GroupM tells Spotify to wise up after claims of agency timidity

By Brendan Coyne | 15 May 2014
GroupM head of digital John Miskelly.

GroupM has hit back at Spotify after the music streaming service claimed media agencies weren't brave enough to place client ad dollars onto the platform.

Spotify Australia managing director Kate Vale told AdNews that agencies needed to “take more risks for the brands that they are working with and try something they've never tried before.” She suggested that the lack of appetite from agencies was down to them being “under resourced” and that when Spotify approached brands directly, they were usually more receptive.

The company claimed its session times in Australia were eight times the daily average of YouTube and that its click through rates (CTRs) are three and a half times higher than the industry average.

But GroupM head of digital John Miskelly suggested it was naïve to be talking about those kind of metrics and suggested the platform build a better understanding of what media agencies evaluated when recommending channels.

“It's an interesting point of view. But [to level that kind of criticism] you have to have a deep understanding of how we do planning for clients. I'm amazed people still talk about click through rates. The people that click on banners have a certain type of demographic, so it is an inappropriate metric.”

Miskelly said if GroupM were to place much faith in time spent as a metric “you would see a much higher proportion spent on radio.” Equally for digital, that would mean the agency “would allocate all our spend to Facebook. That is obviously not the case.”

While Spotify is holding an educational day for agencies in Melbourne today, Miskelly said there were four simple rules that helped agencies decide how to select digital media partners.

“Does it have enough reach to be scaleable? About ten vendors cover off about 95% of the universe. If you are a smaller vendor you have to have a very compelling idea.”

The second pillar was around strategy “can it execute something interesting that goes beyond banners and buttons?”

Miskelly said the third plank was whether it delivers a business or communications goal, and the fourth element was does the vendor's proposition deliver an appropriate amount of value.

“If Spotify isn't growing revenues it should have a look at those four things because those are what we look at. People tell you digital is complicated, but we're really quite simple.”

Miskelly said that agencies were used to “people saying stuff like that. It's not the first time. But they need to understand how agencies work and operate before making statements like that.”

He accepted that Spotify might be making a rallying cry to brands directly in a bid to drive uptake but said that advertisers “will always need impartial views on the best digital vendors to work with. That is what we are here to do.”

When it came to building ad revenues as opposed to subscription revenues, Miskelly said the challenge facing Spotify, and all music streaming companies, was that music was only part of the equation on a small percentage of client briefs.

“It's an interesting platform if you have a strategy based on music. You can execute interesting ideas on Spotify but a music strategy is not a component within the majority of brand briefs.”

Spotify is hoping to hear from some agencies at its forum event in Melbourne today.

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