Storyboard18 - Stacks & Strategies | Spotify and the case of programmatic audio ads: Are advertisers and users listening?

Budget 2022-23: Expectations from media and entertainment sector

A joint report by EY FICCI on India’s M&E sector published in March states that the share of programmatic advertising increased from 10 percent of total digital spending in 2017 to 42 percent in 2021. The increased prevalence of programmatic guaranteed amongst publishers, as they can guarantee both price and impressions to advertisers. The digital media segment grew 29 percent to reach Rs 303 billion in 2021 and it is expected to grow further at a CAGR of 20 percent over the next three years to touch Rs 537 billion.

"Programmatic advertising is now extending its remit to sectors like audio OTT, DOOH, etc. and we can expect to see several platforms come into being to serve even traditional platforms like radio and regional television in future," the report notes.

The usage stats clearly indicate key trends as well. The EY FICCI report states that Indians spent 4.7 hours a day on their phones in 2021, aggregating 700 billion hours of consumption (second highest in the world). Around 197 million people streamed music online in 2021 on a monthly basis. However, India was ranked 20th in terms of consumer spending which in turn means enough headroom for advertisers and agencies to convince consumers for making purchase decisions.

Lalatendu Das, CEO, Performics India, Publicis India-owned performance marketing agency highlights that while the reach of audio advertising has grown to a sizeable number (approximately 200 million in India), the advertising spending on audio as a channel remains muted.

“Based on our experience, the audio gets < 10% share of advertising spend for most of our clients,” he notes.

Also read: Explained: Why musicians are pulling their songs from Spotify

Das shares that currently there are two kinds of advertisers that are actively leveraging programmatic audio advertising - Value seekers: CMP (cost per thousand impressions) on audio advertising remains quite attractive (~ 40% to 50% lower than for video). Hence, advertisers who have already attained good reach on the traditional web, video, etc are exploring audio as an alternate channel. The second category is when an advertiser wishes to promote niche products and placements — newer products — especially with a short shelf-life (such as an upcoming event, or sale).

Experts said that audio publishers and streaming platforms offer a variety of ad formats including display, short audio, and video ads.

"Shorted audio ads up to 15 secs on music streaming platforms like Gaana, Saavan, YT have worked for us in the past," shares Performics India's Das.

Swedish audio streaming platform Spotify, which entered India in February 2019, offers audio, video, display, and proprietary tech that only shows ads when the user is using the screen.

"Our multi-format campaigns drive 40 percent more lift in various brand metrics as compared to just audio ads and that’s what we recommend to our advertiser partners," says Arjun Kolady, head of sales — Spotify India.

Kolady clarifies that ads on Spotify are served to users based on their state and inputs. "…so if someone’s running using Spotify they will only be served audio ads because they are not looking at the screen. We have upwards of 90 percent of completion rates across all our formats including audio and video. From the attention point of view, audio has the highest scale and has most moments that one can reach the consumer on but the visual formats drive more action,” he adds.

Also read: Storyboard: Here's look at Motilal Oswal Mutual Fund and Spotify's new ad campaigns

Mondelez India, for instance, which has worked with Spotify states that within the company, audio has remained an integral part of our Cadbury Dairy Milk Silk campaigns with the product having a distinctive audio asset (its ad jingle) associated with it.

“In an effort to go where our consumers are present, for this year's Valentine's Day campaign, we zeroed in on music as a genre to leverage, and in association with Spotify, we created playlists that gave couples a chance to reveal secret messages. With personalisation transitioning from good-to-have to must-have, these audio platforms with their deep tech are able to provide personalization that is very effective,” says Anil Viswanathan, vice president — of marketing, Mondelez India.

Due to the abundance of free audio options, just three million people purchased music subscriptions in 2021, producing Rs 1.6 billion in revenue. FICCI report estimates that at best the paid subscription industry will reach 7 million paid users by 2024 at a maximum effective rate of Rs 1 per day, generating Rs 2.8 billion in subscription revenue. This means that audio streaming platforms will largely be advertising-driven.

"Smartphone users in India will cross 500 million shortly, and MAU (monthly active users) on some of the leading audio platforms are on the rise. However, there are still challenges around tracking, effectiveness measurement, and attribution when it comes to audio advertising. The space can unlock newer capabilities if the audio platform providers can innovate to solve these problems," he concludes.

Also read: Streaming will rake in Rs 21,000 crore by 2026, more than Indian film industry: Report