How Digital Ads Are Defining a New Era for Music Marketing

by Figaro Digital

To many of us, the familiar “want a break from the ads” icon is an everyday occurrence that usually interrupts the cohesiveness of our well-orchestrated playlist.
Almost all music streaming platforms include digital advertisements that either play before or interrupt your desired song. And I think we can all agree it’s rather annoying.
So why is so much time and money invested in audio advertising, and more importantly does it have a future?

How Do Audio Ads Work?

Most major music streaming platforms such as Spotify, YouTube and Apple Music offer a free service to customers, as long as they’re okay with interruptions from programmatic advertisements.
These ads gather information on the user via cookies, and direct specific endorsements their way. For example, if a user often searches fitness tips or has health based applications on their smartphones, they’re likely to be targeted by weight loss or protein shake endorsements.
While advertisers have reportedly allocated as much as 11.2% of their annual budget on audio marketing, the number of users resorting to paying a monthly subscription fee to avoid such targeted campaigns has steadily risen in the last decade, leading to an all-time high in 2016.
With so many customers opting out of advertisements, is this the end of audio marketing?

Customers Would Rather Pay to Press Play

It must really say something about the current state of advertising when customers would rather sign up to a monthly subscription fee, than have their music interrupted by ads. But why?
To begin with, no matter how you tailor them, ads are annoying. If a YouTube ad has a ‘Skip This Ad’ option, a vast majority are just waiting to click it once the allocated five seconds are up.
When a customer has their mind set on a specific action, such as listening to a song or watching a video, it’s very unlikely that an advertisement is going to interrupt that desire.
Secondly, as much as modern technology has advanced, programmatic advertisements aren’t as effective as many would like to believe.
Just because I once googled a certain type of car, doesn’t necessarily mean that I want to be consistently reminded of what I can’t afford.
Also, there are often at best, tenuous links between what people have searched or downloaded, to what they’re actually interested in purchasing or researching further. A random curiosity does not equal actual enthusiasm, unfortunately the programmatic algorithms have yet to factor this in.
Finally, the subscription fees aren’t that expensive. Spotify Premium can be as low as £5 p/m for students, or £10 p/m for regular users. Apple Music, Deezer and Pandora all offer similar concessions and prices.
Such low monthly subscriptions aren’t there to act as a deterrent against abandoning the free platforms as music streaming sites are out to increase revenue too, meaning advertisements play second fiddle to their own needs.

music store

Do Audio Ads Have a Future?

Fortunately for advertisers, the answer is probably yes. Here’s why:
Music streaming services have faced a significant amount of backlash in recent months due to the low payments made to artists featured on the platforms. Adele, Taylor Swift and Kanye West have all withheld music from sites such as Spotify in protest of the rock bottom royalties being paid to musicians.
Unfortunately for the paying customer, such worldwide artists have a significant amount of sway in the murky world of business and if they continue such a trend, it will become almost impossible for streaming services to avoid paying out more in music royalties.
What does this mean for us? Well, with more money going out comes the necessity for more money coming in. Monthly subscription fees will likely rise and more users will be forced to suffer advertisements on the free platform if they’re unable to justify paying the increase.
Of course, whether listeners will actually pay attention to the ads is another matter entirely. But what is significant is that the price hike will become a deterrent for paid subscriptions.

apple watch

In a perfect world, we would achieve the perfect balance between advertisement and music streaming. But with an artist’s revolt on the horizon, it may not be long until all of our playlists are interjected with celebrity endorsements and detox teas.
If you’d like to read more about advertisement or current affairs, take a look at our blogs below. Otherwise, enjoy your uninterrupted bliss while you can.