Spotify wants music streaming behavior to become a new currency for advertisers, and the company is working with data management platform Krux to make that happen. Over the past several months the two firms have developed and tested a new offering that puts Spotify data to use for advertisers including Esurance and Lay's potato chips, specifically in the Spotify mobile app.
Spotify has first-party age and gender data on its users, and knows not only what music genres they prefer, but when they tend to listen. Now with the help of Krux's cross-device ID management, the music streaming firm is using its data to target users with ad messages from clients including insurance provider Esurance, which is using the Spotify-Krux pair-up to promote its savings message via audio and display ads on Spotify.
"With Spotify and Krux working together, we have access to first-party data allowing us to better target specific people and user groups such as those looking for auto insurance and commuters," said Cyndie Beckwith, VP-marketing at Esurance. "For this initiative, we wanted to add on some similar targeting approaches that we've been leveraging across desktops to streaming audio, and in particular mobile streaming audio."
Listening to playlists is an increasingly common experience on Spotify, and the company is investing in analyzing such listening data and enhancing it with third-party demographic information -- some of which Krux provides, such as education status and household income. The company tracks when specific users listen to playlists, for example when someone starts a "running" playlist around the same time most mornings, it can be used to determine that that person is actually running during those times.
Spotify has grown to use such data as a proxy for determining user activities and moods, said Brian Benedik, global head of sales at Spotify. An adult activating a playlist of kids' music is likely a parent, for example.
The goal is for advertisers such as athletic gear makers or snack food brands to target people with ads during those moments.
A consumer-packaged goods advertiser might want to reach buyers of homecare products or cereal in the Spotify app based on purchase data Krux has made available in Spotify's system, said Jon Suarez-Davis, former VP-global media and digital strategy at Kellogg Co., who joined Krux as chief marketing and strategy officer at Krux digital a year ago.
Krux serves as the DMP and technology layer, matching users seen in its device identity graph to Spotify users. The ad-tech firm also will work with partners to match Spotify users to email or CRM databases. Advertisers can purchase the Spotify audiences directly through Spotify; some programmatic ad services will also make it available.
"We've got this enormous amount of first-party data," said Mr. Benedik. "This feeds into a larger puzzle that we've built here at Spotify." Mainly, Spotify wants its rich streaming data to be more valuable in its mobile app environment where cookie targeting is not relevant.
In addition to its acquisitions of music data firms Seed Scientific and Echo Nest, Spotify is building a team of analytics staff, said Mark Uttley, the firm's VP-consumer insight.
According to its most recent publicly-available measure, Spotify has 45 million active users that can receive ads, and another 30 million subscribers who pay to use the premium service and avoid ads.