Music streaming services such as Pandora, Spotify, Apple Music, and many others are becoming a commonplace part of the consumer’s everyday life. From commuting, doing chores, working out, or simply relaxing, online streaming services through apps and on mobile have made the listening experience about more than just music. With wifi connected devices, consumers can reach their favorite audio streaming apps while at home, at work, and even in their car. Music streaming represented 38.4% of the total global music revenue in 2017, the largest segment followed by physical music sales at 30%. On-demand streaming services have become a standard form of entertainment for today’s consumers making it highly valuable to brands and companies looking for new ways to expand their reach.
How In-Stream and Programmatic Audio Advertising Work
While paid accounts are available, many listeners are still using ‘freemium’ accounts, which lets them to use a music streaming service in exchange for allowing ads to play intermittently between songs. These freemium listeners report increased resonance with ads that play during their favorite podcasts and are more valuable than those who listen to music on Video On Demand sites like Youtube. In 2017, Spotify had an estimated annual revenue of $20/user, compared to less than $1/user for Youtube Music listeners.
Each music platform offers a variety of in-stream advertising format options for different creatives. Pandora recently announced a new line-up of dynamic, sequential, and :04 -:10-second short-form ad formats, allowing brands to concentrate their message down for maximum efficiency for brand awareness. Additionally, both Pandora and Spotify offer programmatic audio advertising, allowing brands to optimize their ad delivery for effectiveness.
Audio streaming services like Spotify and Pandora have the ability to reach listeners when they are most likely to resonate with audio advertising or a brand message. With stations and playlists created around activities like “Study Time,” “Relaxation,” and “Working Out,” in-stream audio ads are delivered in the most effective context for awareness and brand recall lift. From sponsored stations, ad view incentives, and short audio spots delivered on a one-to-one basis, in-stream audio advertising puts brands in front of listeners right at the moment of engagement and with 100% ad share at the time of impression.
The foundational idea of a music streaming platform is that listeners are able to curate their own personalized radio and listen to exactly what they want when they want to. To provide this experience, many platforms allow for a certain number of song skips, the ability to approve or disapprove of the currently playing song, and the ability to add specific songs to a custom playlist. Each of these actions is a moment of engagement that a streaming platform can use to time ad delivery so that an impression is guaranteed. Pair this with user-submitted information, such as age, gender, location, interests, and favorited songs, to give your ads added relevancy to the listener.
A Comparison: In-Stream Advertising vs. Radio Advertising
According to the 2017 Nielsen Music 360 Report, listeners are still consuming 24% of their music through terrestrial and satellite radio. While in-stream audio advertising may never completely do away with traditional radio advertising, it has certainly created an entirely new ad formula and format for brands to consider. The same audio spot will not receive the same feedback on streaming services as it does on radio, regardless of past metrics and case studies. Understanding the differences between the two platforms, as well as the various personas and listener types on each platform, will be the key to delivering effective advertising.
The ability to reach this level of individuality in terms of ad delivery has changed the way brands and consumers are thinking about advertising. Focusing on the ‘message in the moment’ style, in-stream, and programmatic audio advertising are poised to become a standard in marketing in many industries.