These 12 marketing tricks made Spotify so successful
Spotify has achieved in the music industry what Netflix is still working on in the film industry: The Swedish streaming service is the undisputed market leader and has left even big competitors like Apple far behind. In 2016, Spotify achieved a weekly reach of 24 percent among 15- to 65-year-olds, while Apple’s counterpart iTunes had just half of that.
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Yet Spotify was not even a pioneer of the business idea when it was launched in 2008. Back in 1999, Napster, a provider of online music services, had already existed – but it failed. So what makes Spotify so much better than its competitors? In the following we explain some basic features of Spotify’s marketing strategy that can be applied across all industries.
1. Freemium model
Most of the content offered by Spotify is free to use after registration – but users must accept regular commercial breaks. The app can only be used on the move with a paid account and various offers are completely hidden behind the paywall, especially audio books and podcasts. Nevertheless, Spotify users make up about 50 percent of the audience of podcast operators. In fact, the streaming platform has over 71 million paying customers worldwide, despite the wide range of free offers.
Spotify marketing awards
But why are they so willing to spend money? That’s mainly because Spotify knows how to retain its customers. They can listen to their friends’ favorite music, create playlists and follow artists. Accordingly, they invest a lot of time in the service, which makes changing providers unattractive. If the offer is then used continuously, the advertising becomes more and more annoying and at some point wants to be bypassed.
Companies should generally not get carried away with making free use in freemium models so unattractive that customers are literally forced to invest money. Instead, it is important to offer a real free alternative and to bind customers so comprehensively and emotionally to the product that sooner or later they will still switch to the premium version.
2. Recommendations / dynamic content
Spotify relies heavily on its own playlists that are suggested to users. More than 150 editors and sophisticated algorithms work on this alone. This simplifies and personalizes the use of music: Within a very short time, the service records what kind of music a user likes and suggests similar artists to him/her that he/she may not even know yet. How well this is accepted by users is shown by the fact that 92 percent of the playlists with the most hits come from Spotify itself instead of from other users. In addition, a call increase of between 50 and 100 percent can be seen when a song has been performed in a Spotify playlist.
Spotify has been developing these personal recommendations more and more. Meanwhile, “Your Mix of the Week” is a playlist that collects new music recommendations matching the last streamed songs every week. At the end of the year, users receive their personal statistics in the form of an automatic playlist with the top songs of the year. In addition, they will be alerted to songs that they have missed, but which would still suit their musical taste.
Spotify shows how important personalization through dynamic content is in modern marketing. Users no longer want to be addressed with anonymous standard phrases but want to be called by name. In addition, they expect offers to be tailored exactly to their needs, preferences and wishes. This requires one thing above all else: a broad database, which Spotify also relies on, as we explain in the next point.
3. Big data
Spotify captures every user activity and meticulously evaluates it to make the user experience more personalized and tailored to their needs. Accordingly, “Big Data” is the absolute brand core of the company and the basis of the extremely dynamic content. For example, the program registers when users have listened through the melancholy playlist on Valentine’s Day and presents them with a playlist on the theme of “Hopefully things will go better this year” at the turn of the year.
This benefits not only the users, but also advertising partners. Moskovskaya, for example, primarily wanted to attract listeners of electronic music to Spotify, but the streaming service recommended that hip-hop listeners also be included. In the end, the data analysis showed that the majority of the target group was actually among hip-hop fans. This has far-reaching marketing consequences. For example, the spirits manufacturer can now consider sponsoring the Splash Music Festival instead of the Melt- instead.
Data is a powerful marketing instrument that should no longer be dispensed with. Only on the basis of data can the necessary personalization be made and the right strategic decisions be made.
4. Customer loyalty
Spotify explicitly does not rely on aggressive customer relationship management (CRM) like impersonal and annoying email marketing, but only on value-added offers. For example, “Your Mix of the Week” is talked about emotionally in Internet forums, customers are only looking forward to the actually so annoying Monday. This makes the playlist an effective CRM tool.
In addition, the music service now has such market power that the music industry actually designs songs in a Spotify-optimized way, similar to what happens with websites due to SEO. For example, they tend to focus on many short songs in order to generate as many hits as possible and change release strategies: Whereas customers used to have to wait forever for new releases because not much happened between two albums, new singles are now released every now and then. Thus Spotify proves a fundamental added value to users across the platform.
Marketers should not bombard their customers with the same information through the same channels, but rather listen to them and offer real added value. Only then do users develop a real sense of belonging to the service they no longer want to do without.
5. Networking with Facebook
Although it is in principle also possible to create a Spotify account without Facebook, a link is normally provided. This allows customers to see what their friends are listening to and subscribe to their playlists. In addition, Facebook accesses fake pages and can thus present users with songs that match their musical tastes from the very beginning. Based on the specified place of residence, users are made aware of concerts of their favorite artists in the vicinity that are stored on Facebook. In addition, any activity can be actively shared on Facebook and thus lead to further interaction.
Social media have become an essential part of most people’s everyday life. It is therefore all the more important for marketers to pick up potential customers there and to make their services transferable to this world of experience.
6. Numerous payment methods
No user should have to do without a premium account because of missing payment options – that is the credo of Spotify. Accordingly, in addition to the standard procedures such as direct debit, credit card and invoice, PayPal and payment via mobile device are offered. Via paysafecard or voucher cards even prepaid options are possible.
Other companies should also adopt this motto. Customers are now used to choosing and no longer want to be tied down to a particular payment method: Maybe there is no credit card, maybe a customer does not want to have to deal with a monthly bill by hand. Whatever the problem is, this is not the point at which a purchase should fail.
The function called “Trendsetter” shows users which artists they have heard before their breakthrough. The result of this personal music history can be shared with friends and helps to tell their own music history. 1 million hits and 100 million social media impressions shortly after release speak volumes about the popularity of the function. The “time capsule”, on the other hand, is based on one’s own year of birth as well as current music preferences and thus most likely presents listeners with the songs they heard in their youth. In this way, the function awakens emotions and a pleasant, cosy nostalgic feeling.
That shows: People don’t just want to be presented with products, they want to be given a tool with which they can tell stories or one that tells stories itself. This is where marketing is needed to achieve exactly that with high-quality content.
8. Integration of paid advertising options
Spotify itself advertises mainly via Out of Home, Facebook Ads and Google Ads. As exemplary as the content offer is here, the service cannot do without paid ads. Advertising customers can also book classically paid advertising with audio, video and display advertising. Michael Krause, Managing Director EMEA at Spotify, denies in the OMR Podcast in April the possibility of making artists more visible for money. Nevertheless, there are still rumours that playlist places could be bought for between 2,000 and 10,000 US dollars.
Even though organic reach and good content are unquestionably important: It is very rare to do without advertising measures – regardless of the industry.
9. The multi-channel
In addition to the classic desktop version, Spotify can also be used on the move, albeit with limited free access. In addition, a web player is offered with which the service can be used anywhere without prior installation. In addition, songs from your own playlist can be integrated into Instagram Stories. Blogs can directly link the Spotify Play button.
This way Spotify shows how important it is to be present on the most diverse channels – and not only by pure presence, but also by platform-compatible functions that (once again) have added value for the users in mind. Only those who are helpful in all situations and on every channel will become indispensable in the everyday life of the users.
10. Merging online and offline: local fit
Spotify works very regionally and identifies specific issues for each country. For example, the online service let Prince Pi perform at the #SpotifyFansFirst concert in a Berlin church. The clou: Tickets were not for sale or to win, but were distributed to users who had listened to Prince Pi on Spotify intensively before. The streaming platform followed the release of the latest Beatsteak album with the so-called “Hyperlocal” approach, which involved advertising in ten German cities with adapted posters and info screens as well as online advertising.
Internationally, Spotify uses preferences broken down to individual postcode areas at year-end for classic marketing campaigns. For example, users in the hip New York district of Williamsburg were winkingly informed that the majority of them had heard Justin Bieber, who did not fit in with their own image at all.
So if you’re serious about being omnipresent in the lives of users, you need to be present both online and offline. And the combination of both worlds is usually the key to success. This connection can consist of customers picking up an item ordered online at the store or bringing online fans and friends together offline at special events.
After its launch in 2008, free access to Spotify was initially only possible by personal invitation. Each user had five of these invitations available – just enough to make the service a viral hit and at the same time not lose the exclusive touch.
Artificial scarcity has long been part of the classic marketing repertoire, but this does not make it any less successful. Low volumes and limited access give a feeling of being chosen and pressure to make decisions, which increases the probability of purchase.
When it comes to cooperation, Spotify is more than broadly based: Thanks to the cooperation with the dating app Tinder, users can add their favourite song to their dating profile, so that couples can find each other through their music taste. In cooperation with Smirnoff, Spotify has released the “Equalizer” for International Women’s Day. On the corresponding landing page of Smirnoff, users could log in with Spotify, whereupon the proportion of women in their own playlists was analyzed and, if desired, increased to 50 percent.
Thanks to a deal with Tesla, premium access to Spotify is automatically pre-installed in the entertainment system of the e-cars. Digital subscribers of the world also get a premium subscription of the streaming service for free. These last two examples in particular demonstrate efforts to generate new users outside the main user group of under-thirty year olds.
In general, cooperations are a proven means of increasing your own reach. If brands with different but in principle compatible target groups join forces, this offers both partners the chance to penetrate completely new customer segments and to expand their user base in the long term.
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