‍Spotify is expanding its ad solutions with new advertising tools. The company has introduced Spotify Ad Exchange (SAX), a programmatic ad marketplace, AI-generated audio ads, and improved measurement tools. These updates were announced at Spotify’s first-ever Advance event in New York City, where it said it working on improving its ad tech business.

“We’ve been hard at work investing in our ad platform, modernizing our ad tech, and solidifying industry partnerships to become a platform that delivers results for advertisers of all sizes,” the platform said.

Expanding programmatic advertising with Spotify Ad Exchange

The music platform has expanded Spotify Ad Exchange (SAX). According to the platform, SAX is a programmatic ad marketplace designed to enable advertisers to reach its logged-in user base in real-time. The company says the tool will allow advertisers to purchase ad inventory through automated auctions. Through demand-side platforms (DSPs), SAX will give advertisers direct access to Spotify’s users across music and, soon, video and podcast inventory.

Previously, Spotify partnered with The Trade Desk to enable programmatic buying for video ads. Now, the company is expanding SAX access to other DSPs like Google Display & Video 360, Magnite, and Adform, with Yahoo’s DSP expected to join soon.

Programmatic advertising is growing. eMarketer predicts that programmatic audio ads in the U.S. will hit $2.26 billion in 2025. Spotify is aiming for a share of this growing market.

Spotify Ads Manager gets an upgrade

Spotify is also enhancing its self-serve ad platform, Spotify Ads Manager. In July last year, Spotify rebranded this platform from Ad Studio to Spotify Ads Manager with a new interface and ad solutions.

Now, it is adding new targeting and measurement capabilities. The company says its Spotify Brand Lift solution and new App Installs objective will let advertisers analyze campaign performance. Spotify also strengthens partnerships with measurement providers like DoubleVerify, IAS, AppsFlyer, and Kochava.

These new upgrades to Ads Manager could boost Spotify’s ad business. The company noted that its Ads Manager saw a revenue increase of over 50% year-over-year in Q4 2024.

Generative AI comes to Spotify Ads

Spotify is also rolling out generative AI ad creation tools for advertisers to generate scripts and voiceovers for audio ads directly in Spotify Ads Manager. 

The feature is now available to advertisers in the U.S. and Canada at no additional cost. Spotify plans to expand the tool to UK advertisers.

Generative AI in advertising is not new. Other major ad platforms, including Amazon, Google, and Meta, have already integrated AI-driven tools to create ad assets. For example, Amazon introduced an AI tool for audio ads in October 2024, allowing U.S. advertisers to generate 30-second ads. Pinterest uses AI to transform product images into lifestyle visuals, while Meta offers tools that turn still images into video ads.

A response to Spotify’s ad revenue challenges

These updates come at an important time for Spotify’s ad business. Like competitors, Spotify is looking to advance its ad solution to compete in the ad market. In the second half of 2024, Spotify’s ad revenue dropped by 6.4%. Expanding its programmatic and AI-driven ad tools could help drive more ad spending and appeal to performance marketers.

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