Spotify runs test in Australia, allowing users to skip ads at any time, potentially boosting targeting and revenues
If you want to test out a feature on a large, well-known, global, platform, there’s a very simple solution: Test it in Australia. At a population of 24 million and with a predominantly Western culture, it’s a large enough test bed and small enough market, so ideal for testing new features before (maybe) rolling them out globally. And that’s exactly what Spotify appears to be doing in testing out how it can tweak its advertising platform to take the fight to the likes of Pandora and other competitors.
Advertising Age reports today that it’s running a test in Australia which will let listeners skip audio and video adverts at any time while the ad is playing. This is instead of having a preset time limit to listen to or watch the advert which can’t be skipped. They’ll be able to do this any time they want, as often as they want, and the new feature will also let them jump straight back into the music.
The feature (well, it’s still a test feature after all) is called “Active Media.” In it, advertisers won’t have to pay for any ads that are skipped. It’s a high risk strategy because clearly Spotify may get less ad revenue in the short-term, while the algorithm is trained to serve ads that consumers will in fact listen to. But Australia’s smaller market means any lost revenue will be relatively small.
AdAge quote Danielle Lee, global head of partner solutions at Spotify, saying the move is about tailoring the ads to users’ tastes, so similar to Spotify’s “Discover Weekly” feature, which does the same for music.
It’s a smart move, since, by allowing users to spend longer on the ads they actually do like, Spotify will get better data on the ads which work best for that particular user, and thus sell better-targeted ads which, in turn, will have a higher premium.
“Our hypothesis is if we can use this to fuel our streaming intelligence, and deliver a more personalized experience and a more engaging audience to our advertisers, it will improve the outcomes that we can deliver for brands,” Lee said.
Plus, a user listening to a better-targeted advert in full is worth more than blasting adverts to consumers who may ultimately be put off the platform for being forced to listen to adverts. They’d also listen to fewer ads overall, thus keeping the platform ‘sticky’.
Spotify says advertisers won’t have to pay for any ads that are skipped. If things go well, it’s likely the feature will expand globally.
Spotify previously reported in July that it closed the second quarter of the year with 180 million monthly active users. This is up 30 percent year-over-year. It now have over 101 million ad-supported users in 65 markets globally. Total ad revenue has reached $158 million, up 20 percent. Automated ad sales are growing quickly and accounted for more than 20 percent of ad revenue, the company reported.
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