How to Run Spotify Ads: Costs & Key Considerations
Spotify went public in 2008 in a market crowded with rival music services. The music streaming app has shattered expectations by reaching over 602 million users, including 236 million subscribers, across 180 markets. It is now the world’s most popular audio streaming subscription service.
Spotify Ads is also the largest digital audio advertising platform — giving marketers and brands a direct line into the ears of millions of ad-supported listeners.
The breakneck velocity of Spotify’s rise is incredibly impressive. The platform’s active users spend on average 148 minutes a day listening to their favorite music app — and most of these users are enjoying Spotify’s free, ad-supported version.
It’s clear Spotify is seeing vast success, but let’s dive a bit deeper into the world of advertising within the increasingly popular platform. Here’s a quick look at what digital audio advertising is, what Spotify Ads can offer brands and advertisers, and how you can get started. It’s easier than you might think.
The Advantages of Spotify Ads
With a valuation of over $72 billion, strong year-over-year growth in active users, with no signs of slowing down — Spotify has a bright future ahead.
Some marketers have been slow to leverage this new medium of advertising, but maybe now it’s time to pay attention as time spent in these ad units is increasing. Spotify offers marketers many unique advantages that can be leveraged to reach millions of tuned-in listeners across the globe. Let’s cover a few of the highlights:
Expansive and Diverse Audience Reach
Spotify is consistently expanding its reach and has an extremely diverse audience which is a huge benefit for potential advertisers. When advertising on the platform, you’ll have access to:
- 300 million+ ad-supported listeners
- Users who spend 2+ hours listening daily
- A 24% lift increase in ad recall for audio ads (according to Spotify)
As an added bonus, Spotify reports that “when compared to multi-format campaigns, audio-only campaigns tend to drive more foot traffic to stores at a more efficient cost per visit.”
In addition to effectively reaching an incredibly wide audience, Spotify also collects first-party data from its users that marketers can leverage to inform their targeting decisions.
Consumers Spend A lot of Time on the Platform
Consumers are increasingly investing significant time on the Spotify platform, drawn in by its vast array of content. With almost every song imaginable available for streaming and a steadily expanding library of podcasts, there’s no shortage of entertainment options.
With their “Broadcast to Podcast” program, your favorite radio shows are finding a new home, seamlessly transitioning from airwaves to headphones. The numbers speak for themselves: 32% of Americans now listen to podcasts regularly, and that number is only growing.
A Ripe Opportunity for Engagement and Revenue Generation
With a commanding presence in the audio advertising arena, Spotify boasts a substantial market share, leveraging its vast user base comprising predominantly Millennials and Gen Z, but also attracting a significant number of older users. Currently, over 317 million users are engaged with the ad-supported tier of the platform, presenting a big opportunity for advertisers. Spotify’s approach to engaging users is multifaceted, employing a combination of audio, video, and display ads to effectively reach and resonate with audiences.
By utilizing audio when users are most receptive, complemented by engaging video content to enhance messaging, and reinforced through strategic display ad placements, Spotify maximizes ad impact. The platform’s commitment to innovation is evident through its continual enhancement of ad offerings, introducing new functionalities to ensure advertisers can optimize their campaigns and connect with audiences in meaningful ways.
Spotify Provides a First-party Data Advantage
Whenever a user listens to a song, queues a playlist, or creates their own playlist — they are telegraphing something about themselves:
- How they feel
- Where they are
- What they’re doing
This is the power of first-party data, and it’s a golden commodity for marketers and brands when it comes to reaching a targeted audience at the right time.
Consider Spotify’s running playlists for example. Spotify collects data that pinpoints when and how often users listen to running playlists. Brands like Nike put ad dollars to insert themselves into the headphones of users who are fired up and exercising. To put it simply – the ad resonates on an even deeper level.
Brands can use Spotify’s first-party data to reach listeners during very specific moods or activities — all based on the music that they’re engaging with.
Josh Brisco believes that Spotify’s advertising platform will only become more powerful in the future.
“With millions of ad-supported listeners world-wide and robust targeting capabilities, it is a fantastic way to get in front of a desired audience. Its continued user growth and investment in its ad units, capabilities, and overall product make it one to watch.”
How Spotify’s Ad Types Work
Spotify is based on a freemium model — where all users can have unlimited, free access supported by 15 and 30-second ad breaks. However, users can opt to pay for a premium account for an ad-free listening experience (besides certain ad units like homepage takeovers, sponsored playlists, and podcast ads). The great majority of Spotify’s listeners opt for the ad-supported version.
These ad units can play pre-roll and post-roll when users are listening to their favorite songs. Spotify also gives advertisers the option to incorporate video and display options into their strategy.
Spotify Ads has expanded into a variety of different ad units:
Audio Ads
Spotify’s audio ads are concise yet impactful, strategically placed between songs with clickable display content to engage listeners. With a maximum length of 30 seconds, these ads efficiently deliver messages to the target audience, spanning both mobile and desktop devices. Beyond direct targeting, these ads have the potential to reach additional demographics as they may play in various public spaces like stores and restaurants where Spotify is used.
With this ad type, you can combine audio messaging with customizable images (i.e: brand names, slogans, and calls-to-action) to drive traffic to designated websites. These ads offer highly targeted options, including geographic targeting, to ensure relevance and maximize impact.
These ads are extremely successful for brands. In fact, a study by Nielsen found that Spotify audio ads led to a 24% increase in ad recall and a 17% increase in purchase intent among listeners.
Video Ad Takeover (Mobile)
Designed exclusively for mobile and tablet viewing, Spotify’s Video Ad Takeover offers advertisers a dynamic platform to showcase their brand message. With a strict limit of 30 seconds and a maximum file size of 500 MB, these videos are optimized for seamless integration into the user experience. Displayed in either portrait or landscape orientation with a 16:9 ratio, the ads are strategically placed between songs or during commercial breaks, ensuring maximum visibility when the screen is in view.
Each video ad is accompanied by a companion banner featuring a customizable CTAs, enhancing user engagement. Advertisers also have the option to include a Branded End Card at the end of the video, providing an active link to their website for further interaction.
Overlay Ads
Spotify’s Overlay Ads (compatible with both desktop and mobile devices), are a straightforward yet effective advertising solution. These simple, clickable display ads are strategically served to users upon their return to the Spotify app, ensuring maximum visibility and engagement. Occupying the full screen, these ads provide a prominent presence, capturing the user’s attention from the moment they re-enter the app.
Users have the option to close the overlay either by clicking on the designated ‘X’ or allowing it to automatically close after 30 seconds. With a clickthrough URL included, these ads provide a seamless pathway for users to explore further content or interact with the advertised brand. As the first thing users see upon returning to the app, Overlay Ads offer advertisers a prime opportunity to make a lasting impression and drive desired actions.
Homepage Takeover (Desktop)
With Spotify’s Homepage Takeover (desktop), advertisers can prominently feature their brand message on the front page of Spotify’s Desktop Homepage for a full 24 hours. This prime real estate allows for maximum exposure and engagement with users. While the ad links directly to the advertiser’s site, it’s important to note that audio is not supported in this format, although videos can be included to enhance the visual impact.
Spotify offers resources and guidance to assist advertisers in crafting the perfect homepage ad, ensuring it aligns with platform guidelines while reflecting the advertiser’s vision. Additionally, third-party integration enables support for rich media, allowing for even more interactive and engaging advertising experiences.
Leaderboard
Leaderboard ads on Spotify are clickable ads that appear for 30 seconds, exclusively during a listening session when Spotify is in view. These ads are accessible via desktop player or web app, offering advertisers a direct channel to engage with users during their music or podcast streaming experience. With support for images or short animations lasting up to 15 seconds, advertisers have the flexibility to convey their message effectively within the specified timeframe.
These ads are clickable, allowing users to interact with the ad content and be redirected to the advertiser’s desired destination. Leaderboard ads support rich media, enabling the incorporation of interactive elements to further enhance user engagement, whether implemented by Spotify or a third-party provider.
Sponsored Playlist
Distinguish your brand on Spotify with a tailored playlist sponsorship, featuring a clickable display ad and in-playlist media placements. With this feature, you can collaborate with Spotify to select the most relevant playlist for your target audience, leveraging the platform’s extensive user data and insights. For example, Kia recently sponsored Spotify’s New Music Friday playlist, a weekly favorite among millions of listeners worldwide.
This ad type ensures visibility across both mobile and desktop platforms, reaching audiences wherever they engage with Spotify. Your brand’s logo or ad assets will be prominently featured within the playlist interface, guaranteeing consistent exposure in the playlist queue.
While anyone can create a playlist for free, opting for the sponsored option provides a strategic shortcut to reaching a large audience without the need to organically build a playlist from scratch.
Sponsored Session Video
Tailored for mobile listeners, Sponsored Session Video ads on Spotify offer an opportunity to engage users with a brief interruption that presents an offer: 30 minutes of ad-free listening in exchange for watching a video ad on their phone. Similar to typical audio ads, these video interruptions prompt users to opt into an uninterrupted listening experience by engaging with the full video ad. The video ad must adhere to a duration of 30 seconds or less and can include a URL directing users to the advertiser’s webpage for further interaction.
While specific pricing details for Sponsored Session Video ads may vary based on factors such as targeting options and campaign duration, they are generally considered to be more expensive than audio ads due to their enhanced engagement potential and the value of providing ad-free listening time to users. Engagement rates with Sponsored Session Video ads can vary depending on factors such as the relevance of the ad content and the appeal of the offer presented. Engagement rates for Sponsored Session Video ads tend to be relatively high, with a significant portion of users opting to engage with the ad in exchange for ad-free listening time.
Banner Display Ads
Featured at the top of a Spotify user’s homepage, Banner Display Ads provide immediate visibility upon opening the app. As users navigate within the app, the banner seamlessly transitions to the bottom of the screen, ensuring continued exposure while minimizing disruption to the user experience.
This strategic placement enables advertisers to capture the attention of users as they engage with Spotify’s platform, maximizing the impact of their advertising campaigns. With Banner Display Ads, advertisers can effectively reach and engage their target audience, driving brand awareness and fostering meaningful interactions within the Spotify community.
Podcast
Spotify offers a unique opportunity for advertisers to reach specific and well-defined audiences through podcast advertising. Pre-recorded ads, typically audio clips ranging from 15 to 60 seconds, are strategically inserted within episodes. Host-read ads offer a more personalized touch, as hosts deliver the message in their own voice and style, which can enhance trust and authenticity. As an added bonus, when advertising within podcasts, even ad-free listeners hear ads in podcast content so when advertisers buy Spotify’s podcast offerings that is just another unique way to get in front of a premium audience.
Another option is branded podcasts, where sponsors have the opportunity to immerse listeners in their brand story by sponsoring entire episodes or series. When it comes to reaching the right audience, platforms like Spotify Ad Studio allow for targeting specific podcasts, demographics, interests, and behaviors. Spotify Podcast Ads when consumed on Spotify’s platform are powered by Streaming Ad Insertion (SAI), which leverages streaming to deliver Spotify’s full digital suite of planning, reporting, and measurement capabilities. Additionally, direct deals offer the chance to negotiate exclusive placements with high-impact podcasts or networks, further enhancing the reach and impact of the advertising campaign.
The Cost of Advertising on Spotify
Both audio and video ads utilize a basic auction system familiar to digital advertisers, offering bid caps and the flexibility to adjust bids during the campaign. Targeting options include Cost per Impression or maximum CPM bid, with higher costs expected for targeting popular audience segments.
To better estimate production costs, Spotify Ad Studio provides a cost estimator tool. There are three main methods to purchase Spotify ads…
- Self-serve through Ad Studio – Which allows advertisers to create and submit ads independently
- Automated – Where agencies or DSPs manage media buys using dynamic bidding
- Direct – Involving collaboration with the Spotify team to customize ad experiences or secure guaranteed inventory, although this option may not be suitable for all advertisers due to associated costs.
How You Can Advertise on Spotify
These days, almost anyone with any budget can advertise on Spotify. When working with an agency like Tinuiti, you can utilize our direct access to Spotify, but if you’re looking for a self-serve option, here’s how to get started.
1. Set Up an Account
First things first, you’ll need to set up your Spotify Ad Studio account to get started. Within this platform, you’ll be able to:
- Build out audio campaigns
- Create audio ads using your script and a selection of background tracks and voice profiles
- Gauge impressions based on your targeting and spend
- Measure campaign performance within the dashboard
2. Add Basic Campaign Details
When you start creating an ad, the first question that Spotify Ad Studio will ask is if you are promoting something music-related, or representing a brand. Music-related ads are for artists or those in periphery of the music business, like sellers of concert tickets and merchandise. Non-music ads are for every other type of brand that advertises on Spotify.
Once you’ve made that selection, give your ad a name. Since this name will be for internal use only, choose a name that’s both descriptive and easily recognizable to streamline your internal discussions and analytics.
Next, select your ad category. Spotify simplifies this process by offering categories that span across various interests and behaviors. This categorization helps ensure your ad reaches listeners most likely to be interested in what you’re offering, whether it’s lifestyle, technology, entertainment, or any other sector relevant to your brand.
3. Define and Target Your Audience
Targeting is one of the most important steps when creating an ad. If you’re targeting the wrong people, your brand’s message is unlikely to resonate. Ad Studio allows you to target audiences based on:
- Who they are (age & demographics)
- Where they are (city and geography)
- How they listen (devices & connectivity)
- What they listen to (genre, playlists, podcasts)
- Predicted interests (lookalike targeting)
- Off-platform behaviors (custom audience match & 3rd party interest targeting)
- Past interactions (brand exposure, sequential messaging, real-time retargeting)
As mentioned above, one of Spotify’s key targeting features is the ability to target by listener behavior – we highly encourage you to check out this feature. When targeting through Spotify, you can also use first party data like your own customer lists and demographic information to create custom audiences (country, location(s), age group, gender, platform, language). Keep in mind that these are seen as the building blocks to creating a custom audience. You can also target by interests and behaviors but this is optional. For example, target based on podcast or playlists they listen to, favored genres, or for certain contexts (like a workout playlist).
If your objectives change at all throughout your campaign – no worries – you can make changes to your target audience at any time.
4. Set Your Budget, Objectives, and Schedules
Now we’re ready to start building out the finer details of the campaign. Start by selecting your ad format—be it audio, horizontal video, or vertical video. Then, choose if you want to place these ads across music and podcasts or limit them to music only. As we previously covered, there are a variety of ad formats to explore within Spotify’s Ad Studio.
You also have the option to exclude your ads from appearing during podcasts labeled as “sensitive.” This is an important consideration if you’re concerned with brand safety, or just wouldn’t want to appear during an ad break for a gritty true crime episode. On the complete other side of the coin, you can choose to target your ads to appear during episodes focusing on specific topics that resonate with your target audience, such as business, fashion, or technology.
Next, you’ll be able to schedule your campaign and set a budget. Spotify gives marketers precise control over the start and end dates for the campaign, right down to the minute.
Then it’s time to set your budgets. Spotify lets you approach this in two ways: Daily budgets and lifetime budgets. It’s worth noting that daily budgets are not strict caps but guidelines, as Spotify may adjust spending based on demand to maximize your ad’s impact. However, setting a bid cap is still crucial for controlling expenditure, preventing overbidding, and ensuring your campaign remains cost-effective.
While you’re building the ad, take note of Spotify’s deliverability gauge on the right side of the page. This helps you estimate how much you’ll need to budget to reach your intended audience and the likelihood of fully utilizing your budget each day.
Finally, you’ll be able to set your objective – this is how Spotify determines appropriate placements for your ad. You can choose between three options:
- Impressions – Spotify will show your ad more often. Unlike reach, this is based on how many times the ad is served, rather than how many people it reaches. Note that
- Reach – Spotify will show your ad to more people. For example, you could show your ad to 1,000 people one time using this objective.
- Clicks – With this objective, you’ll only pay if someone clicks on your ad. Clicks are almost always the most expensive option, but it’s perfect for brands seeking to increase conversions.
Spotify also allows for setting frequency caps to manage how often your ad is served to individual users, ensuring your message remains fresh without overwhelming your audience. You can set frequency caps on a daily, weekly, or monthly basis. This is especially important for advertisers who want to use the Impressions objective.
The last item on this page allows you to set bid caps. Unlike your budget, this is a hard cap on how much you’ll spend to place a single ad. Strategically setting bid caps is crucial for controlling expenditure, preventing overbidding, and ensuring your campaign remains cost-effective. If you’re not sure what a good bid cap is, Spotify provides a recommendation to get you started – you can always run the campaign and fine-tune the bid cap later.
5. Create Your Ad and Upload Your Audio
At this point, it’s time to put the final touches on your campaign. Add a unique name to the ad – this is for internal purposes only, so choose something that will help your team stay organized. Then, enter your brand’s name complemented by a compelling tagline and indicate the language that your ad is in.
After that, you’ll upload your ad’s image, ensuring it meets the minimum resolution requirement. Under the image upload field, you’ll be able to include a direct click-through URL, which is where you’ll send listeners if they choose to engage with your ad. To help them engage, you’ll also be able to select a Call-to-Action from a dropdown list of options, such as “Listen Now.”
If your campaign leverages audio, you’re presented with two paths: upload a pre-existing audio file or use Spotify’s in house creative team to produce your ad, including background tunes and even script writing. Simply provide a creative brief, and their team will try to produce your ad to the best of their ability.
For those using video ad formats, uploading your content is as simple as drag-and-drop, with additional capabilities for viewability tracking via third-party vendors. This ensures your ad not only reaches but resonates with your target audience.
Once all those steps are done, you’re ready to launch!
6. Measure & Monitor Performance
Measuring and monitoring the performance of your ads is crucial for optimizing your advertising strategy and maximizing your return on investment. With Spotify’s Ad Studio, you can easily track and analyze the effectiveness of your campaigns. Ad Studio provides initial results within 24 hours of your ad going live, allowing you to quickly assess its performance. You’ll have access to a range of key metrics, including people reached, frequency, impressions, completion rate, CPM, CTR, and insights into how long people listen to the ad and the genres they’re tuning into.
You can utilize third-party measurement tools for more advanced analysis and deeper insights into your campaign’s performance. By regularly monitoring these metrics, you can gain valuable insights into audience behavior and preferences, enabling you to refine your targeting, messaging, and creative assets for improved results. With Ad Studio’s real-time reporting capabilities, you’ll have the actionable data you need to make informed decisions and optimize your advertising efforts effectively.
If you’re looking for an even more robust measurement solution separate from Spotify, Tinuiti’s proprietary in-house measurement platform, Bliss Point by Tinuiti, can take your reporting to the next level. It’ll get you to your Marketing Bliss Point in each channel, across your entire media mix, and offers holistic campaign performance.
Spotify Ads Best Practices
We’ve covered everything from Spotify’s overall advantages to various ad types, but how can you make sure you’re following general best practices when it comes to advertising on the platform? Let’s dive in.
Build Strong Messaging
In a recent study, Spotify has found that listeners are less concerned by the length of a creative, and more about the message itself. This means it’s critical to have strong messaging from the start. Be clear, concise, conversational during your ads so listeners grasp the point(s) you’re trying to make quickly. Don’t forget to communicate any additional benefits you are giving your audience like promo codes or sale offerings.
Include a Clear Call-to-action (CTA)
What action are you trying to get listeners to take? Ads on Spotify are on the shorter side so by including a strong CTA (ie: “Buy Now”), you’re allowing users to easily and quickly complete the intended action. Including a clear CTA within your ad is crucial – don’t forget it!
Test and Learn
No matter the campaign you’re running, it’s incredibly important to test and learn from the performance of your ads. You’ll want to take a deeper look into your ad metrics to ensure you’re meeting or exceeding your KPIs to see if tweaks need to be made. As we’ve previously covered, Spotify has a wide range of ad types for advertisers to utilize. If one ad type isn’t meeting your intended goals, be open to testing and trying out new methods.
Conclusion
Not looking to manage your Spotify Ads all by yourself? No problem.
Creating, managing, and tracking ad performance takes time – we get it. So, if you’re looking to streamline your Spotify advertising process, Tinuiti can help. By working with our team of experts, you can take your Spotify ads to the next level by utilizing a more customized approach to further target your ideal customers. We handle the buying and negotiating so you don’t have to. By working with a dedicated agency, your Spotify advertising has the ability to stand out among the competition – elevating your brand to new heights in this emerging space.
“By working with Tinuiti, your brand’s Spotify ads are in the hands of specialists who are familiar with audio campaign set up, optimization, and success. Our team is in the platform daily, making real-time bidding adjustments to campaigns that boost performance while maintaining efficiency. This performance visibility allows us to understand how audio stacks up against your other tactics in a user’s path to conversion. Our experience and hands-on approach is what sets us apart.”
– Carly Fipps, Programmatic Senior Specialist at Tinuiti
If you’re interested in learning more about Spotify advertising, streaming audio, or how Tinuiti can help your business, contact us today.
Editor’s Note: This post was originally published in May 2018 and has been updated for freshness, accuracy, and comprehensiveness.
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