‘Streaming services must provide brands with data’

Recent figures from record industry trade organisation BPI found a fifth of all music buyers have “fully transitioned” to digital music, with 28 per cent of the UK population claiming to have purchased downloads or streamed content legally in 2012. But while consumers are moving away from physical music, streaming services do not appear to be proactive enough in forming partnerships with brands and proving the power of songs in making emotional connections to consumers to boost their advertising revenues.

Headphones Man

The move towards digital has seen many stalwarts of the industry, including HMV most recently, struggle to keep up with the trend. Ads around digital tracks or music videos still do not command the same level of rates as online premium TV or sports content, an issue music video streaming service Vevo’s CEO Rio Caraeff raised in an interview with The Guardian in 2011.

Speaking with Marketing Week, Vevo’s vice president of international Nic Jones, admitted the company and wider industry needs to be “more empirical” about demonstrating ad effectiveness around music with brands.

He added: “The strongest emotional connection is with music content – it’s the best kind of content for viewers to encode ads to memory. We’ve not been great in the past about getting people to think about [advertising around music] in that way.”

To tackle the challenge in getting advertisers – particularly those in the automotive and financial services industries – on board and to increase the amount of revenue the company can procure from them, Vevo launched a study in the US in partnership with UM and neuroscience research agency Neuro Insight.

It found viewers of music videos were more likely than those watching online TV clips to encode subsequent adverts to memory. It also claimed advertising with music videos could increase the strength of positive associates with advertised brands, versus online TV advertising that may actually cause a decrease (see charts below). Vevo is planning to repeat the study in the UK this year.

Phil Holliday, head of Fuse Sport and Entertainment, whose client portfolio includes Levi’s, Tuborg and Vodafone, says streaming services need to share more data if they want to take more of a leadership position within the music industry – particularly because, as media owners, they have the relationships with agencies and brands that labels often strive for.

He adds: “They need to have real insight and opinion. They need to be stronger and more confident in terms of their voice in the entire music industry. In the music industry people listen to opinions because it’s subjective media.”

Arnon Woolfson, head of content, rights and IP at marketing communications agency Anomaly, says he believes the biggest growth area for music services will be more collaborative deals with brands, rather than selling off ad space in a similar way to radio advertising.

He adds: “My feeling is that we will see the music industry working much closer with brands in more strategic partnerships as opposed to one way financial deals, where brands part with money and see little ROI. I predict brands moving into the finance and marketing roles for the newly created entertainment IP.”

In the UK, streaming revenues were forecast to grow at over four times the rate of online music downloads in 2012, increasing consumer digital music spend by £51m to £411m, according to research firm Strategy Analytics.

One of the biggest players in the market, Spotify, was reported to make as much as $500m in revenue in the year to January 2013, 84 per cent of which was understood to have been garnered from its ad-free subscription offering. This gives another indicator that brands may need to look beyond the traditional media buy to interact with streaming services, such as building proprietary apps or sponsored playlists.

Most visited music sites in UK

Source: comScore December 2012

Site Total unique visitors
Vevo 13.1 million
MTV 9.5 million
CBS 4.5 million
Spotify 4.3 million
Townsquare Media 2.4 million
Artist Direct Network 1.8 million
Live Nation 1.2 million
Guardian Music 1.1 million
Spin Music 1 million
MSN Music 964,000

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