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Sonos CEO Patrick Spence: There’s money in ad sales for us

The smart speaker maker adds in-house ad sales as radio service continues to grow.

Patrick Spence holding a Sonos speaker

"Given the kind of customer base that we have and given the adoption we've seen in Sonos Radio, there's absolutely advertising revenue there," Patrick Spence says.

Photo: Andrej Sokolow/Picture Alliance via Getty Images

Sonos is doubling down on its efforts to monetize services on its platform, and is now looking to build out an in-house ad sales team for its free Sonos Radio service. Sonos CEO Patrick Spence confirmed the news in a conversation with Protocol on Wednesday, saying that in-house ad sales could help the company attract the right kind of brand advertisers to its platform. "Given the kind of customer base that we have and given the adoption we've seen in Sonos Radio, there's absolutely advertising revenue there," he said.

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Spence made these remarks ahead of the release of the company's fiscal Q4 2020 earnings results. The company grew its revenue 16% year-over-year, to the tune of $339.8 million for the quarter. Earnings per share came in at $0.15, ahead of the $0.02 that analysts had expected. The company added 1.8 million new households to its customer base in its fiscal 2020, and close to 11 million households now own Sonos products, with an average of 2.9 Sonos products in each of those households.

Sonos saw overall listening hours increase by 33% for the full year. Sonos Radio seems to have played a significant role in that growth, and became the fourth most-used service on the platform, as well as the most popular radio service, just months after its launch in April. The free service did not cannibalize other services on the company's platform, Spence said. "This is not a zero sum game in any way," he said. "People are listening to Spotify, Apple Music and [other] on-demand services in addition to what's happening on radio."

The company introduced a paid tier, dubbed Sonos Radio HD, last week. Spence said that Sonos was still learning how to perfect both free and paid services after having solely focused on hardware products for so long. "We're kind of excited about having another part of the business that is experience-based, feels very Sonos, but is more iterative in nature," he said. "We'll learn and we'll grow it from there."

Sonos is forecasting between 9% and 13% revenue growth for its fiscal 2021, compared to 5% growth in 2020. Spence expressed confidence in hitting those numbers despite increased competition from companies like Google, Amazon and Apple, all of which have introduced new smart speakers this fall. "Our business continued to grow in scale in the face of those introductions," he said. "We're always watching and seeing what's out there. But I feel like we've shown that we can grow. We're going to continue to innovate and execute in the face of whatever anybody else does."

Update: This post was updated to more clearly identify full-year vs. quarterly growth.

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