Spotify is one of the largest music streaming services in North America. With 45 million free-service streaming customers and 15 million paying customers, the service is on a steady pattern of growth that may eventually lead to the company making a profit. However, a recent ad structure change could make some of Spotify's ads more accessible.
"Starting on May 1, advertisers will be able to target ads to the roughly 45 million people who use Spotify's free ad-supported service based on the playlists they stream," Ad Age reported. Specifically, advertisers will have the ability to target playlists that fit into one of 15 distinct moods/styles. For example, a sportswear company could focus their ads on users who listen to "Commute" or "Fitness" themed playlists, or a toy company could focus on kid's music themed playlists.
"This is not something that's just randomly thrown out there," said Brian Benedik, vice president of North American Advertising and Marketing at Spotify. "It's a strategic evolution of the Spotify ads business going back a year and a half ago with the mobile licenses."
Benedik was specifically referring to the company's current free-user mobile model, but the comments are equally applicable to this new ad targeting model. The VP told Ad Age that he has been working with eight different companies to experiment with the playlist targeting for a few months, though he was unwilling to mention who those companies were.
Spotify's new initiative follows a year after the company acquired music analytics firm The Echo Nest.
This is a really intelligent move on Spotify's part. Sending the right ads to the person with the right attitude tends to increase the potential of people responding to the ads. While this is a strong option, it stands in contrast with the Beats and Tidal streaming services, which will require users to have a subscription.
