Spotify went public in 2008 in a market crowded with rival music services. In less than 10 years, the music streaming app has shattered expectations by reaching over 140 million active users as of 2017.
It is now the largest and fastest growing content platform globally.
Spotify Ads is also the largest digital audio advertising platform — giving marketers and brands a direct line into the ears of 90 million ad-supported listeners.
The breakneck velocity of Spotify’s rise is unlikely as it is impressive. Spotify’s active users spend on average 149 minutes a day listening to their favorite music app — and most of these users are enjoying it Spotify’s free, ad-supported version.
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.
Jump to a section
“Digital audio advertising is advertising in an auditory medium, which is becoming more sophisticated and effective with today’s growing music platforms.”
-Josh Brisco, Manager, Retail and Search Operations at CPC Strategy
Case Study: Spotify Ads 25% more effective than normal ads
Last year, Nielsen Catalina Solutions worked with 11 CPG brands to drive sales using Spotify’s Ads platform.
According to the study, “the results are music to an advertiser’s ear.“
This particular study analyzed ads that ran over a 12-month period, promoting “non-alcoholic beverages, food, snacks, personal care and home care products”.
NCS and Spotify’s CPG team found that a combination of audio and display ad units beat leading ROAS benchmarks.
“For every thousand impressions we ran, we created 24 dollars of revenue. The Nielsen benchmark is $19.64.“
– Jeff Rossi, head of industry, CPG, at Spotify,
What may surprise advertisers is that the greatest returns came from multiple ad formats and cross-device campaigns, according to Campaign.
“A combination of ad formats—audio and display—saw the greatest return. Spotify is a platform that users can interact with passively, by starting a playlist and letting it run in the background, when audio ads are most effective. But users also watch videos or actively browse songs and artists, so video and display ads have their place, too.
The study also found that campaigns that ran on both mobile and desktop saw 39 percent higher incremental sales over campaigns running on just one or the other.”
Nielsen Catalina Solutions’ test with audio ads is just one example of how marketers can leverage digital audio to reach and win new audiences.
Josh Brisco says,
“Today’s brands are keenly aware they must diversify their messaging away from more traditional media like television, print, and radio in favor of newer more targeted ad formats like DAA. With ever more relevant ad formats and targeting methods, it is proving to be an excellent way to reach a captive audience on high-engagement platforms.”
Now all brands have that same opportunity with today’s leading music streaming platform.
Following its highly anticipated IPO earlier this year, Spotify has been ramping up efforts to offer brands and marketers the ability to reach listeners through new ad formats and an easy-to-use “Spotify Ads Studio” that enables anyone to create and upload ads to Spotify in just minutes.
With valuation at over $25 billion, strong year-over-year growth in active users, with no signs of slowing down — Spotify has a bright future ahead of it.
Marketers have been slow to leverage this new medium of advertising, and 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.
- Access to 90 million+ ad-supported listeners
- Each user spends 2+ hours listening daily
- 24% lift increase in ad recall for audio ads (according to Spotify)
In addition to reaching an incredibly wide audience, Spotify collects data from its users that marketers can leverage to inform their targeting decisions.
Spotify’s 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.
Spotify’s VP of Sales, Brian Benedik, illustrated a perfect example in an interview awhile back.
“There are over 400,000 playlists on Spotify titled Barbecue,” says Brian Benedik. “This tells us that people are listening to music while barbecuing, presumably with family and friends.
“It’s a special moment. With Spotify Ads, brands have the opportunity to own that moment.”
The same example can be said of Spotify’s running playlists. 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.
Jeff Rossi says,
“Think about the emotional proximity of the content. If I’m going for a run, if I’m focused while I’m doing work, if I’m listening while I’m putting the kids down. The music is in my ear or central to my experience.”
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.
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. 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 Ads has expanded into a variety of different ad units:
- Audio Everywhere – short audio ads served between songs with clickable display content
- Sponsored Session Video – your video ad unlocks 30 minutes of ad-free listening if a user opts to watch the full video
- Video Takeover – your video message served in between songs
- Overlay – simple display ads
- Homepage Takeover – showcase your brand message on the front of Spotify’s Browse page for 24 hours
- Sponsored Playlist – customized playlist sponsored by your brand with clickable display ad
Josh Brisco believes that Spotify’s advertising platform will only become more powerful in the future.
“With 90 million ad-supported listeners world-wide and robust targeting capabilities, it is a fantastic way to get in front of a desired audience. It’s continued user growth and investment in its ad units, capabilities and overall product make it one to watch in the near future.”
These days, almost anyone with any budget can advertise on Spotify. Here’s how to get started.
1. Join the Waitlist
The Spotify Ad Studio platform for advertisers is still in beta, so you’ll need to join the waiting list.
2. Start using Spotify’s Ad Studio
Once you’ve been removed from the waitlist, you can begin using Spotify’s Ad Studio.
In Spotify Ad Studio you can:
- 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
3. Begin targeting your audience
Spotify’s Ad Studio advertises the ability to create ads within minutes and gives brands the ability to target audiences based on:
- Who they are (age & demographics)
- Where they are (city and geography)
- How they listen (devices)
- What they listen to (genre, playlists)
What do Spotify Ads cost?
Prices depend on campaign and ad-formats used. Spotify’s website states that the minimum cost is $250 to get started.
The case study published by Nielsen Catalina Solutions featuring Spotify’s head of CPG Jeff Rossi touches on a few best practices for optimal results.
- Using multiple Spotify ad formats to target an audience
- Cross-device targeting to hit the audience both at home and out-of-home
- Targeting playlists and music that are in-sync with your brand and message
That wraps up our guide to Spotify Ads Guide. Case studies on this platform are limited, but early results and the growth of this channel indicate that it will only become more important in the future.
For Spotify Ads’ success stories, you can check out their webpage.