Spotify's 'Marquee' Sponsored Recommendations Show Promising Early Results

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Courtesy of Spotify

The company is reporting a more than 20% click-through rate for the ad service as it ramps up its beta launch.

Back in October, Spotify kicked off the testing phase for Marquee, a new sponsored recommendation tool from Spotify for Artists that allows record labels to target an artist's existing fanbase with pop-up banner ads for new releases. Now, the company is going wide with that service, which is designed to help major and independent artists alike rack up more streams on the platform -- while also potentially securing new long-term fans -- by leveraging Spotify’s deep trove of listener data.

According to internal numbers provided by Spotify, the Marquee testing phase was a success, boasting an overall click-through rate of more than 20%. Put another way: Over one-fifth of Spotify users who were served a Marquee ad streamed the promoted release within a two-week timeframe; they were also 2.2 times more likely, on average, to save or playlist a track from it.

“We really kind of blew it out of the water,” Spotify senior product marketing manager Charleton Lamb tells Billboard of the program, which is still in beta. “You just don't see click through rates above single digits when you're using those other [digital advertising] tools. It’s exciting that we're able to use how good we are at recommending music to give a wider range of artists access to that ability to connect with [fans].”

Notably, Marquee comes just a few months after Spotify's former CFO, Barry McCarthy, highlighted the publicly-traded company's desire to boost ad revenue from 10% to 20% of its overall sales. When asked whether Marquee is a part of that strategy, Lamb downplayed the connection, stating that McCarthy was likely referring to ads on Spotify's free tier. "On the free tier, we're helping brands connect with people that are using Spotify for free," he says. "And then these tools, like Marquee and the other things that are going to come out from Spotify for Artists, [are] really built from the ground up for artists and labels to be able to connect with music fans."

But the Marquee program is sure to please investors as well, has it has created a double-sided marketplace for Spotify where labels buy-in to get paid more. In trumpeting Marquee’s wins, Spotify points to a number of artists who have benefitted from the service, including singer-songwriter Georgia, whose album Seeking Thrills was the subject of a recent campaign. According to figures provided by Spotify, the click-through rate on that campaign was over 33%, while 22% of those users saved or playlisted at least one track from the album. Even a major artist like The Weeknd experienced a boost; after Republic Records booked a campaign around the singer-songwriter’s most recent album, After Hours, the label enjoyed the highest click-through rate of any Marquee campaign to date.

Marquee employs a “pay-per-click” advertising model, designed to be accessible to both independent and major label artists. Though Spotify once instituted a minimum buy of $5,000, Lamb notes the company has since abandoned that floor. "We’ve done many campaigns that are well below that minimum [since],” he says, adding, "the intention is to make a tool that like works for artists of all sizes.”

One independent label that's reporting good results with the tool is New West Records, whose vp digital strategy, Mike Fabio, says the Nashville-based company saw “amazing” success with campaigns built around artists including The Secret Sisters, Caroline Rose, Pokey LaFarge and American Aquarium. After making the then-minimum spend of $5,000 for American Aquarium's Lamentations album at a price of 55 cents per click, Fabio reports that the campaign reached 44,000 Spotify users -- 24% of whom clicked through. Those users then streamed an average of 14 tracks by the band, which likely consisted of a mixture of repeat listens to tracks on the album and catalog releases.

“The idea that people might be discovering catalog at the same time they're discovering new releases is really exciting to us also,” says Fabio, who notes that New West is currently running a campaign for Steve Earle’s Ghosts of West Virginia and has several more scheduled to run later this year, including new albums from The Texas Gentlemen, All Them Witches and Delta Spirit.

For the Earle album specifically, Fabio took advantage of Marquee’s customization features, which allows labels and artists to target ads based on geography -- the service is currently only available in the U.S. and Canada, though additional international rollouts are forthcoming -- as well as three specific audience categories, described by Fabio as “lapsed fans” (i.e. users who have engaged with the artist on the platform previously but haven’t done so in awhile), “new fans” (users who recently engaged with the artist for the first time) and “superfans.” With the knowledge that Earle had already built up a loyal fanbase owing to a career that has spanned four decades, Fabio decided to target the singer-songwriter’s so-called “lapsed fans” with the campaign, while removing “superfans” from the equation. “If I can build more targeted segments, then I can reach what I think are probably more high value people for the same price,” he says, noting, "It doesn't do me much good to spend money trying to reach a super fan with a record that they're likely going to listen to anyway."

That kind of customization is a more recent feature of Marquee, allowing customers to target audience segments on a relatively more granular level. “Basically, we want it to work for whatever marketing strategy that you've got,” Lamb says, noting that the company has been soliciting feedback throughout the test from labels and artists who took part. Turnaround times have also improved; whereas campaigns used to require seven days to complete, Spotify has since cut that timeframe down to just three days, and it can even accommodate 24-hour rush jobs on a case-by-case basis.

Not all of Fabio’s feedback has been addressed yet. Among other things, he’s floated the idea of a self-serve version of the Marquee tool, as well as inquired about customizing the onscreen banner recommendations to a label or artist's specifications. When reached for comment, a Spotify spokesperson said of the self-serve tool, “We don’t have anything to share at the moment," while reiterating that “as of now, the Marquee banner is based on the official album artwork.”

Since its launch last fall, Marquee has weathered its share of criticism, with some expressing concern that the service amounts to a sort of “payola” for the streaming age, unfairly advantaging labels with multi-million-dollar advertising budgets. Lamb attempted to minimize those critiques by pointing out that -- while major labels make up a significant part of Marquee's client base -- many independent labels and artists have mounted successful campaigns with the service.

“The way the targeting works for Marquee is that we're actually trying to put the most relevant thing in front of the fan,” says Lamb. “So if you happen to listen to some of the biggest artists on earth, and you also have indie bands that you're a fan of, if we think that week that you're gonna have the best experience getting a Marquee for this indie band, that's what's gonna win out -- not necessarily who has the highest budget that week.”

At least for Fabio, buying campaigns with Marquee has been a winning strategy. “When the first results came in, I pretty much immediately said, 'Okay, we're going to start doing this on everything,’” he says. Though the tool isn’t yet as customizable as he would like, in his estimation the return on investment far outstrips that of other digital platforms like Facebook and YouTube. “I can’t think of any other platform where I can see dollar for dollar how many streams it’s leading to,” he adds. "It's kind of amazing that I can do those sorts of calculations now."

You can find more information on Marquee here.

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