Just a few weeks after landing in the U.S., European-based streaming music service Spotify has gotten an immediate shot in the arm by being selected as one of Facebook’s partners in its new “Open Graph” design. The service, which comes with free, ad-supported and paid options, will now have the benefit of not just being shared by its own members, but will now have an potential audience of 800 million Facebook users around the globe. Needless to say, Spotify just got more attractive to advertisers, notes Jeff Levick, who was hired as the chief revenue officer for the U.S. operation last week.
Since Levick had just started days ago, and Spotify has been in the U.S. barely two months, he wasn’t interested to go into the company’s ad strategy beyond the Facebook integration just yet. He did offer some thoughts about why this deal was so important to Spotify and how it would reflect its current revenue building plans.
“For one thing, thanks to the Spotify/Facebook integration, people will be able to listen and share the service through Facebook” as long as they sign up for the music service, Levick said. “That gives us a tremendous base with which to bring to marketers.”
Up to now, Spotify members could share their listening choices on Facebook, which for those who weren’t signed up for the streaming service, they would see nothing more than an artist name, a song title and the Spotify logo. The goal here is to increase members — about three clicks and you’re in.
Beyond serving up the standard audio ads that are a major part of Spotify’s revenue, Levick pointed to sponsors’ “branded playlists” that would appear on Facebook.
“In-stream audio advertising is a large business, and the Facebook connection will help us be more competitive for those ad dollars,” Levick said. “But that’s just the beginning. Spotify also has the display side and standard ad units there.”
Yesterday, internet radio provider Pandora (NYSE: P) revamped its website to make it more attractive to advertisers, especially ones who might be interested in video ads, as the company looks to diversify its ad portfolio and increase its online user base. Display ads for internet radio or social music listening could be tough sell, since most users tend to listen to music in the background, as opposed to “viewing” a music player.
But the ability to have users share a brand’s message on top of the content they happen to be accessing does promise a better level of targeting — since users tend to have a better sense of what people in their social network would be interested in — and, therefore, engagement.
On a day when the stock market was down over 400 points, the threat of a chill over branding campaigns only seemed to grow worse.
“At the end of the day, when times are tough, ad dollars have to get smarter,” Levick said. Advertisers have to look more carefully at ROI. Social media has an enormous pull on ad dollars right now, and companies that are offering new, innovative ways of reaching consumers will win no matter what.”
Asked about his thoughts on his last position as global ad chief of AOL (NYSE: AOL), which, like its portal rivals, has found the challenge of social media is indeed changing the nature of the display ad landscape, Levick said he preferred to discuss at the present and the future, not the past. “Honestly, I’d rather look at what I’m doing now,” he said. “I chose this role because it fulfills my passion for working with platforms, driving consumer engagement. It’s an interesting challenge and that’s what I’m thinking about now.”