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Streaming’s Ad Boom: Will the Millions Spent By Apple, Spotify, Pandora and YouTube Help Decide Who’s No. 1?

Streaming services like Spotify and Pandora steadily have increased their visibility -- and marketing spends -- in recent years, but as Apple Music and now YouTube have joined the competition for…

Streaming services like Spotify and Pandora steadily have increased their visibility — and marketing spends — in recent years, but as Apple Music and now YouTube have joined the competition for subscribers, the battleground has moved to Madison Avenue.

What began with Apple’s Super Bowl-sized spot with Taylor Swift falling off a treadmill to Drake and Future’s “Jumpman” in April has become a bona fide blitz: In the past month, YouTube Music aired its first commercials, Spotify decorated several New York subway lines, and Apple Music — the heavyweight in the advertising stakes — rolled out its latest viral clip with DJ Khaled and Goodfellas star Ray Liotta getting pedicures while talking up the service. Add a series of TV and digital spots from Pandora earlier this year, and those four services have poured a combined $30 million in estimated ad dollars into the U.S. marketplace.

Each campaign took a markedly different approach, with YouTube Music opting for ordinary people to star in its series of five ads, which debuted July 17 and were created by New York-based ad agency Anomaly. They include a Korean teen named Jaysn, who gains confidence on the L.A. subway by pumping up “Eung Freestyle,” an underground Korean hip-hop track; Tina, a young mother who reunites with her family after completing community service to the tune of rising reggae band Machet’s “Naturally”; and Alex, a small-town teen who finds the confidence to dress in drag while watching Elliphant and Big Freedia’s dancehall jam “Club Now Skunk.”

YouTube Music
YouTube Music Courtesy of YouTube Music

The campaign and its music were a strategic shift away from recognizable top 40 tunes and faces, according to YouTube chief marketing officer Danielle Tiedt. “The places where YouTube really shines are where you can find just the right track for just the right time,” says Tiedt of the campaign that runs through Aug. 11 in cinemas, out-of-home and online music publications. “The music streaming space is highly competitive, [which] forces each of us to think through our differentiation and the core of what our users love about the service.”

The size of the spends reflects just how high the stakes have become. YouTube Music’s marketing initiative arrives eight months after the service’s introduction of a $9.99 monthly subscription and at a time of advanced maturity for paid streaming. In 2015, a record 68 million people worldwide paid for a music subscription, according to IFPI’s 2016 Global Music Report, a figure that has multiplied more than eight times since 2010.

With Spotify reportedly mulling an initial public offering and Pandora and Deezer elbowing for an edge, the streaming space is becoming increasingly crowded. That has resulted in more marketing dollars than ever before from modest budgeters like Pandora and Spotify, which spent $3.6 million and $2.3 million, respectively, on paid advertising during the first four months of 2016, according to advertising analytics firm Kantar Media. By comparison, Apple laid out an estimated $7.6 million on its creative featuring Swift and Khaled alone, according to TV-ad researcher iSpot.TV.

Spotify Courtesy of Spotify

The artist-agnostic campaigns from Spotify, YouTube and Pandora seems to help level the playing field with regard to increasingly tricky exclusives, which Apple and Tidal have been battling over in recent months. “We want as many ears as possible on our music,” says Ash Pournouri, founder of At Night Management, whose client Avicii’s “Wake Me Up” ranks as one of the most-streamed songs of all time. “You can’t move your entire audience by trying to be somewhere they don’t want to be.”

Look for Pandora to embrace more listening behaviors in the coming months as the company seeks to replace Simon Fleming-Wood, its first CMO, who departed in April. “We’re creating a fully scaled music marketplace where fans and artists can connect on an unprecedented scale,” says Lisa Sullivan-Cross, the company’s vice president of growth marketing, “Fans will also be to listen to entire albums from their favorite artists on-demand, or create their own playlists.”

As for YouTube, which is currently under fire from artists and managers for under-paying royalties, alliances with emerging artists — like Glassnote’s Aurora — may combat some of the grousing among industry circles. During the week of July 25, YouTube amplified the Norwegian singer’s appearances on The Late Show and at Lollapalooza using YouTube’s assets, search algorithms and talent pool. Says Tiedt: “We’ll be partnering her with the influential creators to help reach a broader audience in ways you wouldn’t see in traditional marketing.”

Pandora Courtesy of Pandora

All this activity seems to be legitimizing the music industry’s bet on streaming as the listening behavior of the future, with media analyst Mark Mulligan recently predicting track downloads to be phased out by 2020. And to the delight of many music execs, the ad surge seems to be preaching that mission to the masses.

“I always have felt no one really has conveyed that you could pay $9.99 to get one album, or pay $9.99 and get all the albums ever, to anyone outside the music industry,” says Jonathan Daniel, co-founder of Crush Management, whose client Sia rises to No. 6 on the Aug. 6 Streaming Songs chart (and No. 1 on the Billboard Hot 100) with her latest single, “Cheap Thrills.” And Daniel isn’t the only one thinking that way.

“Now that the industry is growing and people understand that streaming is the future,” says Spotify chief marketing officer Seth Farbman, “we need to use all of our channels to reach them.”

 Andrew Hampp is a vice president and brand strategist at MAC Presents. A version of this article was originally published in the Aug. 6 issue of Billboard.