The company partnered with what it calls the “most established platforms in the programmatic space”: AppNexus, Rubicon Project, and The Trade Desk. What they’ve come up with are private online marketplaces for 15- and 30-second audio spots in which advertisers can bid in real time. Ad buyers will be able to access demographic data and unique playlist data, allowing them to try to reach listeners based on what they’re listening to, when they’re doing it, and who they are.
For the 70 million Spotify Free users out there, this means that they may hear different ads when they’re listening to hip-hop than when they’re streaming indie/alternative, for example. Furthermore, those with a workout playlist could, in theory, expect to hear ads about exercise gear. Spotify says that its programmatic buying will enable advertisers to deliver their message “at the right time and on the right platform.”
Spotify tweeted about the launch to prospective advertisers on Wednesday:
Reach your audience at scale with Programmatic Audio. Now available on Spotify. https://t.co/w96fR3CKS8 pic.twitter.com/vRZsuJP9a3
— Spotify for Brands (@SpotifyBrands) July 20, 2016
With programmatic audio, buyers may be willing to pay more for ads on Spotify, thereby increasing the revenue the company collects. At present, advertising helps offset the cost of streaming free music to users. Ad-free streaming requires a subscription that costs $10 per month.
Spotify has faced increased competition since Apple Music launched at the end of June 2015, so better monetizing its free tier makes sense for the company. How users will react remains to be seen, but a Spotify rep assured Digital Trends in an email that there will be “no impact on the listening experience for users.” Targeted ads are common across digital platforms, so we suspect that users won’t mind them nearly as much as they would an increase in ad volume.
