…and Facebook, Google might be shaking in their boots.

Taken from adstudio.spotify.com

On trend with the Spotify’s numerous recent acquisitions and the release of the Spotify for Artists toolset, the streaming site has quietly rolled out another useful tool with huge implications: Spotify Ad Studio.

Currently in its beta form, Ad Studio opens the company’s previously exclusive ad platform ($25,000 minimum) to the masses.

On first glance, it looks very similar to Facebook’s Ad Manager, a tool used by nearly 5 million businesses each month, according to Reuters.

You can select an objective to Announce an event, Raise brand awareness, Drive people to your website, or “Other,” all of which seem to lead to the same layout on the next page.

In this case, a search for Indie Rock fans, male and female, age 13–44 in the US would reach about 10,000 ad listens for $250, or $0.025 per ad listen.

Unfortunately — and hold your breath here — Ad Studio does not support ads for content (read: pushing Spotify songs, playlists, and albums is off limits). They recommend emailing adstudio@spotify.com for these type of content ads.

As a music marketer, this footnote was a bit devastating, but as an avid Spotify listener it makes sense. The app has built its reputation on smart recommendations, and pushing a grunge-rock advert into Sherry’s bubble-gum pop Discover Weekly playlist would lose all credibility.

Still, bands and labels will be able to promote album pre-order links and tour dates, and once Spotify notices the influx of SoundCloud and Apple Music links being promoted on their platform, they will surely open up Spotify content ads.

But first, the platform needs to get even smarter about customer behaviors to justify the $250 minimum ad spend (more on that later). After all, it has taken Google and Facebook billions to acquire data on customer behaviors and interests, and the barrier to entry on those is quite low.

Facebook is the primary advertising platform for musicians and bands, raking in $27.6 billion in revenue in 2016 alone, with 84% of all ad revenue coming from mobile ads. If Spotify Ad Studio can disrupt just a piece of that, it may help fix Spotify’s broken business model.

Downsides

Ad Studio has a minimum ad spend of $250, a high barrier to entry for musicians looking to dip their toe in the water. For comparison, a decent sized regional band can run a solid Facebook campaign for $50.

Targeting isn’t as specific. You can target by city, age, gender, and music taste, but the genres are broad and targeting your fans alone may not yield high enough results.

Only audio ads. Ad Studio beta offers 15–30 second audio ads, but no Video, Overlay, Banner, Sponsored Playlists, or other options offered for their higher tiered Spotify for Brands.

Only serves to free Spotify users. Though estimated at 50–60 million users, this excludes the other half of music fans that already pay for Spotify, thus might pay for your product or concert tickets.

Upsides

Facebook recently announced they expect revenue to slow “meaningfully” in mid-2017 due to limited ad space. This means they will either be charging more for ads, or denying requests outright; probably both. Spotify is a new outlet to explore in the event of no Facebook ads.

Immediate ROI. Once Spotify allows native content marketing (they will), users won’t have to leave the app to play your new single or album. A clickthrough on Facebook or Google doesn’t always associate a stream on Spotify, which is only counted after 30 seconds if they have the app.

Audio is powerful. Spotify cites that audio ads increase ad recall over traditional display ads by up to 25%. Chances are, Spotifys Audio Ads will perform much better than Pandora’s failed AMPcast, the much anticipated (and free!) tool that allows fans to speak directly to their fans. For reference, I created 6 individual AMP messages for an artist with over 50,000 Pandora streams, and we yielded 0 listens. I guess there’s a reason it’s free.