Dive Brief:
- Spotify has acquired content recommendation startup MightyTV for an undisclosed price, according to a Spotify press release. MightyTV’s team, including founder and chief executive officer Brian Adams, are joining Spotify as part of the deal, which occurred shortly after the purchase of audio detection technology firm Sonalytic.
- Jason Richman, vice president of product at Spotify, touted MightyTV, which TechCrunch described as using a Tinder-style swipe interface to guide television and film choices, as bolstering Spotify’s position in programmatic audio. Adams stressed MightyTV will insert brand experiences into Spotify that are true to the service’s products.
- Last year, Spotify enabled programmatic buying globally by harnessing three platforms: AppNexus, Rubicon Project and The Trade Desk. AdAge explained the programmatic push let ad buyers service audio creative to users based on various characteristics (age, gender, music genre and so forth) in milliseconds.
Dive Insight:
Spotify, coping with scant margins on music, is maneuvering to take advantage of the programmatic surge. In its U.S. programmatic ad spending forecast, eMarketer reported the real-time outlays have outpaced expectations and will grow at a double-digit clip this year to reach $25.23 billion. Programmatic is on pace to represent 75 percent of all display ad spending in 2017. Audio is a tiny piece of the programmatic pie with Facebook commanding the largest share of programmatic spending followed by Google, a rival for Spotify’s ad revenue. At nearly 66% of the programmatic spend this year, spending on mobile programmatic ads is projected to hit $17.7 billion.
TechCrunch reasoned MightyTV’s ability to improve recommendations could help Spotify expand its user base from diehard enthusiasts to casual listeners, but posited MightyTV’s application in the programmatic ad field isn’t obvious. It speculated MightyTV could develop music discovery tools, and harness those tools to amass data on users and deliver ads to them. Richman told Business Insider that MightyTV is part of its effort to get “really serious” about pumping up ads to subsidize the free version of its service. “We pivoted to focus around Spotify free as a standalone business and that's what we are really focused on,” he said. “This acquisition and Brian is a very strong signal towards our investment in this space.”
Last year, Les Hollander, global head of audio monetization at Spotify, told AdAge the streaming music service would capture at least $10 million from programmatic audio, video and displays ads. With MightyTV in tow, Spotify likely has a grander vision for its programmatic income. But dependence on programmatic carries risks. It might be more efficient for ad buyers, but the efficiency comes with less control. And, as the recent backlash against YouTube shows, brands demand control if their ads land alongside questionable content. Spotify will need to proceed carefully and make sure to its revenue streams remain diversified.