The growth in music streaming services – boosted by the launch last week of Electric Jukebox and that of Apple Music in June – creates valuable opportunities for marketers to boost their emotional connection with different audiences.
Consumers have become accustomed to interacting with artists on social media and accessing curated playlists – often facilitated by brands – that suit their mood. According to the Nielsen Music Report, there were 164 billion music streams in 2014, up 54% on the previous year.
Marketers are creating value for their advertising by aligning brands’ and customers’ values through the artists and genres people are listening to. Brands are also integrating streaming algorithms with real-time advertising processes to make them more creative and credible.
Spotify’s UK director of sales Greg Jarvis points to research conducted by TNS across Europe, which claims that Spotify delivers an average of 14% incremental audience reach against commercial radio.
Spotify has around 60 million subscribers, with 45 million of them on a ‘freemium’ or unlimited service. Brands can target audiences based on listening interests, mood or activity. A sports ad can be served while a user is running, or video content from a drinks brand played before the listener goes out on a Friday night.
“We are leveraging our understanding of data to build targeting and audience segments that offer insight into who people are, what they are doing, what they are interested in and even how they are feeling, based on the genre of music they are listening to,” says Jarvis. “This allows brands to connect with consumers with a strong picture of their customer in mind. They can be super-focused with the message they want to deliver.”
Among Spotify’s most recent innovations is gamer targeting, which allows advertisers to reach consumers using their games device and then retarget them across the Spotify platform. The service went live in early October.
Spotify insists it is not a direct competitor to commercial radio, which may be unlikely given that there is a finite amount of time that people can spend listening to music, but there is also a level of co-dependency. Traditional radio is still the main outlet for new music discovery but Bauer Xcel Media, which owns the Magic, Kiss, Absolute Radio and Kerrang brands, says the rise of the smartphone means marketing has entered a new audio era. Director of digital content Stuart Duncan says streaming services are a way for Bauer to continue its conversation with audiences beyond its core radio and magazine brands. In Australia, it has moved into music streaming with a channel for its women’s magazine, Cleo, on the Guvera platform.
“With more than 35 million smartphone users in the UK and 85% of 18- to-24-year-olds having one, using music streaming services as part of the brand marketing mix is an opportunity we can’t ignore,” says Duncan. “That said, radio is the original 24/7, always-on music service and we’re rather good at that.”
He believes Bauer’s heritage in radio gives it an advantage over music streaming sites. “We know about engaging audiences across all ages and genres, and it’s fascinating to watch the big ‘data rich’ players move towards more serendipitous curation and pseudo-radio service models to grow reach and share.”
Music streaming certainly offers advertisers highly sophisticated audience intelligence, data and targeting. It allows brands to place the right message at the right time in front of the right person during the highly engaging and emotionally charged experience of listening to music.
One of the first brands to launch a curated channel on Apple Music was Burberry, which saw the potential to engage its target audience by championing British acts. Another brand to match fashion with streamed music is ASOS, which linked with Google Play Music to launch Soundtrack Your Summer, where consumers could browse a digital magazine while listening to a playlist of summer tunes.
Streaming a part of daily life
Music streaming sites are now part of many people’s daily routine. Matt Rennie, managing director of The Box Plus Network, which has a 44% share of the music TV market, says the move to include streaming data in the music singles charts earlier this year reflects the changes in music consumption. “We are working with Spotify’s data to compile the new UK Hotlist Top 40, which lists the most sought-after tracks charting each week,” he says.
Olivier Robert-Murphy, global head of new business at Universal Music Group, says marketers need to see music streaming as more than just another piece of technology. “Brands must deliver access to great music with context,” he said at the SuperBrand to SuperFan event at Henley Business School earlier this month. “For example, on board an airliner, do consumers want to explore the full catalogue of a particular artist, or would they like to listen to iconic music from their destination with editorial to explain the connection?”
He says consumers demand an emotional experience through music streaming as well as the freedom to choose their format. He cites a campaign with the Jeep Renegade model in the US featuring the band X Ambassadors, who were asked to create a track that championed the values of the car: “Were the brand, artist and consumers aligned? Well, the band got its first number-one hit out of it, which definitely suggests they were.”
Christian Harris, managing director UK and Ireland at streaming platform Deezer, cites the development of a Sony-branded music app within Deezer, which was used to promote Sony’s MDR-10R headphones, as another example of this alignment. Music was curated within the app to increase dwell time. “If the brand experience within a music streaming service is done right, it will also encourage social sharing, which expands brand coverage,” says Harris. “Our strength is content curation and music is a great way to increase consumer engagement.”
However, as more brands begin to interact with music streaming sites, marketers will have to move beyond curated playlists. Andy Edge, commercial director UK and Ireland for cinema chain Odeon, says he is keen to explore music streaming. Just as fashion and music are comfortable bedfellows, so are films and music. “There are so many options, such as allowing consumers to download tracks from movies when they buy tickets, or offering exclusive music before they see a film,” he says.
Streaming is also moving into cinemas with digital broadcasts of live music events. At the Odeon Leicester Square, artists can perform a full live set, which is streamed to other cinemas. Odeon streamed singer-songwriter Ed Sheeran’s concert film debut, ‘Jumpers for Goalposts’, which included as a cinematic bonus an exclusive performance by the singer from Odeon Leicester Square.
Other examples of streaming music events backed by brands include the ‘Disclosure with James Corden’ event in September, which was streamed live from Los Angeles on American Express’s Amex Unstaged website and app. The English duo performed their album Caracal, with TV star James Corden in charge of production.
The event provided Disclosure with a larger global reach for their album, while for Amex there was the benefit of offering something different to music fans, who could watch the whole show, choose their camera angle and access content through the Amex Unstaged app.
As the music streaming sector becomes even more competitive, brands will have to negotiate harder on licensing fees, especially if they want to launch their own streaming service.
This option is encouraged by Travers Lee, CEO of Stereotribes, a crowdfunding organisation focused on the music industry. He says brands should try to reduce their advertising costs in other media and build their own free or subscribing audience.
“Brands may even be able to offer B2B advertising services [on their own streaming platforms] and establish viable partnerships through subsidising advertising costs to other brands. Ultimately, if you have the audience size and great content, you can become a music streaming service for profit,” says Lee.
Cutting costs will not always go down well with the artists, who already bemoan the financial rewards they receive from music streaming. Taylor Swift famously removed her entire back catalogue from Spotify after complaining of poor royalty payments to artists, while Radiohead pulled some of its albums from the service.
For advertisers, the debate is more about adding value to a music fan’s experience. They are doing this by carefully analysing the connections the individual makes between particular artists and music genres.
Once that relationship is clear, a brand can demonstrate its relevance and credibility and exploit the many creative opportunities that exist.
Streaming’s ‘frenemy’: Ministry of Sound
Ministry of Sound is both a brand advertiser and a record company, and it has had a number of battles with music streaming sites. In 2013, it settled a dispute with Spotify out of court after claiming that the streaming service’s curated playlists copied the compilation albums it retails.
In September, Ministry of Sound achieved a number- one hit with little-known artist DJ Sigala, but refused to allow the track to be streamed on Apple Music. The company is in negotiations with Apple to secure a better deal for its tracks but, even without Apple’s support, DJ Sigala still beat Justin Bieber to the number-one spot – even though the latter is the most streamed artist.
Ministry of Sound commercial director Alexis James says playlist curation is the lifeblood of what it does and it still sells 60,000 compilation albums a week. “We are not rewarded in the same way on streaming platforms so, as a maverick brand, we have to approach things differently. It is about standing up for music and creativity,” says James.
Ministry of Sound regards sites such as Spotify as distribution and retail platforms for its music catalogue, and it sees YouTube as more of a promotional vehicle, similar to traditional TV advertising. “Many brands use streaming services in the same way as they have used radio in the past,” says James. “We are slightly different because we are an advertiser and a record company and have a loyal audience who follow us as a brand.”
He believes that fans and artists welcome a stronger relationship with brands if the music is well curated. “We have Ministry of Sound Radio, which is a free app with 24/7 music streaming, live radio and specially curated playlists,” says James. “This has organically amassed more than a million listeners over the past 18 months.”