- Spotify is testing a new ad format for its Discover Weekly personalized playlist section that allows brands to sponsor the playlist through audio and video ads inserted into breaks between songs on its free version, Adweek reported.
- Microsoft is the first brand to use the new format and will run a campaign, "Empowering Us All," that touts the company's artificial intelligence (AI) capabilities across different sectors, such as education, health care and philanthropy. Spotify sees the campaign as a solid fit because Discover Weekly uses AI to offer customized playlists to users.
- "Personalization has quickly gone from a nice-to-have to an expected consumer experience that delights audiences, and marketers are craving opportunities to be part of it," Danielle Lee, global head of partner solutions at Spotify, said in a statement to Adweek. Discover Weekly listeners stream more than twice as much content as users who don't listen to the playlist, according to Spotify, pointing to how the playlist could serve as an effective advertising channel.
As brands continue to seek innovative and authentic ways to connect with consumers and deliver the personalized experiences that consumers expect, Spotify's new sponsored playlist product could be an opportunity to let brands "own the personalized listening experience," according to TechCrunch. Discover Weekly, which offers a curated listening experience based on a user's preferences and listening history, could be enticing to advertisers, as it attracts a large number of engaged listeners.
Brands are growing more interested in digital audio to reach younger on-the-go audiences interested in streaming platforms. Spending on digital audio advertising jumped 31% in the first half of 2018, reaching $935 million and putting it on track to surpass the format's $1.8 billion for all of 2017, according to an Interactive Advertising Bureau report.
Spotify has more than 200 million active users, which could attract advertisers to the platform. Rather than work to grow its revenue stream through paid subscriber acquisition, Spotify is looking to further monetize its service through other methods that optimize its loyal user base. The company recently launched lower-cost student and family plans, causing the average revenue per user to drop. It had slipped 6% year-over-year to $5.50 by Q3 2018. However, the new plans have yet to demonstrate whether offering more plan options leads to stronger loyalty or higher lifetime value.
Along with the new sponsored playlist offering, Spotify last month announced a deal with "The Ellen DeGeneres Show" on a long-term cross-promotional content partnership. Spotify will become a regular feature on the TV show with on-air integrations and a hub for DeGeneres, who will curate themed playlists. Spotify also launched a branded original podcast with New Amsterdam Vodka, "Ebb & Flow," a five-episode series hosted by DJ and music influencer Jasmine Solano.