Spotify Starts Beta Testing a New, More Aware Type of Advertising

Billboard

Each new day brings with it the possibilities of success, failure, love, a cheeseburger. Each new day guarantees, however, at least one thing: a new drill bit with which advertisers and marketers will attempt to burrow into your mind. These "new" tools are generally anything but, mostly relying on the same mechanisms and the same strategies -- hitching a ride on someone famous, cultural electric shock -- that have been employed for decades.

It's not 1984 anymore. The marketing and advertising industries now have data, and lots of it. And not just about what you're listening to or watching, but where, and when, and what the weather is like, and whether that weather is what you like. (That last is forthcoming, but you can count on it coming.)

This week, Spotify stepped into this brave new world of opportunity with "Branded Moments," a new ad product that will leverage the leading streaming platform's contextual awareness of its users in order to, the hope is, give listeners (those that use the service for free, at least -- subscribers don't hear ads) ads that are particularly relevant to them. It does this in part by knowing how you're listening, and to what.

Intrigued and frightened, Billboard spoke to Spotify's vp of global partner solutions Danielle Lee to understand the future a little better and assuage our protectionist fears.

Billboard: When did development of this product start?

Danielle Lee: We recently started investing and building out native ad experiences on our platform, the first was sponsored playlists. Spotify's curated playlists are some of the most viral content on the platform, so there was this big demand for brands to be a part of that. We launched that in Q2 of this year and it has really taken off

We thought of this whole moments-based marketing opportunity that our competitors have gotten involved in. This is an evolution of that.

The thing that's differentiating for us is that we understand context better than anyone else, the ubiquity of our platform and users that spend on average two hours a day, on variety of devices, in a variety of locations.

So we have this understanding of context, and we can allow brands to be a part of key life moments. That was the genesis.

What competitors are you referring to?

Twitter has a "Moments" offering, Snapchat has sponsored geo-filters -- those are two that come to mind. Those tend to be cultural moments as opposed to "real life" moments, however.

How does it work?

The consumer selects a playlist, either a Spotify-curated playlist or a playlist that the user has created -- then they hit shuffle play, and they get a branded offer, announcing that the next 30 minutes of their listening will be uninterrupted, and then they're served a vertical video -- that creative [for the uninitiated, 'creative' means advertisement] we're working with brands to customize that to that moment. Not just a classic like, TV spot, but a video creative that hooks them as they're starting to work out, or host their dinner party, etc. 

Then, as the user engages with their device, there's a mobile overlay that allows the brand to have sequential creative, and for them to change the message throughout.

It allows the brand to reach their audience at a moment of high relevance, and it drives awareness consideration in that moment, and finally over time that brand will become synonymous with the moment.

Forgive what may be a dumb question -- can you define a 'moment'?

Take for example a running playlist I've created -- now when I go to that, a brand can sponsor that workout, while I get an uninterrupted listening experience. So Gatorade [a partner during Branded Moments' beta] can talk about staying hydrated, for example.

What other information is it pulling?

We certainly know where they're accessing Spotify from, so if they're listening to a 'chill' playlist on a Playstation, or in their car, any of those -- we certainly have visibility into the context. That's why we're able to provide that real-time experience.

This seems like a lucrative new tool to advertisers... and for Spotify.

We're definitely still working out the pricing model for it, we're expecting to learn a lot during this beta period. [Which will last through the end of this year, with Bacardi on 'Party,' Gatorade on 'Workout,' and Bose on 'Chill' at launch.] It's a cost-per-moment model, different than the traditional CPM base pricing.

The future of this is "dynamic," right? Minority Report-style, "aware" advertisements.

Deeper understanding of the context of the user experience, and the moods they're in, which allows us to better serve advertising that's relevant in that moment. And because they're connected in so many places, we start to see those habits, and understand them better than ever before.

And what of ad fatigue? Ad blockers are popular for a reason.

That's why we're so focused on developing custom creative in these moments, instead of traditional commercials.

This conversation has been edited and condensed for clarity.