COMM 424 Capstone Project
FOR OUR CAPSTONE project, we decided to create a fully integrated marketing campaign targeted at middle-aged adults, a demographic that has the spending power, yet has been largely overlooked by marketers in favor of baby boomers and millennials.
Executive Summary
Naturally, our biggest challenge was understanding such a transitional demographic. Where are they in life? What do they value? And how can we best reach them? These were questions we had to answer. What we discovered was that our target were in the prime of their lives. They were dealing with the joys and challenges of middle age--sending their kids to college, caring for elderly parents, or simply trying to find more time to relax.
We’ve used moments like these to fuel our creative and develop a campaign that we think is humorous and relatable. By using this strategy, we believe Spotify can capitalize on a demographic that would be open to using their product, but doesn’t feel the brand speaks to them. Ultimately, our goal is to change the perception that Spotify is a “millennial” brand and increase awareness and purchase frequency within the target demographic. We hope that this campaign resonates with the audience and inspires them to unlock their creativity.
Contents
Introduction Spotify is a digital music, podcast and video streaming service that offers users instant access to millions of music and media content from artists all over the world. It was founded in 2006 by current CEO Daniel Ek and tech investor Martin Lorentzon, in part to revolutionize the music industry and legitimize digital streaming by operating legally and paying royalties. Spotify was first launched in Sweden in 2008 and brought to the United States in 2011. Today, Spotify is the world’s most popular music streaming service with a community of 191 million users, including 87 million paid subscribers, across 78 markets. The Spotify app is available on all major mobile and desktop platforms. Spotify also has a web player, for those who are unable to—or do not want to—download the app. On Spotify, users can search for a specific artist or song, or browse through expertly curated playlists. Clicking the + next to a track title, album or playlist instantly adds it to your music library so you don’t have to search for it again. Spotify also helps people discover new music by creating personalized weekly playlists based on a user’s music taste.
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Situation Analysis PHYSICAL FORMAT revenues declined by 7.6%, a higher rate than the previous year, which was a 3.9%. This physical sector still accounts for 34% of the global market and is particularly significant in leading countries such as Japan and Germany. DIGITAL REVENUES grew by 17.7% to $7.8 billion, driven by a 60.4% growth in streaming revenue —the largest in eight years. Streaming now makes up the majority (59%) of digital revenues.
Digital Music Streaming Share of Voice
Spotify takes the biggest cake with 36% of the category SOV. Tech giants Apple (19%), Amazon (12%) and Google (3%) are also dominant players in the digital music streaming arena.
RADIO remains the most popular listening source in the US. According to Nielson, 93% of adults 18 and older tune in to AM/FM radio every week. SPOTIFY is a category leader in the digital music streaming category, with a 36% share of voice. In 2017, the company also generated €3.67 billion from subscriptions and €416 million from ad-support.
72% of Spotify users are Millennials 4
Competitive Analysis Spotify’s direct competition includes other digital music streaming services including Apple Music, Amazon Prime Music, Google Play Music and Pandora. These services offer very similar services with identical prices for their premium individual ($9.99), student ($4.99) and family subscriptions ($14.99), excluding bundle offers and discounts. Spotify also faces indirect threats from traditional music listening methods such as radio, CDs and downloads, which are favored by our target demographic.
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GOOGLE PLAY MUSIC
Google Play Music, first launched in 2011, has recently been superseded by YouTube Music. However, Google Play Music subscribers will receive access to YouTube Music Premium as well as YouTube Premium and ad-free streaming on YouTube.
PANDORA
Now a fully fledged streaming service, Pandora also offers one of the most popular radio services in the US. As a result the company offers more flexibility than most competitors, even if it is some ways behind in terms of overall catalog size and Premium subscribers.
APPLE MUSIC
With the second largest market share (18.8%), Apple Music is quite possibly Spotify’s biggest direct threat. Apple Music boasts a catalog of 50 million songs and integrates seamlessly with the Apple ecosystem. There's also ton of themed playlists, many hand-crafted by musicians and tastemakers, though it still lacks the robust sharing options built into Spotify.
AMAZON PRIME MUSIC
Tech giant Amazon’s dual music plans gives you access to tens of millions of songs, thousands of hand-curated playlists, and personalized stations. This service is integrated with Amazon Alexa, so you can summon songs using Alexa and also get some added content, such as commentary on selected tracks.
Target Audience “Men and women between the ages of 40-55 who frequently listen to music via traditional (non-streaming) methods during their daily commute and free time.” RATIONALE We selected this target demographic because they are the generation most likely to spend money on Spotify after millennials. Born between 1963-1978, our demographic grew up in both the digital and offline age, so they embrace technology, even if they’re not necessarily tech-savvy. Our target are music lovers who have careers or lead busy, active lives. Thus, they’re most likely to listen music during their daily commute and free time. 6
Target Segments We discovered two distinct segments within our target audience: Professionals and Empty Nesters.
PROFESSIONALS
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The Professionals are men and women with a stable income with busy career-oriented lives. They commute to work via car or public transportation, during which they listen to music via the radio or other traditional methods. The Professional values convenience and efficiency with a “get it done� mentality. They are technologically literate but they are not always up-to-date with modern trends. Their main motivation when listening to music is to focus and relax.
EMPTY NESTERS The Empty Nesters are
family-oriented parents who have adult children or children in college. They own a house and a car and live an active lifestyle because they have a lot of free time. Their daily routine involves running errands, going to the gym, or participating in their community. For them, music is a way to escape or to hold on to memories. Alternatively for them, it can be a source of inspiration. They value convenience and affordability and are also tech-savvy to some extent.
Interviews For our research, we collected data from 250 people through an online survey and conducted in-depth interviews with 12 people within our target market age group. After transcribing the data, we identified several points that offered insight and guided us in our strategy for the campaign. Some of these phrases:
I listen to music at home, in my car, and on my way to work The problem with radio is that the music doesn’t always match your mood
My kids use Spotify
Ads don’t really speak to my generation anymore I listen to music when I feel a certain way, like when I miss my kids
I actually like all genres of music, despite what you might think
Music is a stress reliever after a long day at work
Spotify seems like a young brand for young people
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SWOT Analysis
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Strengths
Weaknesses
—Spotify is a leader in the music streaming industry with a global market share of 36% —Spotify offers podcasts, audiobooks and videos as well as music —Spotify’s offers an exceptionally accurate music recommendation algorithm that caters to your tastes —Spotify offers thousands of hand-curated themed playlists to match every mood and activity —Spotify is the only music streaming service with Genius integration (a lyrics and annotation feature)
—Spotify’s user interface is not user-friendly for some users —Spotify is not as convenient or useful as radio according to our target market —Target audience is unaware of features that will be useful to them such as Spotify Radio, Discover Weekly playlists and/or Waze integration —Target audience is unaware of the brand —Target audience perceives our brand as “too young” for them
Opportunities
Threats
—Expand Spotify’s services to include live music streaming and/or news radio —Integrate Spotify in relevant apps such as Uber or Google Maps to make commuting more enjoyable for our target market —Offer music videos and Genius Lyrics functionality for older music —Create target-specific advertising to increase brand awareness and appeal to our target market
—Spotify does not have other sources of revenue such as Apple and Amazon —Legal and illegal downloads take away from Spotify’s revenue —Issues with pay-per-stream compensation has and may lead artists to choose not to put their music on Spotify which reduces Spotify’s music library —Target audience reluctance to switch from traditional music listening method means lost revenue for Spotify
Strategy Currently, the target's perception of our brand is that it is for “young people.” In addition, some of our potential consumers aren’t aware of Spotify at all because the brand has never advertised directly to them. Even those who have heard of Spotify feel like they can’t relate to its current advertising because of its millennial focus. Thus, for our target, there’s no compelling reason to use or switch to Spotify, especially when radio and CDs are established into their daily routine. Fortunately, Spotify’s playlists offers the passive convenience of radio with the customization of a mixtape. We believe we can exploit this unique selling point to appeal to our target. COMMUNICATION GOALS CAMPAIGN OBJECTIVES
IMC STRATEGY
To show our target audience that Spotify understands them and can bring emotional utility to their lives. Business objective—Increase target SOV by 3% Business strategy—Targeted advertising and marketing/sales promotions Marketing objective: Increase users in our age group from 9% to 12% (+600,000 users) in 12 months Marketing strategy—By advertising Spotify’s brand to middle-aged adults to increase their awareness of our brand and change the perception that we are “too young” for them Advertising objective—To highlight the diversity and versatility of our hand-curated playlists to encourage target to download our app Advertising strategy—Use creative messaging to show our playlists’ capability to bring joy/express moods in a way that is funny and relatable to our target We want to build a genuine connection with our target and show them that our brand understands and hears them. We will show that Spotify can relieve stress, bring back memories and express their emotions through our incredible playlists. Essentially, our advertisements will change current target’s perception of digital music streaming by aligning Spotify’s most distinguished feature, its hand-curated themed playlists, to their attitudes and values.
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Creative
In our creative messaging, we want to show our target that Spotify is more than just a “millennial” brand. Using playful headlines inspired by real Spotify playlists, our print ads show that we’re in touch with middle-aged adults and that we have playlists for all of their moments, feelings and desires. These print ads will be advertised in Time and Mojo magazines (due to their readership being in our target age range) as well as outdoor on billboards, bus wraps and transport hubs to reach our target on their daily commute. We also developed 15 second TV spots to highlight Spotify playlists’ ability to take you wherever you want to go while still relating to our target. 11
12/8/18
David, Natalie, Crystal, Madeline
Take me to...Paradise
Scrolling list of words lands on paradise. SFX: Wouldn't It Be Nice by The Beach Boys. [:01]
Zoom to Extreme Close Up when song reaches the chorus. SFX: Wouldn't It Be Nice by The Beach Boys. [:02]
Over the Shoulder: Man picks up his phone, opens the Spotify app and picks his "paradise playlist". SFX: Wouldn't It Be Nice by The Beach Boys. [:02]
SFX: Narrator Voiceover- Spotify: Unlock your creativity. [:02]
Unlock Your Creativity
Close Up: Man is sitting behind the wheel in traffic with a blank expression on his face. The radio is playing but it sounds like white noise to him. SFX: radio static [:02]
Point of View: Bumper to bumper traffic on a major highway. SFX: Car honks, rumble of engines. [:02]
Zoom out to Long Shot: Zooms out of face to show the man now relaxing on the beach with a drink, accompanied by a hula dancer. SFX: Wouldn't It Be Nice by The Beach Boys [:03]
Point of View: Man looks at a hula girl bobblehead on his dashboard. SFX: radio static [:01]
bumper traffic. The spot occurs in the daytime. The song that he plays after looking at the hula girl is Wouldn't It Be Nice by the Beach Boys. The hula girl on the private island looks like Nicole Scherzinger.
A man that looks like Robin Williams stars in the spot. He is driving a Honda Accord down a busy highway, stuck in bumper to
15 sec
Take Me To...
Spotify
COMM 424: Take Me To Storyboard
Promotions
Pop-up Jukeboxes
Spotify Singles
TV Show Sponsorship
Our pop-up jukeboxes will be reminiscent of old-school jukeboxes, appealing to our target’s nostalgia in a playful and engaging way. Having people interact with our product physically on the street will encourage our target to see Spotify as not just a confusing tech app, but a real and tangible way to listen to music. Since these jukeboxes are digital, they will use Spotify’s interface and show our target that streaming music is fast and simple.
We also intend to release new and exclusive singles with a classic yet mainstream favorite artist like Paul McCartney. Collaborating with older artists will show our target that Spotify is a brand that appreciates music from all generations, not just current artists. We hope that this will increase our target’s positive association with our brand and generate some buzzworthy “news” that will excite older music fans.
The average median age of a view of American Idol is consistently above 40 years of age, so sponsoring a TV show that our target is tuned into will only help to promote our brand and build stronger and more positive brand image associations. We’ve decided to choose “The Voice” since it is currently running.
Geography Our campaign will focus on 24 spot markets. The following locations were chosen based on the percentage of US households in the market as most of our target lives in urban, population-dense cities.
(1) Atlanta, GA (2) Baltimore, MD (3) Boston, MA (4) Charlotte, NC (5) Chicago, IL (6) Cleveland, OH
(7) Dallas, TX (8) Denver, CO (9) Detroit, MI (10) Houston, TX (11) Los Angeles, CA (12) Miami, FL
(13) Minneapolis, MN (14) New York, NY (15) Orlando, FL (16) Philadelphia, PA (17) Phoenix, AZ (18) Pittsburgh, PA
(19) Sacramento, CA (20) San Francisco, CA (21) Seattle, WA (22) St. Louis, MO (23) Tampa, FL (24) Washington D.C.
Budget Spending
Market Spend Breakdown Promotions TV Outdoors Magazines Radio
Spot Market Cumulative Reach
Frequency
GRPs
81.3
52.8
4294
National—Traditional Net TV-E Morning Net TV-Prime Net Cable-Daytime Net Cable-Prime Net Radio-Morning Drive Net Radio-Evening Drive Magazines-General Interest Total
$340,300.00 $555,700.00 $133,600.00 $325,400.00 $1,177,100.00 $1,321,200.00 $2,870,100.00 $6,723,400.00
Spot—Traditional Spot TV-Daytime Spot TV-Prime Spot Radio-Morning Drive Spot Radio-Evening Drive Outdoor Total
$1,716,500.00 $2,857,700.00 $3,531,600.00 $3,913,400.00 $4,136,800.00 $16,156,100.00
Promotions—Non-Traditional Pop-up Jukeboxes Spotify Singles TV Sponsorship Total
$500,000.00 $500,000.00 $1,000,000.00 $2,000,000.00
Campaign Total
National Cumulative
17
Reach
Frequency
GRPs
66.8
21.6
1444
$24,879,500.00
As we researched, Spotify spent $137MM on advertising in 2017. Since only 9% of Spotify users are 40-55 years old, we proposed to invest $25MM, which is approximately 18% of total spending in advertising, for the campaign budget. Ultimately the total spending will be $24,879,500.00.
Schedule Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Traditional TV Radio Outdoor Magazines Promotions Jukeboxes Singles TV Sponsorship RATIONALE The campaign will use flight scheduling, with four peak months and the other 4 regular months. Since people are more likely to enjoy music during the nice weather, we agreed that summer was an effective peak time period to target the audience. We will also reinforce our ads in December to capitalize on the holidays. During this time, we will promote our Family subscriptions as children might consider Spotify subscriptions as a great gift to their parents and vice versa. Except outdoors, TV and radio, magazines will be launched for eight months in both spot and national markets. Billboards will only be posted on peak months mainly for spot market. While the jukeboxes will only be placed in the selected spot market on November to generate buzz on non heavy up month. The singles will come out on Spotify on the peak summer months. Due to the fact that “The Voice� usually begins on March each year, the sponsorship will start at the same time when the show is broadcasted. 18
ROI MEDIA OBJECTIVES
Our campaign’s objective is to make Spotify resonate with our target market of middle-aged adults, measurable through recall of our advertisements without assistance and giving positive response to the brand’s creative messaging.
TRACKING PERFORMANCE
Spotify can track the progress with the two key indicators: paid subscriptions and unpaid usage. The paid subscriptions could be measured by change of number of users from our target audiences. The unpaid usage of Spotify could be measured through surveys which will be sent to the target before, during, after the campaign. The performance could be tracked by the change of attitude towards Spotify. The other indicators Spotify could refer are the number of listeners to the Spotify singles or the number of viewers to “The Voice” TV show.
BENCHMARKING/ MEASUREMENT
In our research, we discovered that in 2017, Spotify’s share of paid subscribers in the 40-55 age group (US only) was approximately 9%. As they already have 20 million current users in the total US demographic, we assume the number of current users in our target age group is 1.8 million. Since our goal is to increase the share of paid subscribers to 12%, this means adding an additional 600,000 users more by the end of our campaign. Assuming that every individual purchases a monthly $10 Premium subscription, the campaign would theoretically generate Spotify a gross amount of $72MM annually.
If our campaign is successful, Spotify will earn almost double of their investment of $25MM, which adds to $47MM. 19
ROI 2:1
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