Spotify Updates App to Sell Better Ad Targeting

Brief

• The 159 million user music streaming company Spotify announced an update to their tier. The free platform will give marketers and brands more opportunities to deliver to listeners, content that is more relevant and engaging. The updated apps will allow their 90 million free listeners to have better control of the music they want to hear.

• According to the head of ad sales for the company, the app updates give the ad-supported tier a more engaging and personal touch. The company is able to acquire contextual data about their listeners through their streaming intelligence. The data explores the moods of the consumers, their behaviors, mindsets and tastes in addition to the initial device ID and demographics.

• Before the update, Spotify’s tier only allowed mobile users to listen to music on shuffle. The desktop version had more on-demand options than the phone. With the new changes, free users can listen to unlimited music – as many as 750 tracks off the top 15 playlists per month.

Insight

Spotify aims at increasing their free audience to their tier and then work on getting them to pay for ad-free subscriptions later on. As it is, Google, Apple, and Amazon are upping their game and giving the company a run for its money. The company says that last year, 60% of the paying users started with the free app use. If that is true, then the company’s strategy is solid; growing their audience is a critical move to their profitability.

In the U.S, Apple Music poses the biggest challenge to Spotify. In fact, a report by The Wall Street Journal predicts that the iPhone’s paid subscription will exceed Spotify’s before December, this year, in the U.S. Apple Music grew from 30 million paid users in September last year to get to 40 million in April this year. Spotify’s paying users are just a little more than 71 million. Apple enjoys an advantage over Spotify because the app comes pre-installed on iPhones. To beat that, Spotify will have to provide the far superior user experience. Moreover, as the smartphones reach a market saturation point, Apple is making growth a priority by seeking to expand their services business including iCloud and Apple Music. The company hoped to acquire Shazam towards that goal, but their efforts hit a bump when there were suspicions of antitrust ramifications. The EU had launched investigations into the matter.

Spotify hopes to make more money off an ad-free $9.99 subscription from their users. However, their update is part of the company’s efforts to get more advertisers signed up with them. The point is for the company to be able to reach users in cases where they are not necessarily glued to their phones. With Spotify, ad advertiser can reach a user as they exercise or drive. According to the company, the update allows users to ‘better soundtrack their lives.’ Getting sponsored messages across to them then becomes seamless.

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