"If you're not paying for the product, you are the product."
This is the common adage thrown around today to describe the free services we have built our online identities around. Facebook, Twitter, Google, all of these services have a massive wealth of user data that can be analyzed, dissected and presented to advertisers. It is no secret; targeted advertising keeps the lights on for a majority of the companies we know and love.
Now, add another one to this list.
The world's most popular music streaming service, Spotify, announced that they are now selling demographic and playlist data to third-party buyers for the purpose of targeted advertising. They are calling it "programmatic buying" but it is just their fancy term for offering age, gender, geography and music preferences and habit data to advertisers for more efficient ad reach.
This means the 70 million Spotify users in 59 markets who use the app for free will start hearing and seeing ads based on what "behavioral segment" they belong to. Combined with other third-party data that's available for advertisers, such as interests and shopping behaviors, Spotify touts that based on these segments, ads will be more timely and relevant to the user.
Currently, they are bidding out :15- and :30-second audio spots for their mobile platform in real time. These spots will then grant access to the first-party user data they have collected so ad buyers will be able to choose what behavioral segment best suits their product.
For example, an ad spot for running gear can be placed for users who have running playlists at a specific time of day. Or sleeping aids and mattress ads can be placed for subscribers of "sleep" playlists just in time for bed. The possibilities are endless considering the range of genres and activity playlists available in Spotify.
Will this be a cause of concern for Spotify users? Well, targeted ad profiling is a standard practice across all the online services we regularly use and it is an integral part of our online activity. This new ad system shouldn't affect Spotify's free users' experience dramatically in any way since ads have always been displayed on their free platform.
If their programmatic buying is as effective as they think it is, then the ads should not be as random nor intrusive, since they are deemed interesting and relevant to the user.
At any rate, if these targeted ads are not your thing but Spotify is a service you would like to keep, you could always opt for an ad-free Spotify Premium account anytime.