Spotify has started beta testing a new advertising offering that allows brands to 'sponsor' its personalised Discover Weekly playlist, one of its flagship functions.
Currently, brands can only 'sponsor' other editorial playlists on the streaming service. Instead of just running ads, a brand will now be able to curate sponsored playlists from end to end.
Sponsored playlists will offer advertisers brand placement in the playlist and featured audio or video during ad breaks. Brands will also benefit from Spotify's collaboration on developing a comprehensive marketing plan.
What makes this new ad product so attractive is the playlist's potential to reach highly engaged users on Spotify and the opportunity for brands to “own the personalised listening experience”. Spotify claims Discover Weekly users stream more than double compared to other users.
Microsoft is set to launch Spotify's new ad product with an AI campaign, 'Empowering Us All'. The new spot will focus on the role of AI in sectors including education, healthcare and philanthropy.
Spotify believes this is a good match for its release as Discover Weekly utilises AI to deliver its customised playlists.
While Spotify continues to grow its user base of more than about 200 million daily active users and 87 million paid subscribers, it has recently struggled to increase average revenue per user with recent promotions, such as bargain family and student plans.
Spotify continues to experiment with ways to successfully reap revenue from its user base that go beyond conversion to its premium subscription model. Sponsored playlists could be the new push Spotify needs to pick its figures up again.
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