Spotify s Budget, Media Objectives & Plan July 6, 2015 MKG 420 Professor Eric Harvey Provided by: The Dream Team Taylor Booher Mackenzie McGilvrey

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1 Spotify s Budget, Media Objectives & Plan July 6, 2015 MKG 420 Professor Eric Harvey Provided by: The Dream Team Taylor Booher Mackenzie McGilvrey Renee Zgunda Jessica Sharkey

2 Table of Contents I. Budget 3 II. Media Objectives and Strategy 4 a. Target Audience 5 b. Reach/Frequency 5 c. Geographic Coverage 5 d. Creative Implications 6 e. Promotion Support 6 f. Trade Communication 6 g. Budget Limitation 7 III. Strategy Section 7 a. Media Mix 7 b. Scheduling 8 c. Weighting, Reach, and Frequency 8 IV. Media Tactics: Specific Vehicle Recommendation 9 a. Media Flow Chart 11 V. Works Cited 12 2

3 Budget Establishing the budget consisted of breaking it down into divided quarters so it is easier for the client to see. By dividing it into quarters, it is showing that the budget is more of a seasonality analysis. This was more rational then breaking it down into larger sums of money. Individuals want to see precisely what exactly each dollar is going towards in a campaign; no dollar should go unnoticed or untouched. So basically each percentage of the budget was based on 3% of the annual sales, and then divided by 4 for that quarter. Looking more closely into the breakdown of the media cost, one can tell that the area that is taken into more consideration than the others is online advertising. This is due to the fact that nowadays everything is connected through the Internet. Everywhere one may go, someone somewhere is accessing information via the Internet verses other advertising medias. It would be imprudent not to invest 20% of the budget into online advertising medias. When investing into the next step of the budget, publications were taken into more of a serious note. Looking at publications verses the other advertising media, Spotify realized that by investing more of a percentage into it than the other medias it would increase the awareness of the company. 17% of the budget is a better input of money towards this advertising. The next step in investing wisely towards the company was by promoting the company through events. By doing thus, it will get the company employees and customers more interaction between one another. 15% of the budget will go towards the company being able to promote events monthly to keep the brand awareness and moral up. This is huge when it comes to interaction between the clients and the company. Along with the events getting 15% of the budget, sales training has the same amount. Sales training is important for several reasons. If employees do not know how to give great customer 3

4 service or do not know the proper information they could impair how customers think and feel about Spotify as a whole. Having the proper amount of training and sufficient amount of funds towards training employees will give Spotify a better work environment. Promotions to get customers interacting with the cliental will promote a better sense of interaction to get customers interested in the company. Promotions do not necessarily need a big portion of the budget. Promotions only need 13% of the budget, enough to give away benefits to customers each month but not blow the budget. Magazines are still widely read and bought on day-to-day biases. By investing into magazines Spotify can widen the target market, which is why it only needs 12% of the budget. Last but not least on the budget is print advertising. Print advertising is the least of the worries for Spotify. Everything is on electronics nowadays that billboards and posters are becoming a thing of the past. Investing only 8% of the budget is needed due to the fact that the largest sum of the budget is going towards online advertising. Overall, all of these costs within the budget are going based off of a national cost. Since Spotify is all around the world, and seen in every country and state, it would be very impractical to base the budget off of a regional budget. National budgets allow the company to expand vastly within big divisions, whereas regional costs only give budgets to certain areas and constrict the budget down to smaller allowances. The seasonality of all of this allows the budget to have room to grow and gives the company areas to stretch its dollar in. Media Objectives and Strategy Spotify would like to broaden and increase their social media activity. We would like to increase our activity through social media and other Internet sites by 30% in hopes of increasing sales. To 4

5 measure our change, we will increase our presence and measure the differences from last quarter to this quarter. Target Audience: Men and women who are avid music listeners On-the-go and active users Music listeners who prefer to create unique playlists Music listeners who prefer to search artists, songs, albums, etc. Listeners who want advertisement-free music Users who are highly knowledgeable with technology and music Reach/Frequency Reach versus Frequency is a heated debate. Without a large enough reach, a company may not have a large enough frequency. Reach is considered to be how many people, within your target market, that may be exposed to your message. Knowing Spotify s advertising tactics and goals, we believe effective frequency is more important than reach. Effective frequency is the average number of times a person must see or hear a message before it becomes effective. Effective frequency would help Spotify gain more users, because listeners would register the message. Effective frequency would create more awareness, comprehension, and potentially actions. Geographic Coverage Spotify has the largest geographic market. Spotify leads the international music streaming market. The service is available in 58 countries around the world. Competitors, Pandora is only available in four and iheart Media is also only available in a select geographic areas. Focusing more on the United States, there should be more emphasis and advertisements placed within the Midwest and Western plains regions. These areas lack awareness of the service. These areas are considered laggards because the East, West, and Southern coasts have 5

6 all been previously introduced to the service. The heavily populated coasts use the service more because they ve been exposed to it more than the middle of the country. Creative Implications When selecting media channels, creative strategy with creative ideas could potentially create implications. An issue that comes with creative ideas is whether these unique ideas effectively market and advertise a product or service. To play devil s advocate, a copy platform may not be as eye-catching either. Creative strategies may limit a company to using only one media outlet, because other media channels are unable to function with the distinctive strategy. Promotion Support Sales and event promotions will need media support. Since our service is a computer application, our users are known to be technologically savvy. Therefore, our current users and future users often hear about promotional efforts and news via online services and social media. With the millennial generation relying heavily upon social media, most of our promotions will be generated through those outlets. Whether it is an updated blast/blog or a tweet linking a URL to our news page, Spotify is taking advantage of these social media outputs. Trade Communication Trade consumers would help benefit our efforts in developing awareness. Trade promotions are used to help large companies distinguish and differentiate their services or product(s). These promotions increase product purchase rate and product visibility. If Spotify created relationships with trade consumers, we could help build our brand. These associations would help highlight our core competencies and strengths. 6

7 Budget Limitation Strategy Section Media Mix Of the five M s in a media strategy, Spotify would like to put forth more attention to the mechanics and methodology of our media mix. Spotify s primary media would be information used and printed from Spotify s resources. Spotify s secondary media would be information used and printed by their partnerships or compatible companies. For our future media mix, Spotify would like to use Internet services and new social media platforms. Creating new partnerships and promotions with other Internet services would help Spotify gain more active users. If Spotify were to partner with more collegiate online services, we could offer our premium package to college students at a discounted price. With this said, Spotify could also use new social platforms to promote this deal. 7

8 Scheduling We at Spotify believe that a continuous schedule pattern would be best for this campaign. We feel as though it is important to reach our users continuously instead of sporadically. Because this is something that is consumed at all times and not just during certain periods or peak seasons, we believe that advertising should be done on all levels at all times. This is also a great way to build continuity and give our users and potential users a sense of permanence when dealing with Spotify. We need to consider that we want to make a large impression upon students; therefore, it is important to focus a lot of advertising with radio stations and other forms of media around college towns. This will allow us to reach our maximum target market at one time and at a relevant time for this service. Because Spotify has relevance during all times of the year, we have not yet determined how long we will run this campaign. Because welcome week, along with times such as midterms are important for music streaming, we want to make sure that this campaign is at least existent during those times. If this is successful, we will then consider continuing until around finals time. Weighting, Reach and Frequency As far as geographic markets go, as stated previously, Spotify would like to focus on towns and cities that have a large college-age and student population. Because this campaign primarily focuses on this age, we think that it would be best to focus our efforts around college towns that will yield the best results with our target market. For example, towns like Bloomington, IN, Muncie, IN, and West Lafayette, IN will have a heavily weighted campaign focus. We would want to center our efforts around campus radio stations and campus events to also show that Spotify supports their school. 8

9 The months that need to be heavy-up would be November and December, as well as May and June. These are the months when students rely on streaming music to get them through studying for finals and release them into the freedom that is summer. This is the time when a lot of students are willing to try new services and would be willing to pay a few extra dollars so that they don t have to listen to advertisements while studying. We would like our R/F to be consistently at 160 GRPs the entire campaign in total. That is considering all of our College towns and the radio stations we plan on running the campaign with. Media Tactics It is essential when advertising to directly focus on appealing to the target audience. The effectiveness of marketing begins with the core message portrayed to potential consumers, but a message must be properly cycled to ensure the consumer is reached. This is pertinent for the success of the marketing efforts throughout every step of media planning from choosing medium to selecting media vehicles to picking time slots, frequency, etc. In essence, the core consumer should be at the heart of all efforts in the marketing process. Based on the target audience of college students, the time frame is indicative of the start of each college semester. The emphasis on the media flow is the first three months surrounding each semester. Therefore, media will be increased during July, August, and September then decreased to less coverage during October, November, and December. Similarly, media will be increased during January, February, and March then decreased to less coverage during April, May, and June. The three main mediums selected include television, print, and digital: Television ESPN and Hulu College-aged males are intensively involved in sports and entertainment. An effective way to reach this demographic is through advertisements on ESPN. Ranking in the top five most 9

10 watched television channels, ESPN constantly has heavy traffic due to the variation of sports seasons year-round. The second television media vehicle is Hulu. One aspect of Hulu that makes it extremely desirable for advertising is the cross-platform capabilities. Hulu can be accessed on desktops, laptops, tablets, cell phones, etc. It is extremely versatile and therefore access by the consumer is virtually unlimited. This in turn allows for greater advertising potential as opposed to advertising on a specified television channel. Additionally, Hulu utilizes research technology to determine the average audience for the shows offered and is able to segment and target different demographics based on their customer profiles. This allows Spotify to get the most out of its marketing expenditures by specifically gearing advertisements toward college-aged users. Print Cosmopolitan and Game Informer For both magazines, 4C 1/3-page advertisements were chosen to effectively utilize the marketing budget while also allowing for a visually appealing ad with color. Game Informer is consistently ranked in the top 5 among most popular and best selling magazines with a total reach of over 30 million. The different psychographics of this consumer as compared to an ESPN consumer will allow saturation into multiple subcategories of the college student demographic. 84% of Game Informer subscribers are male, and 17% of those males are ages 18-24, which fall into the target audience of Spotify s marketing campaign. On the other hand, Cosmopolitan enables reach to the female portion of the target audience. Cosmopolitan is ranked among the top 10 US women s magazines. Of the nearly 17 million subscribers, over 25% are ages 18-24, predominantly comprised of women. Furthermore, each magazine is read by an average of 5 people, exponentially increasing reach. Digital Facebook and Twitter 10

11 The millennial generation is known for extensive, and ever-growing, utilization of social media and digital platforms. In targeting this demographic, it is essential for companies to take this piece into consideration and incorporate it into media plans. Social media is the main form of communication for college students and Spotify will capitalize on this communication tool. The wonderful part of advertising on platforms such as Facebook and Twitter is the low-cost. This allows for year-round advertising, which ensures constant exposure of the brand. Facebook was chosen due to the advanced technologies with Facebook analytics that allows specific targeting to the demographic of the marketer s choosing. This will allow the marketing message to be directed to the target audience. Similarly, Twitter has analytics that allow for segmented targeting to consumers. Even more so, Twitter is heavily dominated by the millennial generation with over 25% of total users falling between 18 and 24. Media Flow Chart 11

12 Works Cited Cosmopolitan Media Kit Fun Fearless Female. Cosmopolitan Media Kit. N.p., n.d. Web. 06 July code=demo&category_id=77109 MISSION. Hulu Advertising. N.p., n.d. Web. 06 July Most Popular Magazines: Best- Selling Magazines. Top 25 Best- Selling & Most Popular Magazine Subscriptions. N.p., n.d. Web. 06 July magazines/ Network Demographics Choose A Popular Network Below. Network Demographics Choose a Popular Network Below. N.p., n.d. Web. 06 July networks President and CEO. Aircraft Engineering and Aerospace Technology Aircraft Eng & Aerospace Tech 74.2 (2002): n. pag. Web. _non- endemic_july.pdf 12