Spotify Open for Small and Medium Business Advertisers
Spotify is aiming to have advertising represent 20 percent of its revenues. However, there is a way to reach this goal. In 2022, advertisements comprised 12.6 percent of its revenues, up from 10.2 five years prior in 2017.
Spotify’s latest strategy to accelerate its growth is to focus on small and medium-sized businesses (SMBs). Snap has enlisted the company’s global director of mid- and small-sized sales to customers, Samuel Bevan, who was previously employed in SMB-focused positions for Meta and Google.
It also has created a ” Spotify Advertising Academy, which includes an official partner certification program targeted at these firms and their partners. It’s available across the US, UK, Canada, and Australia. It aims to show individuals how to build an ad campaign, optimize it, and track the results of Spotify advertising campaigns.
The potential is obvious: McKinsey & Company estimates that SMBs represent 44% of the GDP of the US economy. The Data Catalyst Institute estimates that 61% of businesses spend more than $10k annually on advertising, while 29% spend more than 100k.
Yet, Spotify has plenty of competitors for the same dollars. For instance, TikTok has been adamantly promoting its benefits for SMBs in recent months. This blog article described its strategy for small businesses and its TikTok Academy that it started in October began with a specific course aimed at small and medium-sized enterprises.
At the NY: LON Connect event in January, Ole Obermann discussed the importance of the Commercial Music Library for SMBs who would like to include the music in their video. “We have more than one million advertisers; the majority are small to medium-sized enterprises,” he said.
The reasoning was that micro-licensing by SMBs can help “double three, four, or four times” that market size for syncs. Spotify, in turn, is seeking SMBs to increase its revenue from advertising, which impacts the royalties it pays music rights holders.
The fierce competition between these two platforms and the other ad-supported music and related services available to attract small and medium-sized companies is a good thing in the world of music.
The largest brands will always be in attention. However, SMBs could significantly contribute to boosting the marketing economy in the coming years.