Spotify adds video ads, McDonald's and Coke first off the ranks

Rosie Baker
By Rosie Baker | 8 September 2014

Spotify has joined the massing ranks of online platforms vying for a share of TV dollars. The music streaming platform today kicked off its first video ads. Coca-Cola and McDonald's are on board.

It's getting crowded out there. But Spotify insists it's not taking the standard approach.

Speaking to AdNews ahead of the launch, Jeff Levick, Spotify's global chief business officer, said the move was not strictly about video ads, but about video content. He claims that it solves some of the issues brands and agencies have with other video products, with a sly dig at "intrusive" autoplay videos, pushed by the likes of Facebook and others.

Sponsored Sessions mean advertisers can sponsor, ad-free sessions on Spotify. It's a slightly roundabout way to approach video ads, but Levick said it means brands can target users with video that's relevant to the activity they are doing while listening to music on the platform.

If a user is about to listen to a running-themed playlist, a brand like Nike can run an exercise-themed video ahead of providing the user with an uninterrupted music streaming session, for example. Levick said the music platform is now on a mission to educate brands about how to think in native terms about video ads, or video content, on Spotify in that context.

That is, tailoring video content to those different “moments”, whether waking up, working out, commuting to work or cooking dinner.

Levick said: “We believe that's a great experience for consumers. It's great for brands because they can guarantee that a consumer is engaging with their content and [that gives] a brand benefit. They're also getting the credit for reducing the interruption from ads on Spotify during the activity where you really don't to hear advertising, so it's a really unique advertising product. There's nothing worse than when you’re about to go on a great run, or hitting a great stride, than hearing an ad."

Spotify worked with agency partners on its global agency council to develop its Video Takeovers for its desktop product and its Sponsored Sessions so Levick believes “agency DNA is stamped on the product” so they will be keen to take it up.

“It's 100% share of voice, 100% viewable, it is less intrusive than an autoplay ad – the consumer has to opt in to it. We tick a lot of the boxes for brands and agencies that are finding they have a bad experience with with video ads, and it's solved a lot of the problems they told us they were having,” he said.

Spotify is mobile first, said Levick, but the amount of available video inventory will start small and ramp up over time.

“Mobile is the fastest growing place people spend their time and brands are looking for unique ways to get people to engage with their video,” he said

“We wanted to think from the perspective that Spotify is a content engagement platform. It's the sole reason people come to Spotify – to engage with content. We wanted to rethink how we could present video in a way that ads to the consumer experience and to the brands'.”

Spotify is testing the measurement and pricing model for the ad units. Currently, it is being charged on a CPM basis, but Levick said it could shift towards cost per engagement.

It is also looking at how it impacts awareness and ad recall and is looking to include elements that also encourage click through to brand sites such as end cards that remind the user the ad-free session was courtesy of McDonald’s, for instance.

Video Takeovers of its desktop app and Sponsored Sessions launch across Spotify's free global platform today, reaching its 30-million strong user base. The video products will go live to the Australian market early in the first quarter of 2015.

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