Home  › Marketing › Strategies

Ad-Funded Music Service Spotify Has Big Brands on Board

  |  March 3, 2009   |  Comments

Spotify has signed up a major advertisers including T-Mobile, XBox, Sony Pictures, and Universal, and announced its millionth user.

clickz_ukandeu.gifEuropean ad-supported music service Spotify has signed up a host of major brand advertisers including T-Mobile, XBox, Sony Pictures, and Universal. What's more, the Stockholm-based outfit this week announced its millionth user since it launched in October '08. The firm's ad sales success suggests the prospect of ad-funded music is proving attractive for both consumers and advertisers.

"The general reaction to our core radio and digital formats has been hugely positive, and many of the major brands are already realizing the unique value of our offering," Spotify's UK Sales Director Jon Mitchell told ClickZ News. "There's no wastage and it's fully accountable," he added.

Spotify, led by Martin Lorentzo, co-founder of performance-based digital marketing company TradeDoubler, works in a similar way to commercial radio, combined with the on-demand nature of download services such as Napster. Users stream music of their choice via a downloadable application, and are served display ads, and audio ads in between content. Currently, around one minute of audio ads is served for every 20 minutes of music consumed.

Audio ads are coupled with display creative, which enables advertisers to track click-through rates, and adds an element of accountability unattainable through traditional, or even digital radio.

"We always believed the audio format would be successful, and now the numbers prove it. Figure-wise, our audio CTRs are 0.7 to 1 percent in the UK and display ranges from 0.3 to 0.5 percent, with some clients getting as much as 1.6 percent," Mitchell claims.

Alongside audio, typical display ads are offered within the application itself. Mitchell says these display units are currently performing especially well, owing to "a general lack of clutter and restricted ad formats," and the fact that ads are only served when the user is active within the application.

Currently, ads are sold on a run of site basis. However, a number of targeting options will be introduced as the service gathers steam. Alongside demographic, geographical, and socio-economic targeting based on user registration data, the firm also plans to launch music genre targeting later this year. For example, advertisers may find that fans of certain types of music have a higher propensity to buy certain product lines.

Additionally, advertisers may wish to align their brands with certain artists. "Our close relationships with the music industry means we have some interesting opportunities between bands and brands arising in the near future. Watch this space," Mitchell said.

Although Spotify is entering a crowded market, competing with a host of ad-supported services such as Last.fm and WE7, it has already amassed an impressive list of advertisers including COI, Vodafone, Philips, HMV, Sainsbury's, Nissan, Paramount, and findanyfilm.com.

The firm currently has relationships in place with all of Europe's major labels, offering access to millions of tracks. Alongside the ad-supported model, users can also opt to pay a subscription fee for ad-free streaming, much like the services currently offered by Napster and similar services. At present, the ad-supported version of its service is only available in the U.K., Spain, France, Sweden, Norway, and Finland. The firm says it eventually plans to open in the U.S. and Canadian markets.

Tags:

ClickZ Live Toronto On the heels of a fantastic event in New York City, ClickZ Live is taking the fun and learning to Toronto, June 23-25. With over 15 years' experience delivering industry-leading events, ClickZ Live offers an action-packed, educationally-focused agenda covering all aspects of digital marketing. Register today!

ClickZ Live San Francisco Want to learn more? Join us at ClickZ Live San Francisco, Aug 10-12!
Educating marketers for over 15 years, ClickZ Live brings together industry thought leaders from the largest brands and agencies to deliver the most advanced, educational digital marketing agenda. Register today and save $500!

ABOUT THE AUTHOR

Jack Marshall

Jack Marshall was a staff writer and stats editor for ClickZ News from 2007 until August 2011. 

COMMENTSCommenting policy

comments powered by Disqus

Get the ClickZ Marketing newsletter delivered to you. Subscribe today!

COMMENTS

UPCOMING EVENTS

Featured White Papers

Gartner Magic Quadrant for Digital Commerce

Gartner Magic Quadrant for Digital Commerce
This Magic Quadrant examines leading digital commerce platforms that enable organizations to build digital commerce sites. These commerce platforms facilitate purchasing transactions over the Web, and support the creation and continuing development of an online relationship with a consumer.

Paid Search in the Mobile Era

Paid Search in the Mobile Era
Google reports that paid search ads are currently driving 40+ million calls per month. Cost per click is increasing, paid search budgets are growing, and mobile continues to dominate. It's time to revamp old search strategies, reimagine stale best practices, and add new layers data to your analytics.

WEBINARS

Resources

Jobs

    • GREAT Campaign Project Coordinator
      GREAT Campaign Project Coordinator (British Consulate-General, New York) - New YorkThe GREAT Britain Campaign is seeking an energetic and creative...
    • Paid Search Senior Account Manager
      Paid Search Senior Account Manager (Hanapin Marketing) - BloomingtonHanapin Marketing is hiring a strategic Paid Search Senior Account Manager...
    • Paid Search Account Manager
      Paid Search Account Manager (Hanapin Marketing) - BloomingtonHanapin Marketing is hiring an experienced Paid Search Account Manager to...