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Spotify Advertising Illustrates the Expansion of Programmatic

May 24th, 2016   ||    by Susan Kuchinskas

Five months ago, Spotify advertising got easier for advertisers and more lucrative for the streaming sensation, thanks to its private, programmatic marketplace. The Spotify music platform now allows programmatic advertisers to target based on not only subscriber-provided demographic information but also by music genre or playlist.

Most recently, the platform rolled out targeting based on activities and moods, Marketing Land reports. Brands can target groups in different ways ranging from people with children to those who are working out, and even to people who are happy or sad.

Programmatic is going so well for the streaming music service that it expects its ad selling to be completely automated in the next five years, reports The Drum. In some European markets, 70 percent of Spotify advertising revenue already comes from programmatic, Jonathan Forster, vice president, EMEA, told a panel.

Programmatic Diversity

Spotify will also roll out programmatic audio ads, executives told AdExchanger. The 1,300 stations of iHeart radio will also begin to sell audio ads programmatically, according to Adweek. The entire ad inventory will be available programmatically. In addition to demographic data, advertisers can buy audience segments by attributes including political affiliation, what kind of mobile device a person is using, and what kind of car the listener drives.

These two initiatives illustrate how the technology for programmatic buying is expanding the universe of available media beyond display ads. AdAge reports that rich-media units such as homepage takeovers and pushdowns also are available on programmatic platforms.

The increased diversity in programmatic offerings is partly due to the work of the IAB, which has been developing specifications that will simplify programmatic buying and selling. The IAB also released a Programmatic Fee Transparency Calculator in March, notes Business Wire.

Spotify’s Jan Jakovljevic told Media post that the IAB‘s release of Open RTB 2.4 specification gives programmatic buying a boost. Noting that it allows audio to be sold programmatically in the same way that video can be, she said, “When buyers can work with their preferred and existing technology vendors, it makes for a very simple and seamless transition.”

Increased Value

Because programmatic provides better, data-driven audience targeting, it’s cost effective for advertisers. Scott Franzer, an associate director with Omnicom Media Group, said P&G is seeing three to five times greater ROI with its programmatic buys, AdAge reports.

Jakovljevic, head of programmatic solutions at Spotify, told MediaPost that thanks to the private marketplace, “We’ve been able to reach buyers and budgets that would have otherwise been inaccessible, and PMPs now drive a very sizable percentage of our overall programmatic revenue.”

Spotify’s gains are further evidence that programmatic media buying can benefit both sellers and buyers by allowing media owners to unlock the true value of their spots while opening up inventory to more potential buyers.

Interested in programmatic media buying? Reach out to Videa.

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