The Spotify advantage: First-party data
Spotify’s advertising model relies on the collection of a huge amount of its users’ personal data. First, through the process of opening an account, which is required of any user who wants access to the streaming service. Then, thanks to all the information collected in real time about their listening habits.
One extremely interesting aspect of Spotify’s first-party data tracking is its interconnectivity. The fact that a user can connect to the platform from their phone, computer or tablet allows Spotify to follow each user’s journey.
There’s also the question of listening habits, which not only reveal a lot about a user’s personality, but also their moods, tastes, different behaviours in the platform, how they engage with ads, preferred electronic device for listening to music and even what they are doing at a particular moment, according to the playlist they are listening to. The platform refers to this as “streaming intelligence.”
One example of a brand that’s used streaming intelligence is Gatorade. The goal of their campaign was to build brand awareness for Gatorade among young Hispanic American athletes, as well as consumers between ages 18 and 34. Gatorade opted for a multiformat campaign including audio, mobile display and sponsored sessions, and defined their target audience by their interests. According to Spotify, the campaign generated a 171 per cent increase in ad recall as compared to the benchmark, and the target audience qualified the ads as relevant on Spotify.
Spotify playlists can also provide marketers with insights as to what activity a user is potentially engaged in. A sports brand like Under Armour might, for example, decide to sponsor a Spotify playlist from the Workout category.
Thanks to the data it collects, Spotify has successfully identified and categorized five major listening habits that could help companies better target their audiences.
And finally, Spotify has identified various categories of users, be it millennials, early tech adopters or parents. For example, millennial audiences on Spotify might be interesting to a brand like Samsung, because, according to the analysis done by the streaming platform, millennials are “44% more likely to regularly inform friends and family about new products, 64% more likely to buy brands they see advertised, and 90% more likely to have the latest tech products.” A campaign using display, audio and video could then be used to increase brand awareness for Samsung or one of its products, like the Galaxy S20 Ultra.