Decoded: Spotify Ad Studio & Advertising on DSPs

Attention is worth more than gold.

Humanity’s limited ability to focus rewards just about anyone with a measurable audience. Advertisers flock to platforms like Instagram and Spotify because their users, or listeners, have purchasing power. These services are invaluable to advertisers because they capture attention and directly reach millions of people (and their wallets) (or their parents’ wallets). It may not be the most romantic use of music, but it does pay the bills (well, some of them).

The good news, potentially, for artists and teams is that this system isn’t just for corporate brands — the same tools can be leveraged to build a fanbase. Scroll on to learn more.

The Business Behind Streaming

A handful of DSPs—led by Spotify, with 101 million ad-supported listeners—have invested serious funds in decoding how their platforms benefit folks with something to market, publishing numerous case studies. Easy example: A sports brand leverages a network of workout playlists to help bump running shoe revenues. Every story acts as proof of concept, and most all of Spotify’s clarify…   

1. Who uses their platform. This part tends to involve the word ‘millennial.’ Gen Z, you’re next.
2. How users engage with said platform. Hint: To accessorize moments—see image below. Freemium streamers don’t want to hear abrasive ads about deodorant in the middle of study marathons. (Or maybe they do, if the exam stress triggers sweat glands.)  
3. How major companies have successfully advertised on this platform. A popular move: sponsoring 30 minutes of ad-free listening if a listener opts into viewing a brand’s video.
4. The steps others (and you) can take to follow suit. Have you seen ads for this a lot lately?

via Spotify for Brands | Spotify Ad Studio. The streaming company breaks down audience moments for advertisers.

Are DSP Ads like those served by Spotify Ad Studio Beneficial for Artists?

While most success stories revolve around Fortune 500 companies, creators can spin this knowledge to their advantage. As they should. Artists (who enable a platform to develop a global audience reach, which justifies ad programs to even exist) might benefit, too. It’s worth looking to synch for context. As music placement revenue across film, television, gaming and more has grown, so too has its role in discovery. If a TV ad is compelling and the song is great, the probable reaction involves Shazam, not the bitter taste of sellout. (Use your judgment.)

To that point, freemium users understand their reality: music afforded by brand messaging or sponsorship. Given that ads are inevitable, then, would music fans rather hear about a new soda drink or a song that fits their favorite genre? (Conversely, it’s worth asking whether someone unwilling/unable to pay for ~$9.99/mo is going to convert and drop money on merch, a ticket, or an album that an ad is promoting.)  

In the grand scheme of consumer behavior, we’re still in the early days of all things streaming. Every facet is subject to enormous change—subscription costs, machine learning algorithms, voice-powered search, royalties, and, yes, how all of this art gets monetized when the listener isn’t paying the tab. In a perfect world, ads works like this: The listener learns about something relevant to them, ideally not at the expense of their sanity. The platform earns revenue to cover costs and pay rights holders. The creators identify and nurture more fans. Some potential positive outcomes to keep in mind:

1. Boost Awareness: Ads can introduce a song to listeners and then reinforce that song’s presence in their minds. This coupling of familiarity and repetition tends to positively affect how we feel about music. There’s real science behind it. One result, assuming the ad is effective and is not a nuisance? Listeners might be less likely to skip a song in a playlist when they have prior exposure.
2. Drive Streams: Simply put, a good ad with a good song might (might) lead to conversions. If the desired conversion is the viewer/listener pressing play, then ads can incrementally increase play counts. Algorithms can detect that traction and serve music in users’ discovery playlists.
3. Grow Audience: Targeting fields (location, age, interests, playlists, etc.), which you’ll select when running ads on any platform, helps you zero in on the right people. ‘Right’ varies for just about everyone. Some folks target ‘lookalike’ audiences—people who resemble existing fans. Others explore uncharted territory and do, to some extent, the opposite (targeting middle aged men when the core audience is 22-year-old women).

A quick reality check for this rosy picture: It’s typically difficult to make ad magic. Artist constraints might include limitations pertaining to funds, creative assets, rollout deadlines, and fan info. Teams with the resources to test different mixes of creative, copy, distribution, and targeting have an advantage. That said, less important than any budget is the wherewithal to make the most of what’s available. (For reference, the minimum ad spend on Spotify Ad Studio is $250. Learn more here.) Every campaign breaks down into different parts. Mastering each—or a majority—lends itself to a winning ad, though there’s never one correct, always applicable method.

Building Campaigns: The Basics

Here’s an excerpted, high-level example of what teams should consider before running a digital ad campaign. Based around Spotify.

• Brief: Explain the high-level purpose of a campaign.
• Example: Boost awareness of a rising indie rock band by targeting 25-34 year-old midwestern males with creative assets that drive curiosity, rather than conversion.
• Target Audience Insights: Determine who you want to reach / what you know about them.
• Example: Male Chicago residents who react to cryptic tone and artful, custom creative. Active desktop users who engage with band’s music most midday on weekdays. Age range: 25-34. Inference: Overworked, underpaid firebrands enduring the work day.
• Context: Developing and established teams will have plenty of information to help guide action: Fan-favored aesthetics from Instagram to help select an image for the ad. Music skip rates and listening times from AWAL to help select a song and time window. A blend of demographic (e.g. age and location) and platform (mobile vs. desktop) info from social and streaming channels. Fan-favored tone for ad copy by looking at Twitter posts with top engagement. Conversely, you can use advertising to expose an act’s creative to new audiences to validate (or invalidate) broader appeal.   
• Ad Type: Format.
• Example: 30-second audio snippet (band’s best song) and a corresponding 728×90 px leaderboard display ad (red backdrop, eye-catching question typed in custom font)
• Context: Spotify divides ads into audio (best for commutes), display (best for attention-grabbing copy or creative), and video (best for maximizing user recall—listeners’ ability to remember what they watched). Beyond Spotify, there’s also voice message ads targeted to fans exclusively (e.g. AAM on Pandora); preroll, bumper, and TrueView video ads (all on YouTube); and audio-display ads on SoundCloud and Deezer. Apple Music, Tidal, and other paywall DSPs don’t offer ad inventory to third-parties.
• Programming: Where the ad lives.
• Example: Indie Rock on Spotify  
• Context: Ad Studio users can select an audience via genre, playlist category (e.g. party, focus, chill), or catch-all (all music). Similar to Spotify’s Ad Studio, Pandora’s Artist Marketing Platform (AMP) is a self-serve portal that lets artist teams broadcast targeted Artist Audio Messaging (AAM) to their listeners based on timing and demographic information. YouTube’s TrueView ad program, created in Google AdWords, lets advertisers (you, potentially) carve out target audiences based on topics, keywords, and demographics.  

No Easy Answer

There’s lots to choose from when it comes to digital ads. Where there’s choice, there’s opportunity costs. $5000 spent on Spotify ads via Spotify Ad Studio means $5000 less to allocate toward an Instagram campaign, or tour support, or a handful of influencers in Brazil, for that matter. Every campaign, if thoughtful, benefits from a unique mix. Some ads—meme-inspired photo gaffes!—might work best on Twitter, whereas others—doses of self-aware comedy about ad intrusiveness—might click on Spotify. So, what works best? The honest answer is equal parts “all of the above” and “it depends.” No matter how you cut it, the jury’s still out. Testing different approaches and paying close attention to the results is an understated art, and a good place to start.

Diversification of ad inventory plays a crucial role in securing awareness and action among potentials fans. Someone might first hear a snippet of your song in a Spotify ad, but only on their third encounter, an Instagram Story spot, will they visit your profile and decide it’s worth sticking around. The tricky part? Knowing, with certainty, your ad led to the desired end user action (a listen, a follow, an added track, a hat purchase). This knowledge gap—the inability to attribute a marketing effort to a result—makes it more difficult to determine the true value-add of a campaign. For now, the insights gained from Spotify solely include an ad’s reach (the number of people who saw your ad), frequency (the number of times people saw said ad), and the click-through rate (exactly what it sounds like.) Expect the Spotify Ad Studio to grow even more robust for artist teams as it becomes an increasingly important  part of Spotify’s business model.   

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