they discovered new brands and products through podcast ads and sponsored content, up from 10% in 2019. said to have increased slightly.
As a result, this maturation of the podcasting industry could help Adland’s players block out the noise and better identify which podcasts to pitch to convey the organization’s message. Specifically, Goldstein said, it will allow you to reach the right audience, not just the masses.
Also, embrace technology advancements over time as they will allow advertisers to leverage automation to gain scale and reach through advancements within programmatic, such as programmatic and dynamic ad insertion. It’s also important to keep in mind that there is a need, said Leela Naal, M.D., Asia-Pacific. fairness.
“Campaign effectiveness can now be measured down to the impression level, and this technology ensures that consumers don’t receive the same ad repeatedly during a podcast,” she said, adding that in the past it has increased ad spend on podcasts. It is more difficult than expected. “
But with Spotify’s downsizing likely to have been driven by the economic downturn and Spotify’s slowing revenue growth, podcasts remain a strong opportunity for advertisers, argued Nair.
After all, as Kevin Kan, CEO of Break Out Consulting Asia puts it, we live in a content-driven world, and as more people get busier and time becomes more precious, the need for podcasts will increase. is always present. The podcast industry has not slowed down and will not in the near future.
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