What Is Spotify Advertising?

If you are a Spotify user, you have likely experienced listening to your favorite songs amidst branded advertising. Have you ever considered how these ads actually come to be or how YOU could take advantage of the market accessibility that the Spotify platform offers, as an advertiser?

And, as a consumer, what kind of content would you be most likely to engage with from an advertiser on Spotify? Spotify ads are video and audio formats that primarily run on the free version of Spotify in between songs, podcasts, and playlists. Spotify also offers Custom Experiences, explained below which may include Home Page Takeovers, that are aligned with the other ad formats for a visual and auditory experience.

When you think of spending your marketing dollars, Spotify probably doesn’t come foremost in your mind. And yet, you might have considered radio, a very traditional marketing medium. You might even think about spending some of your online marketing dollars on YouTube.

While many people still listen to music on traditional radio stations and music videos are amongst the most popular type of content on YouTube, Spotify is rapidly becoming the favored way to listen to your music. Therefore, it makes sense to devote some of your marketing to Spotify.

By the end of 2019, Spotify has become the most popular global audio streaming subscription service with two hundred seventy-one million users, including 124m subscribers, across 79 markets. They claim they are the largest driver of revenue to the music business today. Luckily for marketers, Spotify has recognized its potential for marketing success and now has a well-organized advertising market.

Why Advertise On Spotify?

Like Facebook and Instagram, Spotify has a formal advertising marketplace. This makes advertising on Spotify a simple process. They opened Spotify Ad Studio in 2017 to streamline the advertising process and provide a range of options to potential advertisers. Spotify has one advantage over many apps.

Most people will, at some time, have listened to the radio, where they hear ads between the songs. They are already used to listening to ad-supported music. Spotify is one step better than the radio, however. You can create your own playlist and aren’t reliant on the whims of some program director.

Because most people are now used to the freemium model, Spotify’s free users are expecting ads with their listening. Those who actively hate ads willingly pay for a subscription to the Premium service. This leaves people who accept that they will hear ads at the price of receiving their favorite music streaming for free.

How To Create Spotify Ads:

Advertising on Spotify used to be very expensive, and this limited Spotify advertising to just large businesses. However, with the arrival of Spotify Ad Studio as a self-service platform in 2017, Spotify suddenly became viable for small and medium-sized companies.

Firms can upload their ads directly to Add Studio and set their budget and targeting factors themselves. It operates in a very similar way to the advertising platforms of Facebook, TikTok, and most other social networks. As with all self-service advertising networks, Spotify Ad Studio leads you through a process, helping you set up your ads campaign.

You will need to go through the following steps if you wish to use audio ads. You do not even have to record your ads yourself. You can simply upload a script and select suitable background music. Spotify’s technology can record the script and bring everything together for you.

If you have a larger budget, then you could consider adding display or video ads to your campaign mix. Research shows that Spotify users spend a surprisingly long time looking at their devices, meaning that there is a reasonable chance that your target audience will see your more visual ads.

1. Choose your objective
2. Upload the ad or video: upload your video or voiceover.
3. Target your audience: Target your audience you can target your audience by demographics such as location, age, gender, listening behavior, or platform.
4. Set your advertising budget and schedule. You will need to spend at least two hundred fifty dollars. The exact price you will end up paying will depend on your location and your ad targeting. You will also have to set the dates for your campaign, with your budget spread evenly across the campaign period.
5. Create the ad: By creating your ad, creative is where your add details like the companion image to go with your audio ads, the ad headlines, and the link to your landing page.

How Do Spotify Ads Work?

Spotify offers a few methods for ad buying, primarily through their Ad Studio or programmatically through Demand Side Platforms DSPs, for example, Facebook ads, Manager ads, Google ads, etc. And Private Marketplace or Programmatic Guaranteed buys.

Buying Spotify Adds Through Add Studio:

Ad Studio operates similarly to other platforms like Google Ads and Facebook Ads Manager. Spotify uses a similar auction type of process in order to output specific ads for targeted audiences. To launch your DSP, Spotify representatives work with you to determine the buy details and rates.

For Custom Experiences, brands can work directly with Spotify to create their advertising mix. The Add Studio is a place where advertisers can easily access and create all ad types from within the platform. Ad Studio also allows advertisers to upload and save assets to use throughout their ad creation process.

In addition to the ad creation and implementation, Ad Studio gives advertisers the ability to use reporting tools to set goals, track performance, and make changes to their advertisements with their wide range of resources.

Buying Spotify Ads through Demand Side Platforms DSP:

DSPs allow for more flexible and consolidated management and reporting of display, audio, and video ads across the board, including Spotify. For advertisers interested in managing large-scale audio campaigns, Search Discovery recommends considering the DSP and Programmatic buy approach.

How Much Does Spotify Advertising Cost?

Spotify Advertising offers the ability to begin an ad campaign starting at two hundred fifty dollars within the Add Studio. Spotify gives advertisers the option to set their own bids and caps so that their budget is optimized that is, also kept within pre-set limits.

The auction and bidding process can be maneuvered based on the campaign goals that advertisers set, ensuring that all auction results work toward benefitting the brand and reaching set goals. This format allows for a pretty user-friendly experience for advertisers to seek to reach their goals with as much or as little control as they want, making it a relatively simple addition to an advertising strategy, if appropriate.

Programmatic buying may offer some more flexibility with additional optimization levers in the DSP, but Spotify will still support setting fixed-rate CPMs.

How To Advertise On Spotify?

If you are an advertiser, there are several audio and visual ways in which you can advertise on Spotify.

Types Of Spotify Ads:

Audio ads are the first type of Spotify advertising that most of us think of, but the platform actually has several more ad options.

Audio Ads:

Audio ads are the most well-known form of Spotify ads. No premium users often complain about how many ads interrupt their music. However, from an advertising perspective, audio ads are a favorable outlet because users are unable to skip or fast-forward through them, guaranteeing that users are listening to audio ads no matter what.

Thanks to Spotify’s user insights, advertisers are able to target audiences based on several factors, allowing for more effective messaging to users. Spotify reports that showing ads that “match the moment makes a bigger impact. And seventy-five percent of Spotify listeners say they remember the ads that recognize their moment or setting.”

Video Adds Vertical Or Horizontal:

Another advertising opportunity can be tapped into through the video ads options, which are typically 15 or 30 seconds. These include video takeovers, which are made up of a companion banner and a customizable call-to-action. Takeovers are only shown when the user’s screen is in view while they are actively looking to find new music or podcasts.

Another form of video ad is sponsored sessions. These sponsored sessions prompt 30 minutes of ad-free listening for users. Again, this type of video ad only runs when the user’s screen is in view, and users are unable to skip the ad.

Podcast Ads:

Advertisers are offered two different ways to run ads on podcasts through the Spotify audience network and through Title-by-title buying of podcast ads respective to Spotify or hosts across select Spotify original and exclusive podcasts. This is an option that includes extensive conversation and working with the Spotify team, as it does not appear to be the most accessible option.

A notable advantage of podcast ads is that they run for ALL Spotify users, including premium subscribers. Podcast hosts are given the choice to opt for including a dynamic ad slot within their podcast through the streaming ads attention option that advertisers choose.

Although it is up to the host, these dynamic ad slots are another potential place in which ads can run, especially in a more targeted and meaningful way. The Spotify Audience network allows advertisers to pick their target audience and buy podcast ads to reach their target audience.

Spotify has connections with various different podcast publishers and creators, such as Megaphone and Anchor, which help to truly expand their audience network. With these connections, advertisers are given the option to not only target active users on Spotify but even users that are not listening on Spotify.

Custom Experiences:

Custom experience is the term for Spotify’s more traditional variations of display advertising available. These display ads include sponsored playlists, overlays, homepage takeovers, and leaderboards. Most of these ads are display ads that are clickable for advertisers to link to their desired webpage, so users have a quick reference to the ad content.

leaderboard ads are visual ads that show for 30 seconds when the Spotify screen is being viewed by a user. Of all the Custom Experiences offerings, sponsored playlist advertising is unique and offers the opportunity for advertisers to be heard or seen on some of Spotify’s most streamed playlists.

Advertisers can use this option to reach users through native ad placements and in-playlist media. Overlay ads are pop-up ads that appear as the first thing on users’ phone screens once they go back into the Spotify app, making it the first thing users will see and interact with. home page takeovers are limited to desktop users, but they are ads that can appear on the Spotify homepage for 24 hours.

Your Spotify Target Audience:

Spotify’s popularity makes it an attractive platform for brands to have impactful interactions with their target market if your ads are done correctly. With just about 433 million monthly listeners in the first quarter of 2022, a total of 118 million monthly listeners subscribed to Spotify Premium and opt out of Spotify ads. That leaves about 245 million monthly listeners that are actively listening to ads that Spotify plays for them in between songs and podcasts.

Within Ad Studio, advertisers can access different targeting capabilities available to reach their audience.

Demographics:

Spotify has first-party demographics data that gives insights into user age, location, gender, and languages.

Behavior:

By being able to examine listening behaviors, advertisers are able to look into user interests and fan bases.

Contexts:

Spotify not only pays attention to listening behaviors based on music, but it also provides insights based on the podcasts that users listen to. In addition to just listening insights, because of its dynamic user experience, it can provide advertisers with context about users regarding the different platforms and devices that users use.

Custom Targeting:

Custom targeting is an option that is only available to advertisers that have requested to work with Spotify’s full-service sales team. This option can vary in availability depending on advertising goals.

Targeting and Privacy:

When it comes to user data and policy, Spotify collects user information in order to assist with improving advertising and targeting efforts. According to the privacy policy, depending on the specific use of information, Spotify has to ask user permission for some, but not all.

For example, in the use of cookies for marketing and advertising, the law requires Spotify to get consent from users. Spotify might not need to ask for consent when it collects personal data for tailoring ads to user interests, but this varies by region and platform. User data gets shared with advertising and marketing partners so that users are presented with relevant ad and marketing efforts.

These advertising and marketing partners are shown user data and usage data information. Users are allowed to change settings so that Spotify stops tailoring advertisements to them, but that is virtually the only option for stopping the use of their information for advertising, aside from unsubscribing to the platform. Within Add Studio, advertisers can access different targeting capabilities available to reach their audience.

Measurement:

Depending on the advertising goals set, there are several measurement tools Ad Studio offers to gain insights into ad performance. Add Delivery adds served, reach, frequency, budget pacing, completion rate, and Audience Insights age, gender, genre, streaming device, Conversion Metrics listeners, new listeners, and average streams.

Performance clicks, CTR, and quartile completion rates. Adds Studio offers services that are provided by external reporting partners such as Datorama, Funnel.IO, Clari sights, Report Garden, What a graph, Super metrics, Tap Clicks, Advertising, and Agency Analytics.

Custom Measurement:

Advertisers that opt in for working with Spotify ad specialists can access a more customized solution system. It includes specific groups that specialize in reach, resonance, and reaction. Reach includes a third-party measurement that helps to find solutions for ad verification, ad fraud, and viewability. Resonance helps with measuring awareness, favorability, and intent. Reaction measures sales lift online and offline, in-store visitation, TV tune-in, and podcast attribution.

Why Should You Consider Advertising On Spotify?

Millions of people tune into Spotify every day to listen to something of their liking, offering a wide range of insights and information regarding their interests, solely from what users listen to and care about. This implies that there is a wide range of data that is available to advertisers to increase their reach and conversions.

Spotify’s consumers are highly engaged, as they are actively listening to their favorite music and podcasts, so reaching them in this period is a way to ensure that advertising dollars are being spent on a meaningful audience. Many of the capabilities and tools that Spotify Ads provides, along with its potential reach for advertisers, make it a unique and attractive platform to expand brand awareness for a wide range of products and services.

Potential By Spotify Advertising:

In some ways, you can look at Spotify as being two products. On the one hand, you have the free ad-supported Spotify product. The keenest Spotify users, however, upgrade to Spotify Premium, which is added for free. Spotify very much follows the classic freemium model.

But, despite there being a little opportunity for marketing on Spotify Premium, there are now vast numbers of people using the free version of the app. According to Spotify’s Q4 2019 Annual Report, Spotify has two hundred seven million monthly annual users of MAU. This is up from 207 million a year previously. Over 2019 years, premium subscribers increased from 96 million to 124 million.

There must be some overlap because the report also states that they had 153 million monthly users as of Q4 2019, up from 116 million in Q4 2018. Another way to look at the importance of advertising on Spotify is to look at their financials for Q4 2019. Although the bulk of its revenue comes from Premium subscriptions €1,638 million, the €217 million Spotify received from advertising is still a sizable amount.

Perhaps more importantly, advertising revenue jumped a solid twenty-seven percent from the previous quarter, compared to a smaller five percent increase in revenue from Premium subscribers. Spotify’s greatest strength is its enormous reach. It is, without a doubt, the world’s number one audio streaming platform nowadays. And don’t underestimate the power of audio streaming.

Streaming accounts for sixty-two percent of the world’s music sales now, and that’s just the Premium subscribers the people who stream music for free and thus have to listen or watch ads do not even factor into the equation. Spotify is clearly passionate about the future success of its platform.

“We are enthusiastic about the underlying trends in the business. From history, we know that MAU growth tends to be a leading indicator of future subscriber additions, which is then followed by revenue gains in both premia and adds-supported users.

Spotify’s Best Six Strategies Approach Inspires Your Own:

In terms of a marketing strategy, Spotify takes an active approach. While most companies build on a previously established marketing platform for years, Spotify changes its marketing techniques yearly. This ever-evolving viewpoint has led to the company’s rapid growth. Here is a breakdown.

Make It Personal:

In a saturated market, personalization – creating customized content for consumers – is essential to remaining a competitive business player. In 2016, Spotify re-conceptualized its AI interface to personalize it per user. This ensures each individual receives tailored content that is pre-made personalized playlists based on listening history. The impact and potential of personalized marketing are building a connection between the platform and its users. By collecting and effectively using consumer behavioral data, Spotify crafted its experience to an individual’s taste.

Embrace Market Fluidity:

Most marketing concepts are tried and true and will likely never change. But somehow, that does not prevent marketing from evolving in adjustment to current trends. Marketing fluidity is simply accepting change. Recognizing the oddity of the year, Spotify created billboards to poke fun at users who listened to different songs.

On the bottom of the billboards, “Thanks, 2016. It’s been weird” was written in black lettering. 2016 was an odd year. In the United States, the election of President Donald Trump embroiled the nation in political debate. The United Kingdom’s withdrawal from the European Union created a heated struggle in Europe. And the cherry on top, Leonardo DiCaprio, finally won an Oscar.

Partner With Other Brands:

A business partnership taps the potential of reaching new markets, increasing customer loyalty, and blocking the competition. And leading the pack and not just the pack of music streaming companies, though, there’s that too Spotify. As of 2022, seventy-six companies across the globe have joined Spotify’s partnership ecosystem. Among these epic collaborations, the fan favorite remains the 2015 crossover between Spotify and Starbucks.

Additionally, Starbucks employees received a Spotify Premium subscription. This innovative partnership encouraged the active participation of consumers and ultimately enhanced both entities. Bringing the digital music streaming experience to Starbucks mobile app customers, members could receive curated playlists and earn drink reward points for purchasing Spotify’s premium package.

Jump On Social Media Trend:

Social media trends harness the power to viral a business. The clip exploded across social media, and millions of people joined the conversation. Spotify noticed the trend and decided to create a new billboard. In 2018, an auditory illusion was posted on Reddit. While some listeners claimed a man was saying the name Yanny, in an audio clip, others were certain it was the word, Laurel.

Test Out A Freemium Model:

Freemium is a pricing strategy by which a basic service is provided free of charge. Offering a limited, ad-supported music service for free, freemium remains to be the distinct feature that separates Spotify from its competitors. While nearly half of its users opt for the free version, the supported ads contribute to Spotify’s revenue stream. Additionally, the freemium business model produces a 46 percent conversion rate from free to paid users.

Keep Your Brand Identity Consistent:

Consistency in brand identity generates trust and creates a positive perception of service. In response to the minimalist trend in the early 2000s, Spotify created a simple theme. But its logo is remarkably plain for a brand whose very niche is music and innovation. Yet, the simple, crooked WiFi emblem has represented the company for fifteen years. Consistency as the platform exploded in popularity, Spotify became known for its warped icon. Throughout time, the company underwent several rebranding efforts to express creativity. However, the original logo remained intact to offer a sense of familiarity to its subscribers.

Final Words:

In conclusion, like other online advertising platforms, Spotify is also a great opportunity to promote your brand, company, business, or product. Spotify and other music streaming platforms are modern-day radios, with a little bit more balance and variety for the user. It offers a wide range of options for advertisers to customize ad campaigns and optimize their budget, along with several tools and tips for making Spotify ads.

If you have the budget and resources to start advertising your product or service, it is worth considering Spotify as a new way to build brand awareness and reach. And the rapidly changing economy of the Internet, Spotify stands out as a leading innovator in the field of music streaming.

Starting out in a large field of competitors, Spotify rose quickly to lead the industry in music streaming, and become the service of choice for millions of users. By recognizing the value of the network, and the power that could be leveraged through focusing the network attention, Spotify was able to achieve success and attract a greater library of music to offer the users, which in turn increased the network and the power of Spotify.

In an economy where companies can rise rapidly, they can fall just as quickly at the mercy of a network of users. And it can be understood that companies like Spotify can only succeed as long as they can continue to find new ideas to meet the changing needs of the audience.

However, Spotify’s network of users exists within an ever-changing digital world where technology advances at a great rate, and competitors arise on a regular basis. To remain the top competitor in the market, Spotify must constantly develop its products and innovate its services to respond to the advancing needs of the audience.

They have maintained their position as the top music streaming service only because they have been better at providing their large network with updated services and innovative products, and focusing their business model on the needs of the users.

This was achieved through a user-focused business model that placed value on the attention of millions of users over the economic value of the music it was providing or the monetary profits that might be gained. It was this shift away from a profit-driven business model that allowed Spotify to grow a network economy and gain value as a business to advertisers and music artists alike.