Spotify added Playlist Targeting to its advertising mix on Thursday, an offering that lets brands access its first-party data to target listeners based on current moods or activities. Playlist Targeting will be available for all brands when it launches out of beta on May 1st.
Thursday’s launch adds to Spotify’s video offerings, Video Takeover and Sponsored Sessions, which debuted in fall 2014 and let brands target users on mobile and desktop.
“Spotify is becoming more friendly for brands,” said Brian Benedik, Spotify’s North America VP of advertising and partnerships. “Between running media, targeting, the open API and branded content, we’re trying to give brands multiple ways to activate audiences.”
In the case of Playlist Targeting, that activation is based off listeners’ emotional states. Rather than listening by genre, most users now listen based on their moods, and the playlists they activate indicate their behavior in real time as well as their interests.
Here’s how Playlist Targeting works: Spotify hosts “Mood” playlists on its platform like “Chill,” “Focus,” “Party” and “Exercise.” Coupled with login data (age, location, gender), brands can cobble Spotify’s audience insights together to serve an ad for, say, Nike, when a listener is likely running.
Playlist Targeting also lets brands target via user-generated playlists. If a user titles a playlist “Workout,” segmentation is easy. But Spotify can also deduce that a user’s playlist was generated for exercise if a user activates a certain playlist every morning at 7am on a mobile device and the songs average a high number of beats per minute.
For its ad offerings, Spotify works with a customer development group that’s made up of eight brands. Each of these brands represents a particular vertical and acts as a testing ground for Spotify’s ad products to “work out the kinks.”
McDonald's is one brand client in Spotify’s customer development group, said Benedik. He didn’t name the others, but Spotify’s landing page for brands offers case studies from brands like Reebok, Nike, Adidas, BMW, Hyundai, Volvo, Kellogg’s, L’Oréal and Vodafone.
Brand advertisers reach the vast majority of Spotify users. Spotify houses more than 1.5 billion playlists, and audiences spend an average of 148 minutes per day streaming audio on different devices. Of its 60 million monthly active users, 15 million are paid subscribers, meaning 75% of Spotify users don’t have a paid subscription and get audio ads.
In addition to Playlist Targeting, Spotify also unveiled the ability to launch sequential messaging campaigns, which hits on cross-device advertising. A Spotify listener could listen to music on Spotify via a mobile device during their morning commute, for example, and fire up Spotify on desktop once they reach the office.
As for measurement, Spotify is still working to pinpoint the right KPIs.
“We have a lot to learn in terms of proper KPIs,” said Benedik. “Once we have a couple months under our belt, we will start to establish KPIs that make sense for this type of targeting. We want to work with certain brands to co-create those KPIs.”
Programmatic is also on the horizon for Spotify, according to Benedik.
“Programmatic is something we’re diving into in earnest, and we’re testing with a few partners right now on display. We’re working on that very actively right now,” said Benedik, adding that Spotify is particularly interested in developing video and audio programmatic solutions.