Spotify’s New Free Streaming App Could Give Advertisers Better Targeting and More Insights

Spotify went public less than a month ago. Now it wants to prove to advertisers and Wall Street that it’s growing up and ready to compete head on in the competitive music-streaming industry. On Tuesday at an event in New York, Spotify gave press and advertising partners a first look at a new ad-supported version of its app that 90 million consumers use to stream music for free. The splashy presentation was reminiscent of the annual Digital Content NewFronts at which publishers pitch digital video ad packages to media buyers. "We’ve leveraged our huge investment in machine learning to build an experience that onboards you and personalizes you from day one,” said Gustav Soderstrom, chief research and development officer at Spotify, during the presentation. At the end of 2017, Spotify said it had 157 million monthly users. Seventy-one million people pay for premium, ad-free streaming, though not all of them log onto the service every month. Another 90 million listen to music in exchange for receiving ads. With the new app, Spotify redesigned the free experience for the first time since 2014 and will now let users listen to songs on demand from playlists created by Spotify and skip as many songs from 15 specific playlists as they want. Until now, free users couldn't listen on demand or skip songs. Spotify’s sophisticated and popular algorithms that help with music discovery will also be more prevalent in the app—users can "heart" songs they like to receive personalized recommendations. The goal, of course, is to get those free users hooked on the new features and upgrade to premium service, which costs $9.99 per month. Spotify claims that 60 percent of its premium users started using the service for free. There’s also a "data saver" feature that caches songs, which Spotify claims saves up to 75 percent of mobile data. Spotify’s current video, audio and display ads will look the same and be served in the same way in the new app, according to Danielle Lee, global head of partner solutions after the presentation. So, advertisers will not need to build low-data creative specifically for Spotify. "They don’t have to create new ad creative or change their campaigns—those things will port over in the new experience as consumers migrate to it," Lee said. "As we learn more about [consumers], we tailor and deliver more relevant ads to them based on the context of the user, their habits." Over time, advertisers can mine more of Spotify’s data from the ad-supported app to better target ads and find new audiences, she said. That includes everything from mood to mindset and taste. "We’re consulting our advertising partners on how to deliver a more relevant experience—even thinking about audiences that they didn’t know [about]," Lee said. "It’s not enough to find the right person, but to find them in the right moment where they’re going to be most receptive to your message."