Spotify has launched an in-house music consultancy called Aux that will guide brands on how to use music in advertising and pair them with musicians.
Aux offers brands a new way to reach the hundreds of millions of people who stream music, while giving emerging talent new monetization options and creating a new revenue stream for Spotify’s ad business.
It will work directly with brands, either through ongoing partnerships or on one-off projects, said Emma Vaughn, global head of advertising business development and partnerships at Spotify.
“We have a short-term project with a client that’s currently in progress, but we’re already having discussions of what an extension of that could look like,” Vaughn said. “A lot of times we hope that we create a music strategy that can umbrella into bigger opportunities.”
Aux debuts with Coca-Cola as one of its first clients, having helped the brand form a partnership with DJ and singer-songwriter Peggy Gou. It also built a recording studio in Spotify’s LA office where artists will come to record music and collaborate with the brand.
Joshua Burke, global head of music and culture marketing at The Coca-Cola Company, said: “This is a natural progression of our long-standing partnership with Spotify. We are excited to launch Coke Studio at Spotify LA, which will provide recording support for emerging artists and a platform to promote their music.”
Aux will provide various music-related services depending on a brand’s needs, including recommendations for reaching specific demographics in different parts of the world. Vaughn declined to name other clients Aux is working with.
She said that consumers will start to see Aux’s work in the next couple of months.
For clients, rates will vary depending on the length of the partnership and services offered. She declined to disclose what Coca-Cola paid for its recent campaign.
Brands will measure the success of working with Aux depending on what they are hoping to get out of using music, but the consultancy will offer ways to track a brand’s association with music genres, conversions to sales and social impressions, Vaughn said.
Aux will contribute to Spotify’s ad revenue, which reached an all-time high of around $538 million for Q4.
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“It’s the perfect time to leverage our strongest assets and drive a new revenue stream,” Vaughn said.
Throughout 2023, Spotify made three major rounds of layoffs, most recently letting go of more than 1,500 employees, or 17 per cent of its workforce, in December.
Aux launches as music takes on an integral role in marketing on platforms like TikTok. In early February, Universal Music Group pulled its catalog of music from TikTok after both parties failed to reach a new licensing agreement. Advertisers told Campaign US that the removal could hit user engagement, in turn forcing them to reduce or pause their budgets on the platform.
In Q4, Spotify reported 236 million premium subscribers, up 15 per cent YoY, and 602 million monthly active users, up 23 per cent YoY.
This article first appeared in Campaign UK
