Over the past few years, Spotify has become a music streaming powerhouse. At 31 December 2018, the company had 116m ad-supported users and 96m subscribers, with 207m active users in total. There are over 40m songs and 3bn playlists on the platform, which is available in 78 markets. And as of 31 August 2018, it had paid out €10bn (£8.8bn) to right holders.
We caught up with the firm’s head of programmatic Europe, Zuzanna Gierlinska, to find out where the company is at, where it’s headed, and what the advertising opportunities for brands on the platform look like.
MM: To the man or woman in the street, Spotify is a great music streaming service. Is that how you see it?
Today, Spotify is the largest music streaming service in the world, but we see ourselves as so much more. We strive to become the number one audio platform in the world, where people come to enjoy all of their favourite audio content, including music and podcasts. And our users see us more than just a place to get music; we give them a space to reflect their moods, mindsets and celebrate major cultural moments. For example, during the 2018 World Cup, streams of the England football team anthem ‘Three Lions’ increased by 8,240 per cent after England won the quarter final match against Sweden. And in the month leading up to the Royal Wedding, many users were curating their own Harry and Meghan playlists, with a total of 3,290 ‘Royal Wedding’ playlists created on Spotify.
When things happen in the world – be they in the fields of culture, social progression or entertainment, for example – we can see this on Spotify, because music is central to people’s lives. Whether these are big global events or events that are personal to one listener, music fans turn to Spotify to express their moods and emotions through what they are listening to. And our dedication to innovation around ubiquity means that our platform is available anywhere you would want to listen to music, truly enabling fans to soundtrack their lives wherever and whenever they are listening; in the car, on their phone, on smart speakers in the home, and so on.
MM: What does that mean for brands advertising on the platform?
ZG: This real-time fan engagement and our connection to culture presents meaningful opportunities for brands on our platform. We provide a unique place for brands to connect with their audiences in an authentic environment because our users trust us.
MM: OK so it’s a good, brand-safe and trusted environment, but how efficiently and effectively can brands reach consumers on Spotify?
ZG: Our unique understanding of our audience allows us to serve the right brand message to the right person at the right time and ultimately drive brand outcomes. Just as we constantly iterate on our consumer products to create a world-class experience for our users, we are focused on doing the same for our ad products to ensure a great experience on the free tier for Spotify Free users and brands alike.
We use tools like Nielsen Brand Effect, IAS, Moat and more to prove that Spotify is more than the cool kid on the block; our ad platform is delivering real results for brands. The insights that these third-party measurement tools offer help marketers make more informed media investment decisions across their marketing mix and drive increased campaign performance on Spotify.
MM: Can you give some examples of how all this works, the personalisation, leveraging data for more precise targeting and measurement?
ZG: We recently unlocked Discover Weekly – one of our most popular playlists, which creates a unique, personalised playlist for each user every Monday – for brands to sponsor this personalised moment end-to-end, on Spotify Free.
To make this happen, we pushed the boundaries of our ad infrastructure to support this scaled sponsorship experience. For the beta launch, we sought like-minded brand partners to come on board and lean into this experience with an open mind and out-of-the-box thinking. Microsoft’s AI campaign ‘Empowering Us All’ immediately came to mind. It explores the impact that AI will have across many sectors like Education, Healthcare and Philanthropy. This campaign was a natural fit for the AI-built Discover Weekly playlist and Spotify’s deep connection to culture and community.
Another fun example is the Snickers Hunger Spotter. Snickers challenged us to tap into its audience during those key hunger moments when they’re behaving out of character, under the campaign strapline: ‘You’re not you when you’re hungry’. Snickers used Spotify’s streaming intelligence and machine learning to target users that were listening to music that was out of character. We delivered bespoke audio ads, disguised as actual songs, that were tailored to these genres to catch the users’ attention and support the message: ‘You’re not you when you’re hungry’. We then drove users through to a Snickers-branded playlist: “The Hunger Hits”. It’s one of my favourite campaigns on Spotify.
MM: How do you continue to evolve your advertising business to make it easy for advertisers to buy ads on Spotify?
ZG: Our programmatic business is growing at a pace which is a direct reflection of the way the overall industry is heading. All across Europe, agencies are moving towards a programmatic-first buying model and increasingly, brands are in-housing their technology partnerships and programmatic operations.
For Spotify, this brings great opportunity, as we are well positioned to capitalise on this shift with all all our media suite, including audio, video and display, available to be bought programmatically.
From the outset, one challenge we have faced is democratising the knowledge of programmatic, both within our business and externally. We have invested – and continue to invest – significantly in educating our internal team from sales to operations on the nature of running a of programmatic business and this is a big investment for us. We are also committed to helping the industry overall scale programmatic capabilities and run dedicated programmatic academies targeted at empowering junior traders with the knowledge they need to navigate the in-app programmatic environment.
Another challenge that we face, not just as Spotify but across the programmatic industry as a whole, is building awareness for, and adoption of, programmatic audio. As a pioneer in the audio space, Spotify been championing programmatic audio since 2017, and it’s really this last year that agencies and marketers began to lean in to test the medium. There’s still, however, a broad lack of awareness in the power of audio and work to be done to evangelise the exciting personalisation and creative opportunities programmatic audio offers.
MM: What do the next 12 months look like for Spotify? What else can you do to ensure the company and the brand remains a force in culture?
ZG: Our founder and CEO Daniel Ek said it best. Based on radio industry data, we believe it is a safe assumption that, over time, more than 20 per cent of all Spotify listening will be non-music content. This means the potential to grow much faster with more original programming – and to differentiate Spotify by playing to what makes us unique – all with the goal of becoming the world’s number one audio platform.
We are building a platform that provides a meaningful opportunity for creators, excites and engages our users, and builds an even more robust business model for Spotify, in an industry we believe will become significantly larger when you add internet-level monetisation to it.