Six months on from its public-beta launch in the US, Spotify’s Ad Studio is expanding to the UK and Canada. The self-serve advertising platform lowers the minimum price of an audio-ad campaign on Spotify, opening it up to smaller businesses – music companies included.
Spotify says that 1,025 advertisers have created 4,736 campaigns using Ad Studio in the US during the last six months, using targeting based on age, gender and location as well as the genres and playlists that people are listening to. For now, marketers have to choose to target by fan, genre or playlist, rather than combining them.
“In the UK and Canada, we’ve been working with partners in a closed beta to test the platform, who are already using it to reach our highly engaged audience,” announced Spotify in a blog post this afternoon. Clients can upload their own audio ad, or submit a script and pick a background track for Spotify to produce the spot.
The key for music companies here – from labels and management firms to tour promoters – is the lower barrier to entry. The minimum cost for an Ad Studio campaign is $250 in the US, which will translate to £250 in the UK according to Spotify’s FAQ – down from a few thousand dollars in the previous system. Advertisers are only charged for each time their ad plays.
The 15 or 30-second ads include clickable images, which can link through to a single URL of the advertiser’s choice – although links to a ‘competitor’ are banned.
Marketers have told Music Ally that live music is one of the best-performing uses for Ad Studio so far, from ads for individual artists’ upcoming tours promoted to their fans, through to festivals targeting the fanbases of a number of artists on their bills.
As part of Ad Studio, Spotify offers analytics including an ad’s reach (the number of people who heard it); the frequency (how often they heard it) and its number of clicks and click-through rate. There is room for improvement here in terms of tracking conversions – how many of those clicks led to actual ticket purchases, in the live example – in the future.
The most direct comparison to Spotify Ad Studio is US streaming service Pandora’s Artist Marketing Platform (AMP) – or specifically the advertising features within it that artists can use. Revamped in October 2016, those include the ability to record voice messages that are then broadcast to fans (AMPcast) as well as boosting songs by making them ‘featured tracks’ on the service.
The comparison that most marketers will be thinking about, though, is how Spotify’s Ad Studio compares to Facebook advertising in terms of reach and efficiency. Spotify’s pitch is that the ads are on a music-streaming service, reaching fans where they listen, rather than on a social network where they might have followed or mentioned particular artists in the past.
That said, many music companies now have Facebook marketing down to a fine art, so will be looking carefully at how Spotify ads perform in comparison, and judging how much budget to divert towards the platform. As it expands – Spotify’s blog post says ‘stay tuned” for additional markets – we’ll get a better understanding of how the platform is performing.
Expect labels and managers to push Spotify to keep improving it. Earlier this month, for example, former WMG exec and Playlists.net founder Kieron Donoghue – now running streaming-focused indie label Humble Angel Records – published a blog post with some suggestions for Spotify self-serve advertising.
Those suggestions included paid placements in algorithmic playlists like Discover Weekly and Release Radar, as well as in Spotify’s radio stations, ‘New Releases’ tab, and in the list of ‘Recommended Songs’ at the bottom of people’s own playlists.
The other angle here, from Spotify’s perspective, is whether Ad Studio can ignite more growth in its advertising revenues. According to Spotify’s recent filing to go public, the company’s advertising revenues grew from €196m in 2015 to €295m in 2016, and then €416m in 2017.
The main role of Spotify’s free, ad-supported tier is still as a funnel towards its paid subscription tier – more than 60% of its new subscribers since February 2014 started on the free tier, according to the filing.
However, Spotify – like Pandora and YouTube among others – believes there’s also a lot more value to be unlocked from advertising in the years ahead, citing estimates that the global radio (advertising) market is worth $28bn a year.