Brands still not taking advantage of music streaming platforms

By Rebecca Chambers | 11 November 2014

Online music streaming is a cutthroat market. Australia has more than 30 online music streaming platforms and also a few big names like Beats supposedly waiting in the wings. Not all of them can survive.

Most are ramping up advertising to shore up revenues and attract users to free ad-funded versions and brands are buying in, but are they taking complete advantage of the unique ad features these music service providers are offering?

AdNews took on the arduous task of sitting down and listening to the ad-funded versions of three of the biggest players; Spotify, Rdio and Pandora to establish the level and types of ads encountered. 

Rdio, Spotify and Pandora offer a range of advertising options for brands including audio, display units, banners, skins, interstitials and video. Each of the sites also tailor advertising units for mobile and desktop, with close to 80% of each of the platform’s audience coming in via mobile.

The ads that feature on the platforms come from a wide range of brands, although it’s noticeable that brands are missing out on connecting with users by failing to tailor their advertisements to a distinct audience.

So what did we hear? 

Rdio offers advertisers audio and banner options, as well as sponsored radio stations. Over an hour of listening to Rdio, it featured the same frequency of ads as both Pandora and Spotify, with four 30-second ads per hour. The ads were audio-only and three out of four were for Rdio’s premium service.The platform recently broadened its offering in order to make sure its users didn’t migrate to another site that matched its services. 

Spotify is another major international player; having launched in Australia in 2012 it is the leader in terms listeners and revenues. Spotify offers advertisers video, audio, sponsored stations, sponsored playlists and tailors its offering for mobile. Spotify also plays four ads every hour.

It recently introduced video ads in order to remain competitive and attractive to advertisers. At the launch Jeff Levick, Spotify’s global chief business officer, told AdNews the music platform wants to educate brands that advertise with them about how to think in native terms about video ads, or video content in order to minimise disruption. Spotify also offers brands the option of “sponsoring” ad-free streaming sessions. For instance, before a user begins a ‘cardio’ playlist, Nike can book a slot which thereafter allows the user to listen to uninterrupted music for the next 30 minutes. 

Kate Vale, Spotify managing director in Australia, believes that the platform is doing a lot more than most and that the brands that advertise with Spotify are taking advantage by using bespoke content. Vale admitted that some brands use Spotify as a replacement for radio ads but told AdNews, “Some of the strongest campaign results on Spotify have come from brands who tailor their ads to take advantage of the specific benefits of our ad platform.” 

Vale said that Spotify gives brands a number of unique opportunities to connect with its audience and that a number of bespoke ads are featured on the site, “A recent example of this was for Disney's theatrical release of Maleficent, where our users were served targeted audio ads inviting them to not only watch the trailer, but to also engage with musical content from the film.” 

Vale added that Spotify was already working with third party production agencies to help produce bespoke ads for brands. 

Pandora launched its service in Australia in 2012 and it has been a free, ad-funded service since the beginning. The platform delivers one minute of ads for every hour of listening. The ad unit that works most effectively for advertisers on Pandora is called “The Earball” which is a combination of audio advertising, accompanied by a call to action on a display unit for mobile or desktop, including video, banners, skins and interstitials.

Optus and Bupa were two of the brands featured in advertisements over an hour of listening on Pandora. The ads didn’t make a creative effort to target a music audience; beyond being “clickable” they were generic ads that featured clear branding. Google Play had also booked an ad spot on the service, which was interesting given the brand's occupation of the same music space.

The audiences accessing music streaming platforms are diverse, according to Jane Huxley, Pandora ANZ managing director, and therefore brands don’t tailor their ads for specific demographics. Huxley told AdNews that the advertising on Pandora isn’t necessarily platform specific, either.

The ads aren’t just targeting music-lovers specifically, they’re targeting everyone. She describes Pandora’s listeners as, “From 18 to 88, and they are listening to their favourite Pandora radio stations while they are doing something else – pushing prams, commuting to the office, working in open plan, exercising, to name just a few activities. They represent many different lifestyles, and that’s who we are able to target in our advertising." 

What is important though is ad wastage, she said. “The concept of wastage is critical to us. We pay royalties on every song we spin. We don’t serve ads if you are not listening, we don’t serve ads if you are not looking and we target our ads to relevant demographics”.

Although advertisers are seeing the importance of music platforms, in most cases they don’t seem to be taking full advantage. The majority of ads seen and heard by AdNews were largely similar across the platforms, and not dissimilar to the ads also running on websites, social channels or typical radio ads. Those brands that were the most creative used music to their advantage, like Adidas’ 'Boost Your Run' US campaign on Spotify, where users were given a perfectly timed motivational playlist to get them through their run. Using playlists and sponsored ad-free segments allows brands to engage with their audience in a meaningful way but this isn’t happening often enough, in the Australian market.

By not using creative methods that suit music streaming offerings, brands are potentially missing out on connecting with a new audience and without creating engaging content advertising on the platforms is a waste of money. 

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