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Is Spotify’s Active Media approach a game changer for digital advertising?

by James Hodson on 4 July 2018

Earlier this week Spotify announced that it is transforming its advertising service into an ‘Active Media’ model. An Active Media model is where the listeners have the option to hear, see or skip ads with advertisers only paying for a completed listen or view.

Spotify is then utilising user engagement with ads to better tailor future ad experiences for that user. Whether a user chooses to skip, see or view an ad, informs Spotify about what they are interested in receiving and to what degree they are engaged. This essentially creates a tailored ad experience for each user based on past experiences – improving the relevance of the ads served to the end user.

If this sounds familiar, then it probably is. Spotify has already been using this process to curate personalised daily mixes for its users. Active Media is merely Spotify migrating the same machine learning process to its advertising offering.

The model is the first of its kind globally for advertising and highlights the trend in 2018 of large digital companies improving their online experience by putting their users first

Andrea Ingham, head of sales at Spotify ANZ, said: “Active Media is a win-win for listeners and advertisers. Listeners benefit from an improved experience, allowing them to choose which ads they want to engage with, and in turn, we can offer advertisers better cut through and ROI”.

So how does it work and why is it different?

Through the Active Media approach, Spotify combines implicit and explicit behaviour signals from the user. The majority of advertising publishers currently use a mixture of implicit signals (for example how long a user watches a video) and a user’s profile for targeting (age, gender, etc). Spotify is doing this and more by using the explicit signals from a user choosing to skip, listen or view the ad.

As an added bonus, advertisers will be able to test radio creative in real time for salience and cut-through, optimising for better performing executions. For campaigns that then extend onto traditional radio channels, this will provide significant cost/performance benefits.

This innovative advertising model could lead an industry-wide change as other platforms race to adopt an Active Media model. Watch this space….

 

James Hodson is a Digital and Data Specialist at BCM

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