In an attempt to increase advertising on its free tier, streaming music service Spotify is using a recent study to position itself as a complement to traditional radio. The service is looking to capture a share of the approximately $1.7 billion that advertisers will invest in terrestrial radio this year.
The December survey of 1,011 GTA listeners aged 15-65 by TNS Global follows a similar study of Spotify’s free user base in Europe. The company plans to release research on additional Canadian markets in the latter half of 2016.
The study found that 63% of people in the GTA are aware of Spotify – including 67% of men and 59% of women – while 80% of people in the coveted 18-34 demographic know of the service.
Its free ad-supported tier, meanwhile, has the largest weekly reach of any streaming service in the GTA among 18-34 year-olds, reaching more than one quarter (26.3%) of that segment.
That puts it ahead of Google Play (17.5%), Apple Music (16.6%) and Songza (16.3%). The TNS research is already somewhat outdated, however, as Google merged Songza – which it aquired in 2014 – with Google Play earlier this year. The research also references the now-defunct Rdio service.
“The largest tech companies in the world have identified streaming music as a platform they want to follow consumers on,” said Jon Jon Hales, country manager, advertising and strategic partnerships at Spotify Canada. “They’ve jumped in by acquiring other companies and that’s what has caused the consolidation of the industry. You will also see new players continue to emerge, because we’re still in the early innings of this game.”
Spotify is the GTA’s fifth largest “radio station” based on its weekly reach of the general population (17%), just behind Rogers Media-owned 98.1 CHFI (18%) and ahead of Corus Entertainment’s long-running rock station Q107 (15%).
Bell Media’s 104.5 CHUM FM brand leads all stations in the market with weekly reach of 24% of the general population, followed by sister station 99.9 Virgin Radio at 23.6%.
Recent reports have pegged Spotify’s total global user base across its free and subscription tiers at 100 million. That includes a reported 25 million paid users, who pay the equivalent of $10 a month for ad-free access to the service.
Jonathan Prince, the company’s communications and public policy head, recently tweeted that Spotify’s subscriber growth in the last six months of 2015 was its fastest ever.
The average Canadian user on Spotify’s free tier spends 150 minutes per day listening to the service. Approximately 55% of its Canadian users access the service via mobile, which the company says is in line with global averages.
Spotify currently serves up approximately three minutes of audio advertising per hour on its free tier. Advertisers during a recent listening session included McDonald’s Canada, Fido, Ford of Canada, GM Canada’s Chevrolet division, Toro and Petro-Canada.
Hales said that Canadian advertisers have reacted “tremendously well,” to the service, making Canada one of its top five global advertising markets by revenue. “We’re starting to hit our stride as we continue to build and grow,” said Hales, who said that the company is now looking to grow in other key Canadian markets such as Vancouver and Montreal.
Company representatives would not say if the company is hitting its revenue targets, although Hales said he is “very happy” with its Canadian performance.
Les Hollander, the company’s global head of audio monetization, told Marketing that Spotify is able to use audience data to deliver “smarter” ad impressions that can complement standard broadcast ads. Spotify’s post-campaign reporting, meanwhile, enable advertisers to determine who clicked on an ad, the device they were listening on and further divide audience demographics into subsets.
“What we’re trying to show is how we complement broadcast radio for a media buyer, and can extend their reach with a digital audio message,” said Hollander. “A broadcast audio message is one-to-many, while a digital message is one-to-one.
“There are some inherent benefits to the advertisers and agencies that we’re serving in buying digital audio, and that’s one of the reasons we’re showing this research and how we complement broadcast.”
The TNS study found that while the “vast majority” of radio listeners tune in while driving, Spotify listeners are often engaged in a variety of activities, such as surfing the web, studying, exercising and driving. Its users are also more likely to be social influencers and early adopters compared to traditional radio listeners.
The study also underscores some of the key differences between streaming audio and traditional radio. While terrestrial radio listening tends to peak between 6-10 a.m., Spotify listening grows steadily throughout the day, peaking between 6-8 p.m.
No matter how you slice it, the article shows that there’s more beyond selling by traditional media’s number of listeners/viewers/readers and the amount of tuning/viewing/reading, and what their general demographics identify as to when they’re going to be in the market for a product or service.
Spotify’s “more” is in specifically identifying and quantifying the people responding to advertising and when they respond. Even then, apart from what Spotify is doing with Toronto advertisers and audiences – what Spotify doesn’t address – is the more pertinent revenue solution to the fact that local and national advertisers, in markets small and large, are moving more money to media providing current, documented sales results. It’s been done in Canada thousands of times for greater revenue for local and national advertiser and media company alike. Heck, if I can do it as a small player in the industry and generate measurably more results for advertisers than the mega-players, it’s beyond me why more don’t do the same.
The reason most every radio/tv/print owner, executive, manager and seller isn’t getting significant, quantified sales results for their advertisers, and ignores the more profitable opportunity to do so, is because human nature tends to default to the status quo.
With or without a “digital strategy” that produces a profitable, measurable, sustainable sales result for clients, our traditional media industries default to the status quo, in what is essentially selling media today the way media has been sold for decades. That’s why the radio industry continues to flat line, print has faced years of free-fall, and local tv is facing unprecedented upheaval.
At least Spotify is doing something beyond what most traditional media does that is uniquely of value – but they don’t go far enough.
Thursday, February 25 @ 11:24 pm |