Spotify Now Allows Small Businesses to Advertise

Spotify has been slowly expanding to take over more and more of the digital music streaming marketplace since its origins in 2008. As of August 2017, it has become the most downloaded music application in the United States. That kind of access to customers and consumers has made Spotify an important target for marketers throughout the western world. As of October, those marketers now have a new tool to play with: Spotify has introduced its own internal Ad Studio in beta mode.

What is Spotify Ad Studio?

According to Spotify themselves, no other company in the industry has ever attempted to launch such a broad and comprehensive self-serve audio advertising platform. Spotify describes the Ad Studio as a full-service platform that allows companies to create, target and measure the impact of audio ads. All businesses have to do is share the script of the ad and choose between a few background music options, and Spotify creates the ad from scratch. There are a few more advanced options that users can look through as well, including recording a voiceover or even uploading a previously made ad directly into the platform. Similar to traditional radio ads, these ads air in approximately 15–30 second chunks in between songs.

What are the benefits of Spotify Ad Studio?

We’ve said that these ads bear a lot of similarity to traditional radio ads, but that statement comes with a huge caveat: companies placing ads on the radio could never dream of segmenting their consumer audience so well. Targeting individual users based on likes and interest, similar to what social media allows marketers to do, is the primary benefit of the platform. Audio ads have also been proven to provide a 20 or even 30% sales lift improvement over online display ads. With Spotify’s millions of listeners, those astounding sales lift figures could translate into huge numbers for a small business.

What Comes Next for Spotify?

Casual followers of Spotify have hypothesized that this was a potential step for the successful but financially troubled company. Even though Spotify just raised a huge billion dollar round of investment in anticipation of its IPO (initial public offering), the company has never actually finished the year without dipping far into the red. Ad Studio simply gives Spotify another source of readily available income, while providing an excellent service for marketers across the countries where it’s active.

In order for Spotify to stay viable and continue providing an important service for millions of people, it has to find a way to combat the billions of dollars it is paying out yearly to artists and the music industry. Ad Studio should provide a welcome source of revenue at a time when Spotify needs to figure out what it is as a company.

Article by Josh Gruss — CEO of Roundhill music.