The auction is eating the sales floor
Spotify’s latest quarterly filing put a number on a shift performance marketers have felt for years: ad budgets are moving from negotiated deals to automated auctions.
In the third quarter, ad-supported revenue reached €482 million, up 9% at constant currency and 10% as reported. That made up roughly 10% of Spotify’s total revenue of €4.97 billion.
But the mix tells the real story. Automated channels added €91 million year on year. Spotify’s direct sales channel, where its own teams sell to agencies and brands, fell by €53 million. Over the first nine months, automated channels gained €211 million while direct sales lost €177 million.
What the numbers show
- €482m ad-supported revenue in Q3, up 9% at constant currency.
- +€91m from automated, biddable channels.
- -€53m from direct sales.
- €538m potential MLC royalty claim Spotify does not treat as a liability.
CFO Christian Luiga said biddable buying is “now up to 40%” of the advertising business, though a chart in the results shows about a third on a trailing twelve-month basis because the two figures use different measures.
“Our advertising business is coming out of a longer period of low single-digit growth,” Luiga said.
Why marketers should care
For agencies and D2C growth teams, this is a signal about where platform inventory is heading. When direct sales decline and biddable inventory grows, the balance of control shifts. You get more self-serve reach and auction-based pricing, but fewer bespoke packages and less hand-holding from platform reps.
Music ad pricing was soft in the quarter, while podcast sponsorships supported growth. That gap matters if you’re planning audio budgets: podcast inventory may hold value better than generic music placements right now.
What to do about it
If you buy Spotify advertising, test biddable inventory before direct deals become a smaller part of the platform. Separate music and podcast performance rather than treating “Spotify” as one line item. Watch how the auction prices respond as direct inventory consolidates.
Spotify gave no numeric ad guidance for Q4, only that ad growth should approach double digits. Company guidance points to €5.2 billion in revenue, 818 million monthly active users and 316 million subscribers. The quarter itself closed with 788 million MAUs, 306 million subscribers, a 33.0% gross margin, €672 million of operating income and €735 million of free cash flow.
The measurement questions aren’t resolved either. Spotify restated its Q3 2025 ad revenue from €446 million to €437 million, and the filing did not explain how advertising works when listening is driven by AI agents.
Source: PPC Land
