Spotify is introducing video ads on its digital music service later this year. The ads are hoped to encourage brand marketers to sponsor free streaming for listeners.
The new video ad experiences will come in two formats: Sponsored Sessions and Video Takeovers. Spotify users who do not pay the monthly $9.99 fee for its Premium ad-free service can choose to watch a brand-sponsored video spot, or a “Sponsored Session,” in return for 30 minutes of uninterrupted music.
Brands can also sponsor a video ad break on desktop with a “Video Takeover.” These are integrated into normal ad breaks, but the videos only play if the user is in view.
“Our audience is incredibly engaged, so we are delivering an advertising experience that enhances their time spent on Spotify and connects them to the music and brands they love,” says Jeff Levick, Spotify’s chief business officer.
He adds that giving subscribers the choice to view ads in exchange for an uninterrupted listening experience “communicates a better value,” as users are “being rewarded for engaging with the content.” This encourages Spotifiers to watch the ads as opposed to being turned off by them.
According to a blog post from Spotify, the average user spends 146 minutes per day streaming music on both mobile and desktop. Additionally, only 20 percent of Spotify users pay for its Premium service, leaving the majority of listeners receptive to advertisers. This is all good news for the initial brand partners that will be using the new video ad formats, including Coca-Cola, Ford, McDonald’s, NBC Universal Pictures, Target, and Wells Fargo.
It is still unclear how much Spotify will charge advertisers for the new service, but there is certainly a huge market for video ads. Earlier this year, Nielsen estimated that video advertising on the Web was expected to generate $572 billion in media spend in 2014 alone.
Going forward, Levick says that Spotify hopes to make ads more customized. Last March, the company acquired music data company The Echo Nest. Since then, the music streaming service has been working to analyze data based on its 1.5 billion playlists, as well as the times users are listening the most, to establish the best ways to tailor ads based on real-time experiences.
“We hope to make Spotify the most real-time, highly targeted platform available to both advertisers and users,” notes Levick.
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