Could Spotify’s people-based approach make marketers sing again following the transparency furore?

Could Spotify’s people-based approach make marketers sing again following the transparency furore? / Spotify

As advertisers grow more sceptical of Google and Facebook's duopoly of online media, Spotify has spotted an opportunity to put itself in pole position to answer growing concerns around transparency

If you’re one of Spotify’s 100 million monthly listeners then you’ve probably let the app soundtrack your life at some point. Part of the draw is the ability to follow playlists, artists and genres but in turn Spotify follows listeners – from the shower to the commute, the gym to the office. For a while, the service has been offering marketers segmented audience data around listening habits, and it’s now taking that one step further by placing an emphasis on a people-based approach.

Just last week the streaming giant inked a deal with LiveRamp in the US to let marketers take advantage of first-party data and tap into relevant audiences. Marco Bertozzi the brand’s vice-president for Europe believes that the move, coupled with Spotify’s crisp metrics, could help ensure the business is well-placed to scoop up budgets reserved other digital players in light of the ongoing transparency scandal.

Since joining Spotify in November Bertozzi says he has been “struck” by the power of the firm’s advertising products when lined up against “some of the things that people are worrying about in the industry today.”

“Our ads are being shown to people,” he says, “which is clearly a hot topic. There’s zero ad fraud in our system. We have 100% share of voice – there’s no scrolling or anything like that – so there’s very high levels of viewability. When you combine those two things with a persistent ID we’re in a great place to answer the concerns in the marketplace.”

The cookie crumbles

Bertozzi remained tight-lipped on what brands are testing Spotify’s people-based solution and when it would be rolled out in Europe, but his emphasis on the power of a “persistent ID” is something that’s gaining steam in the industry.

The concept of tracking users via cookies is crumbling in an increasingly mobile-first landscape. Having been kickstarted by Facebook’s people-based suite, then Google’s push for marketers to use identity tools on YouTube, the trend for stitching together individuals’ cross-device journeys is heating up.

By helping pin-point retargeting and wasteful impressions, people-based marketing could also help carve out solutions to the £600m something marketers are thought to have lost to non-viewable ads last year.

The shift towards it has been sped up by changes in European data-privacy laws, and moves in the space from players like Group M, which recently unveiled its mPlatform adtech “universal ID” outfit, have further piqued interest from marketers.

“We’ve talked about the death of the cookie for a long time and I think we’re starting to see it’s not becoming a reality and I believe the mobile ID and so on will be the currency of the future,” muses Bertozzi.

Pole position

The executive is clearly optimistic about Spotify’s own data, but when it comes to the topic of industry-wide transparency he echoes comments he made in an editorial for The Drum last month, reiterating his belief that strict digital metrics will be the norm in ad land.

“More generally, for the industry, there’s going to be an ever-increasing higher bar set for the quality of advertising that’s out there so all these metrics around viewability and fraud and so on are going to become very standard metrics going forward. Companies like Spotify that have that persistent ID, and can genuinely claim to be talking to people, will be in pole position.”

His comments come as brand marketers are plotting their next move in what Bertozzi has previously described as a “post-Pritchard-address world” – a reference to a speech from PG’s top marketer Marc Pritchard which has quickly gone down in ad land history for calling out the “murky at best, fraudulent at worst” digital ecosystem.

Some of the industry’s biggest players – including Google and Facebook – have been quick to play their cards in the weeks since, introducing third-party verification and promising improved data. Ad bodies have even inked cross-Atlantic partnerships but a report from January indicated that 90% of marketers are set to review programmatic contracts in 2017 following growing frustrations with a lack of clarity over where their investment is going.

Hitting the sweet spot

Streaming undoubtedly makes for a unique setting to capture consumers and Spotify’s free users are 100% logged in – outwith Facebook and Google there aren’t many other firms that can offer that data to brands at scale.

Listeners feel such a personal connection to music and when its combined with mobile there is ultimately a danger of ads feeling interruptive to their most intimate form of media. Despite having access to intricate physiographic insight, Bertozzi asserts Spotify is keen not to “bombard” people with ads, instead using native platforms like branded playlists and moments – the latter of which serves up ad-free music in return for display and vertical video views.

Pointing to brands like Sainsbury’s, which recently sponsored a dinner party moment, Bertozzi says: “We’re trying to bring that real-time moment and combine it with the advertising and insight that we have to hit that sweet spot – that is really our USP because music is so important to people,” adds Bertozzi.

Speaking to The Drum earlier this year, UK country manager for sales, Chris Forrester, said advertisers were actively seeking opportunities to slip into the native experience.

“Brands are coming to us, they tell us they want an audience and they’re beginning to understand we know the best possible time to display ads,” in turn he said the business was “starting to understand the most appropriate times” to serve them up.

When it comes to plain and simple audio ads, the company has made no secret of its desire to be the dominant seller of automated audio inventory. The fact that the average Spotify session lasts more than two hours and 70% of its userbase are using the ad-free version strengthens its lure as a media buy for brands.

“Radio figures are dropping but we’re seeing that uptake,” Forrester said, “90% of millennials are regularly streaming.” He conceded that audio will continue to be “really important” but said video is becoming “most popular across most of the market.”

Bertozzi believes that Spotify’s ability to be with listeners throughout the day has opened up bigger opportunities for audio advertising, adding that programmatic audio was introduced by the service to provide a “better level of sophistication and targeting” that advertisers could combine with its video and display formats.

The transparency scandal has paved the way for marketers to reassess to whom and where budgets are allocated. It’s clear that Spotify wants to steal people’s ears, but its focus on display and video ads also mean it is well-placed to steal eyeballs. For some advertisers, the company’s commitment to transparency combined with a renewed focus on people-based marketing may well be music to their ears.

Additional reporting by John McCarthy

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Rebecca Stewart

Rebecca Stewart is a reporter at The Drum. Based in London, she primarily writes news, analysis and features around brand marketing and digital innovation. She has interviewed key figures from the likes of Airbnb, Amnesty International, Unilever, Facebook and Spotify, as well as covering international events like Ad Week Europe, Dmexco and Ciclope.

All by Rebecca