Lovers of free music should be thrilled to hear that Spotify will be rolling out a half hour of it via its mobile app in exchange for simply watching a video ad. The advertising spots will be offered to a limited number of brands such as Coca-Cola, Ford, McDonald’s and Universal Pictures for the global trial, with Kraft Foods, Target and Wells Fargo taking up the US only market test. Ad Age announced the news yesterday, revealing that if successful, the new opportunity will be offered to other advertisers in 2015.
It looks like Jeff Levick, Spotify’s chief business officer, has been drinking the ReelSEO Kool-aid when he was quoted as saying:
We think about video as one of the most dynamic forms of content that advertisers have and that bring great relevance to Spotify. Brands have clearly stated it’s of interest.
Spotify: Current Freemium and Premium Models
This is how it will work. Spotify users currently pay $9.99 a month to listen to their cherry-picked tracks without ads, or they can listen for free but have the music interrupted by audio ads. In this new trial, due for release later this year, anyone using the iOS or Android app will be given the option to also watch a 15-30 second video ad in return for 30 minutes of ad-free listening.
These will be known as ‘Sponsored Sessions’, and the idea is that advertisers get the ability to run video ads for the first 30 seconds of a listening session, while the experience is made relatively painless for consumers by guaranteeing 30 minutes of uninterrupted listening afterwards. It sounds like a win-win for advertiser and consumer. According to Levick, Spotify tried out different lengths for its ‘Sponsored Sessions,’including 15 minutes and an hour, and saw 30 minutes notch the higher opt-in rate.
Spotify and Video Advertising: The Perfect Storm
Where does this Spotify initiative fit into the total online video ad spend? eMarketer predicts that advertisers will spend $5.96 billion on digital video this year, and $1.44 billion of that spend is expected to go to video ads on tablets and smartphones. So it looks as though the appetite is finally there, and Spotify have timed this move perfectly to pick up on the demand.
Spotify are by no means re-inventing the wheel. Hulu has its ‘Branded Entertainment Selector’ video ad, allowing viewers to watch a one minute long pre-roll ad in exchange for seeing their chosen show or movie without any more ads. One thing is for certain, this new video ad spot will not be an option for brands with a low budget allocation. According to AdAge, Mr. Levick declined to say how much Spotify is charging advertisers for the ‘Sponsored Sessions’ ads, but said they are being priced at a premium to make up for revenue lost from the ads that don’t run in the half hour afterward.
Mobile is Fastest Growing Medium for Spotify
Of course it’s no surprise that mobile is the fastest growing traffic device for Spotify, having recently overtaken desktop in impressions and streams. They launched their audio ad-supported service in December 2013 and it now has 30 million users. So there’s no reason to believe that the video ad-supported option won’t be taken up by a significant number too.
Desktop won’t be ignored by advertisers either. Spotify will also soon release ‘Video Takeover’ ads on desktops. These will work like regular ads on the service, playing as a visual if someone has the Spotify desktop app in view and otherwise playing as audio only.
Apparently advertisers who recently bought into the new video ad initiative did have an additional request that Spotify were happy to agree to: a post-roll element will be added to the ‘Sponsored Sessions’ that reminds a user of the brand that paid for the ad-free session and there’s a chance Spotify could use that exit message to lead someone into a second ad-free session sponsored by that brand.