The music streaming service Spotify has rapidly moved to the forefront of the music streaming industry, and companies are taking advantage of Spotify’s reach to interact directly and advertise toward its one hundred and forty million users.
While sixty million Spotify users pay for a premium, ad-free account, there is currently an open market of eighty million subscribers who regularly receive advertisements in between their favorite tunes.
For those unfamiliar with the streaming service, in between every few songs, approximately every fifteen minutes, Spotify plays audio ads that a user is not able to skip. While it is the most common way companies advertise, it is not the only way to reach this user base. The desktop and web format also features display ads and overlays that can take users to the ad’s website with one click. Companies have the option to make branded playlists with their logos and an optional link to a landing page. You can also sponsor a session on Spotify, where your brand can offer your audience an uninterrupted thirty minutes of music in exchange for viewing your video.
Spotify was voted Ad Age’s 2018 In-House Agency of the year, and the investment bank GP Bullhound has predicted that Spotify could become the third largest online advertising platform (behind Facebook and Google). Last September, Spotify launched a self-serve platform called Spotify Ad Studio, demonstrating their dedication to pulling in more advertising revenue and becoming more accessible to smaller companies.
When thinking about your marketing budget, it is essential to consider how an advertising campaign using Spotify, a hip, sexy trend in advertising, is beneficial for your business. The article below outlines the various ways your company can advertise with Spotify and access their vast user base.
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Spotify Advertising Cost
While Spotify’s ad price is a steep minimum of $25,000 per campaign, with CPMs ranging from $5 – $30, Spotify is moving toward a more available advertising budget to attract smaller and smaller businesses. Spotify’s commitment to expanding the sophistication of their advertising makes them an excellent option for your ad campaign needs.
However, while small businesses cannot typically afford a massive ad campaign, they can now advertise on Spotify for much cheaper. For individual ads using the Spotify Ad Studio, the minimum Spotify Advertising budget is $250.
Pandora vs. Spotify Advertising
By 2016, music streaming was responsible for over 50% of all U.S music industry revenue, with almost 70% of those users subscribing for free (and thus open to advertisements). Before Spotify, Pandora held the reigns of music streaming for nearly two decades, and while Spotify is emerging as a giant, Pandora remains equally as formidable a player and also can offer lower prices for ad campaigns.
While Spotify requires the $25,000 minimum, Pandora’s basic packages start at about $1,500 per month and have an average CPM of about $5 – $7 for visual ads, $8 – $12 for audio ads, and $15 – $25 for video ads. So, if your ad budget is smaller, Pandora may be the better option.
The ages of Pandora and Spotify differ significantly, defining the demographics of each. Spotify users tend to be younger, and, thus, more in tune with technology. Spotify users tend to be between the ages of 13 and 29, while Pandora’s larger group of users were in the 35-44 range.
Pandora has a more sophisticated method of analytics, as it customizes playlists for its listeners, making guesses based on previous selections. Pandora is more favorable for executing creative campaigns with a highly targeted group and a smaller budget. You can run banners and video ads on the service, and the engineers can even tell when a user is looking at their smartphone (and thus will see a video ad) or merely listening. Because of the high quality of Pandora’s analytics, local businesses can easily advertise on Pandora. If you’re a small coffee shop in Michigan, you can promote to folk/alternative listeners in your town in Michigan rather than nationwide.
Spotify does not have the same analytics but offers a variety of targeting options, which allows you to focus your brand toward your customer age. Brands and companies can either target listeners of a particular demographic, identify listeners by the genre or playlists they listen to, or the time of day or platform for when they’re listening. Because Spotify identifies and categorizes users for you, your campaign can focus more on the content and how to reach the users you want to achieve. If your company is trying to target millennials or teenagers, Spotify has it all figured out for you.
It is recommended you check your budget before talking to a sales rep from Pandora or Spotify. But overall both can provide great advertising options to get your brand out there and generate revenue.
Spotify Advertising Campaign
In August 2017 Spotify’s marketing chief Seth Farbman outlined a plan to make it easier for small and medium-size businesses to buy audio ads through a self-service platform. While the bulk of their revenue comes from premium paid subscribers, Farbman stated they aimed to move away from that.
With Spotify Ad Studio, brands can upload their audio spots directly to Spotify Ad Studio and then set targeting and budget parameters to run it and track campaign reporting. Advertisers upload a script and choose background music, and the technology records a voiceover for the spot.
If you have the budget for a more prominent campaign, creating brief ads or banners can be an option for your business as well. Though Pandora can identify if a user is looking at their phone, compared to other music-streaming services, Spotify users spend a lot of time looking at their devices and are ripe for video ads. The ability to display brief visual content provides more possibilities for the way in which you want to present your brand to Spotify listeners, and the fact that the streaming service is a platform for visual content provides great promise for the future of advertising.
Several major brands have launched massive Spotify campaigns, partnering with the company in various ways. Reebok recently launched the app Reebok FitList, which provides people with a playlist for each physical activity like yoga, dance, and running. The playlists are created with votes by the app users themselves. McDonald’s has sponsored The Drop, a website where Spotify releases exclusive photos, videos, and playlists from popular artists, including Fall Out Boy, the Gaslight Anthem, and Childish Gambino. Jose Cuervo launched a college campaign in the U.K in 2013 to ask students to submit their best playlists, with prizes for the winner. The campaign got more than 270,000 views on Spotify and drove sales of Jose Cuervo up 220 percent at the winning school.
While not every company has McDonald’s advertising budget, these campaigns can provide creative inspiration to smaller companies. It’s important to remember that Spotify’s viewers are millennials, who are notoriously cynical and favor authenticity over commercialism. They don’t trust advertisements. But knowing this makes them easier to advertise to.
The customization of your brand with fifteen to thirty-second ads, as well as the opportunity to interact directly with users (and potential consumers) by creating playlists or featuring a contest winner’s playlist on your channel can generate exposure and publicity.
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Make a Company Spotify Playlist
Advertising on Spotify can cost a pretty penny, but there’s one excellent marketing move that will not burn a hole in your pocket: creating a playlist.
Since Spotify’s inception, billions of playlists have been created by individuals and brands alike, and they can help get your company’s name out there. Creating a branded company playlist with an image is easy, fast, and does not cost a cent (unless you want to sponsor it toward a targeted audience for exposure). Anthropologie created a Christmas playlist (amongst its main playlist) to get shoppers in the mood to buy candles, scarves, and ponchos, and Nike has a running playlist for your morning cardio workout.
A well-branded playlist warms up the audience toward the feelings you want your customers to experience with your brand. That said, treat it like any ad: it has to move in a different direction, and the order of the songs should be taken into consideration. If you’re advertising a restaurant for example and want the audience to feel a sense of comfort, don’t use forty slow acoustic songs. Throw something exciting in the middle to get them excited to try new food, interact with friends, and make memories. A Spotify playlist makes your brand look down to earth and genuine, preferring to distinguish oneself instead of blasting it out loud in a huge banner. Deciding how to make your Spotify playlist and use it as an interaction with your customers is a fantastic, inexpensive, marketing move.
Spotify advertising is an option and a very lucrative one. But creating a branded playlist is also a great branding move. It appeals to Spotify’s millennial anti-commercial majority, it’s free and provides a method to engage directly with users.