Know This About Spotify’s New Marketing Tool, Showcase

Spotify is doubling down to bridge the gap in its Ads revenue by launching "Showcase”, a fresh approach for artists and labels to work their music promotion, much like on Google (YouTube) and Meta (IG, Facebook) platforms.

Sponsored Ad, if you may!

With Showcase, artists, and labels can now feature their new and existing releases within the most visited place on Spotify: Home.  According to Spotify, ‘Home’ is the most visited place on Spotify and billions of streams originate from it every day.

The starting budget for campaigns using Showcase is $100 and will be charged on a cost-per-click (CPC) model, starting at $0.40 per click. The budget will only be used when people genuinely click on your Showcase promotions, ensuring optimal ROI.

Campaign Duration

Spotify provides further clarification, stating that campaigns will run until (whichever comes first):

• Budget is exhausted

• 14 days after campaign starts

Eligibility

The feature officially launched on September 12 and is accessible based on the following criteria:

• Artists/labels with billing in the US

• Artists/labels who have accumulated a minimum of 1000 streams in the last 28 days in one of Spotify's target markets. 

This requirement ensures that only artists and labels who have demonstrated a certain level of popularity and engagement can take advantage of the Showcase feature.

Target Regions

Campaigns can target audiences in the following regions:

🌍 Europe: Austria, Denmark, Finland, France, Germany, Ireland, Italy, Liechtenstein, Monaco, Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom

🌎 North America: Canada, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, United States

🌍 South America: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay

🌏 Oceania: Australia, New Zealand

For each campaign, it is important to note that you can only target one market. If you wish to target multiple markets, you'll need to schedule separate campaigns. 

Showcase is designed to adjust and fine-tune your audience as the campaign progresses. It takes into consideration those who have already intentionally searched for and streamed your music, ensuring that your campaigns are targeted towards an audience who are likely to find your release relevant.

Audience Segment

You can choose to customize and target specific segments of your audience. Spotify will also include audiences of all main artists on your release.

According to Spotify, these audience segments have been categorized based on "real streaming behaviors" viz:

🎧 Active audience: Listeners who've intentionally streamed your music in the past 28 days from active sources like your artist profile, your release pages, or their own library and playlists. An active listener is someone who intentionally seeks out and plays your music from active sources like your artist profile, album, release pages, and their own library and playlists. This doesn’t include playing from a Spotify-created personalized or editorial playlist (e.g. Discover Weekly, Rap Caviar, Radio, etc.)

🎧 Super listeners: Your most dedicated active listeners in the last 28 days. They’re also the most likely to keep streaming your music.

🎧 Moderate listeners: Active listeners who've intentionally streamed your music many times in the last 28 days, and could still develop into super listeners.

🎧 Light listeners: Active listeners who've intentionally streamed your music once or a couple times in the last 28 days, and could develop into moderate listeners.

🎧 Previously active audience: Listeners who used to be in your active audience but haven't intentionally streamed your music in at least 28 days. They may still stream your music from programmed sources.

However, note that Premium listeners have the option to opt out of seeing campaigns.

What This Means for Spotify’s Business Model

Advertising revenue plays a significant role in the revenue of many tech giants and Showcase represents Spotify's efforts to improve theirs.

Despite a 15% year-on-year growth in ad revenue during Q2, Spotify's ad revenue falls short in comparison to other tech giants. For instance, YouTube generates approximately $84 million in advertising revenue per day, while Meta (formerly Facebook) brings in around $346 million per day. In contrast, Spotify's daily advertising revenue is roughly $5 million.

So far this year, Spotify's ads business has been operating at a loss in terms of gross margin. This means that the basic costs associated with generating ad revenue (such as sales & marketing and research & development) exceed the actual revenue generated. In the first half of this year, Spotify reported a negative gross margin, amounting to a loss of EUR €23 million specifically for its ad-supported business. Consequently, this has had a negative impact on the company’s overall gross margin figures.

While Spotify continues to make strides in its Premium subscription business, there is room to up the ante, when compared to other major players in the industry.

Conclusion

Showcase, follows the launch of Marquee in 2019,  and both features differ in their capabilities. Unlike Marquee, which only allows the promotion of brand-new music, Showcase enables artists to promote both new and older records. Spotify highlighted various scenarios where artists may want to promote catalog releases, such as anniversaries or capitalizing on viral buzz - like from TikTok.