Spotify may not actually be making money yet but it is finding every way it can to monetize its service. One in beta test is brand sponsorship of targeted playlists.
Kia is the first brand to sponsor the New Music Friday playlist in the hopes of promoting the new version of its Sportage. The list showcases the most-talked-about tunes of the week, changes weekly and—critical for brands—has millions of listeners.
Target and McDonald’s have also signed on to beta test the playlist sponsorship, according to Adweek. There are more than 400 playlists for brands to choose from or they can create their own. As a Spotify blog post states, “With Sponsored Playlist, it’s all about matching the playlist to your marketing goals. Think content plus context; the right message in the right moment.”
A Spotify rep told Forbes that the Kia program has been a big success: “(T)hose listening were intrigued enough to want to learn more, as the Spotify portion of the whole ad rollout for the car experienced double the clickthrough rate that the entire campaign did overall.”
Music plays an important part in all of Kia’s advertising, Kia America COO and EVP Michael Sprague told brandchannel. The new “Soul Jam” commercial, which broke in more than 34,000 US cinemas over Memorial Day weekend, features Kia’s music-loving animatronic hamsters.
Sponsored playlists are only available in the US and UK right now, according to the company blog post. However, Spotify, which has around 30 million paying subscribers, is “excited to bring the product to other markets later this year.”
Spotify has already moved into Japan, Asian Correspondent reports. The service is rumored to be launching there in July. It remains to be seen if a streaming service can be successful in Japan as consumers still prefer to actually purchase physical forms of music. “Figures published by the Recording Industry Association of Japan showed that revenue from CDs, LPs, and other physical audio products only declined by two percent in 2015,” according to Asian Correspondent.
The service is also attempting to bolster its revenue by “making its own videos, such as interviews with artists, and producing other content like pop-ups that explain lyrics” as well as “investing in algorithms that ‘learn’ users’ tastes and … offering personalized services such as concert recommendations and artist memorabilia” on its mobile app, Fortune reports.
Spotify may have the strongest name recognition among music streaming services right now, but the brand still needs to find a way to be profitable and beat our some other pretty big names, such as Apple Music.