Spotify: Media agencies to blame for brands' risk aversion

By Rosie Baker | 14 May 2014

Marketing directors get a lot of flak for not taking enough risks, but Spotify managing director Kate Vale says media agencies are actually the culprit. With longer session times than YouTube and higher click through rates than the industry average, Spotify says it really works – but agencies just aren't buying in yet.

Spotify, approaching its second birthday in Australia, admits it is still early days for a lot of advertisers to get on board with a new platform that offers something different to what has been around before. The music streaming service is trying to help educate agencies and make it easier for them to understand the opportunities and get on-board.

The platform claims Australian users spend 109 minutes on Spotify per day on average – eight times the daily average for YouTube and touts an average CTR of around 0.24% versus the average of 0.07%.

It knows it needs to do more to educate media agencies on its own platform and is hosting a forum event in Melbourne tomorrow (15 May because it knows if it wants them on board, it has to get in front of them.

While it's largely anecdotal, marketers are consistently described as risk averse, but Vale says her team finds that when it works directly with brands, there is more push to be brave and experimental with what they can do on the platform than there is from agencies.

Vale concedes it's not easy for agencies because on the whole they are under-resourced, which means teams simply don't have enough time to go out and learn about every new platform that's emerging, what it offers and requires and pitch that back into clients.

“Maybe I shouldn’t say this but I’m going to – it's such a new platform and for some brands its a risk because it's something they’ve never done before. Sometimes agencies need to be taking more risks for the brands they are working with and trying something they’ve never tried before and be prepared. If it fails, it fails. But it never does. Whenever we talk directly to clients they always want to give it a go more,” she said.

“I really do think its an issue with agencies being under resourced – we need to make it more simple for them. The forum is about showing them how it has worked with other brands in other markets, getting them on Spotify and trying the service. That doesn’t cost any money, they can try it for free on mobile and desktop and understand what the ad product is like, but its just getting them there.”

Whereas in the US before Spotify launched there were already music platforms like Pandora offering advertising opportunities, in Australia the concept is more foreign and so even understanding how to put together an audio ad for digital is new.

Spotify's global creative director Richard Frankel, in Australia for the agency forum, said:

“We need to build as many tools as we can to help the influencers inside the ad industry to adopt [Spotify] in a way that makes it easier for the rest of the industry on board. We need to make it easier to take the risks, get the data and feedback. It's education and a matter of time because there's inertia involved that you need to get past,” he said.

He added that it's between Spotify's second and third year that things really start to take off for brands, from his experience in the US where Spotify is one year more mature than in Australia.

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