Core Insights - Spotify's advertising business is struggling, with CEO Daniel Ek acknowledging the company has been moving too slowly in this area [1][4] - The goal is for advertising to account for 20% of overall revenue, but as of June, it only made up 11%, with second-quarter ad revenue down 0.7% year-over-year [1][5] - Industry analysts are questioning whether Spotify's ad business has plateaued, contrasting with the company's overall strong performance in user growth and stock price [2][3] Advertising Strategy - Spotify's ad efforts have been hindered by a focus on its more lucrative subscription business, leading to a decline in customer service and low ad rates [3][21] - The company has recognized the need for change, leading to the departure of longtime ad head Lee Brown, with a search for new leadership underway [4][5] - Spotify's podcast strategy, which aims to connect advertisers with Premium users, has been described as messy, with inconsistent execution and various pivots [6][9] Financial Performance - Spotify generated $1.9 billion in ad sales last year, but the profitability of its Premium tier is significantly higher, estimated at 15 to 20 times that of the advertising tier [7][8] - The average CPM for digital audio ads was $16.51 in the second quarter, with Spotify claiming its average CPM is "far above" $9 [15][16] Customer Service and Operations - Advertisers have expressed concerns over Spotify's customer service, citing slow response times and high turnover in the ad sales team [21][22] - Issues with ad consistency in podcast streams have been reported, affecting campaign performance [23] Future Outlook - Spotify is optimistic about improving its ad business by 2026, with recent initiatives including the launch of the Spotify Ad Exchange and partnerships with adtech companies [25][26] - The company is also focusing on video content as a potential revenue stream, with a significant increase in video podcast consumption reported [20][19]