To test a feature on a large, known, global platform, it's a very simple solution: Test it in Australia. In a population of 24 million and with a predominantly western culture, there is a large enough test bed and little enough market, so ideal for testing new features before (maybe) rolling them out globally. And that's exactly what Spotify seems to do by testing how it can customize its advertising platform to fight the likes of Pandora and other competitors.
Advertising Age reports today that it has a test in Australia that allows listeners to skip audio and video ads at any time while the ad is playing. This is instead of having a pre-set time limit to listen to or see the non-skipped ad. They will be able to do this whenever they want, as often as they want, and the new feature will also let them jump right back into the music.
The function (well, it's still a test feature after all) is called "Active Media". In this, advertisers may not pay for bounced ads. It's a high risk strategy because Spotify can obviously get less ad revenue in the short term, while the algorithm is trained to show ads that consumers actually want to listen to. But Australia's smaller market means lost revenue will be relatively small.
AdAge Quote Danielle Lee, Global Leader of Spotify Partner Solutions, says that the move is about tailoring the ads to user tastes, so similar to Spotify's "Discover Weekly" feature, which does the same to music.
It's a smart move, since by allowing users to spend longer on the ads they actually like, Spotify will get better data on the ads that work best for that particular user, thus selling better targeted ads that in turn want a higher prize.
"Our hypothesis is that we can use this to burn our streaming intelligence, delivering a more personal experience and a more engaging audience to our advertisers. It will improve the outcomes we can deliver for brands," said Lee.
In addition, a user who listens to a better targeted ad in its entirety is worth more than blowing ads to consumers who can eventually be turned off the platform to be f orced to listen to ads. They will also listen to fewer ads in total, and thus keep the platform sticky.
Spotify says advertisers do not have to pay for ads that are skipped. If things go well, it's likely that the feature will expand globally.
Spotify reported earlier in July that it closed down quarter of the year with 1