ad rates fell about 30% in Q1. Given the poor state of economies around the world -- U.S. gross domestic product dropped 4.5% in Q1 -- expect lower brand advertising to deflate ad rates in Q2 as well.
But if Spotify can hit the midpoint of its revised 2020 guidance, the company's annual revenue would still grow about 22% from 2019. Subscriber growth should continue through the year as Spotify 2020 forecasts 143 million to 153 million subscribers and 328 million to 348 million monthly active users.
Spotify reiterated some of its main talking points -- listening is going from linear to on-demand, the opportunity is on-demand audio, not video -- but the earnings release's takeaways aren't spin and can be considered trustworthy. Likewise, the company's executives don't hide under subterfuge during its earnings call, and instead give conservative, straightforward comments and insights into their thinking process and expectations.
."There's been a platform shift where more consumption is happening in home," CEO Daniel Ek said."That will change [marketing] tactics and channels we're reaching consumers on the marketing side. Long-term it's an opportunity to remind people when they come back to the car, like Daily Drive. We feel good about content and there's content for every part of their lives; marketing's job is to remind them of that.
Ek added that Spotify believes advertisers will shift from"pure reach," or radio's blanket audience targeting, to"measurable formats," or digital advertising that allows advertisers to track their ads' effectiveness.. Video is a complement to audio on Spotify, not a priority. Spotify flirted briefly with video about four years ago by
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