If you’ve ever listened to Spotify, you’re probably familiar with the line “Wanna break from the ads?”
Indeed, about 30 million people do “wanna break from the ads,” according to Spotify CEO Daniel Ek’s announcement earlier this year about his company’s number of paying subscribers. But the majority of Spotify’s 100 million active listeners are ad-supported—around 70 million of them. This year, mobile programmatic spending will reach $15.45 billion in the US, according to eMarketer, compounding the rush to automate digital advertising in all its forms.
The rising number of paying Spotify subscribers is an indication of a population that’s tired of interrupt ads—not a new narrative, but one worth reiterating to marketers who are considering where to spend their budgets. Yes, the majority of users tolerate 15-30 second ads through free accounts, but that’s quickly changing.
At a time when the trend clearly points to users shelling out a small amount of money per month to listen to music without ads, the question becomes: Why are ad buyers still interested in purchasing audio advertisements through platforms like Spotify, Apple Music, and iHeartRadio? Why would they bet against the market?
Simply, their audiences—the majority of which are still nonpremium members—are captive. Similar to broadcast television, these ads interrupt people’s playlists when they’re hanging out with friends, cooking dinner, during their after-work jogs, and countless other scenarios. And as a way to break the awkwardness of interruption, we’ve even established go-to sarcastic commentary for when you’re with other people and these ads interject: “I love this song!”
Another big reason advertisers are investing in audio ads is because they’ve been sold on programmatic—an automated way to serve personalized ads based on user data. Brands are tuned into why traditional advertising tactics have stopped working, and so they’re doubling down by accusing their marketing of not being personal enough. But that’s not the problem—the interruption part is, and for brands that make programmatic a significant part of their budgetary spend, the situation is worse than ever.
In theory, programmatic advertising should be highly successful, no matter the medium. If you can target ads to people based on their past consumption habits, age, gender, IP address, location, and other personal details, the thinking is that the consumer will connect with that ad because it appeals to his preferences—and more importantly—his ego.
It’s human nature to think we’re special, and advertisers have been tapping into that feeling with programmatic ads for nearly two decades. In social psychology, this phenomenon is called illusory superiority, defined as “a cognitive bias whereby individuals overestimate their own qualities and abilities, relative to others.” And when you see or listen to an advertisement for something that taps into this sense of superiority—a luxury car that fits your lifestyle, a beer that was brewed just for you—the common thinking among traditional marketers is that a connection will be made between you, as the consumer, and that advertisement.
While they may have seen success in the past, here’s why programmatic ads are a waste of budget today:
It’s that simple. I’ll gladly pay ten bucks a month to not have an ad for the latest first-person shooter video game interrupt my Jazz/Study playlist. What’s more, the people building the company’s ad-supported model don’t seem to be knowledgeable about the user experience. According to Business Insider, Spotify’s developers were asked to use the free service for five days in order to better understand how ads are delivered to listeners. Nonetheless, Spotify’s Chief Revenue Officer, Jeff Levick, recently told the Wall Street Journal how the company plans to invest more in its ad-supported model. It seems like both the ad buyers and the ad suppliers are in on a big, fat, expensive, unfunny joke.
I see one outcome. Mobile programmatic ad buying on audio streaming services will become so bloated that advertisers push users to buy premium accounts at higher and higher rates (we know that’s already happening), leaving the marketplace for programmatic ads weak. And since the Spotify streaming model is relatively new, I also see competitors coming onto the scene and providing free alternatives sans ads. Just like Facebook gave way to myriad social networks that now compete for people’s attention, Spotify will give way to start-ups that can offer unique value without ads, as well as major market competitors with similar business models. Indeed, it already has:
People will find a way around the ads, and in the time that they don’t, they won’t be happy with the experience. Brand marketers would be better served if they instead invested in building owned audiences that seek out content instead of trying to avoid it at all costs. Programmatic advertising won’t ever go away, and it may even grow before it sinks; but one thing is for sure—in the end, user experience will dictate how we market.
So yes, I do “wanna break from the ads.”