Apple Music attracts new advertising dollars to streaming music: report
As the free trial period ends this week for the first Apple Music subscribers, the streaming service is attracting big brand advertisers, some that have not been in this space before, according to a new report from Xappmedia.
The report, Apple Music Ad Load Report, shows that Apple continued with ad-supported listening after the launch of the Apple Music subscription service and actually increased the ad load despite industry conjecture that the company was dropping its ad-supported model. The key point of difference with other services is that Apple relies much more heavily on ads from artists than its competitors, although about half of revenue is also coming national brands.
?The Internet radio advertising market is growing rapidly and eMarketer suggests it will reach $2.9 billion this year in the U.S.,? said Bret Kinsella, chief marketing officer at Xappmedia. ?That is up from a little over $2 billion last year if we consider estimates from BIA/Kelsey.
?At the same time, our Internet Radio Ad Load Report data show that advertiser diversity is increasing across the industry and we see some advertisers on Apple Music such as Macy's and MasterCard that do not currently show up in other streaming services,? he said. ?So it looks like most Apple Music advertising represents net-new revenue.
?To a certain extent all advertising channels compete for advertising dollars, but the data suggests that Apple is attracting new ad dollars and not taking anything away from other streaming apps.?
Ad-supported listening
It is not surprising that Apple continues to bet on advertising to support its streaming service, with just 5 percent of listeners across services typically ponying up for a subscription, according to Nielsen data cited in the report.
The report forecasts that about half of Apple Music?s 15 million users will start hearing ads this week when their free trial expires while others will start paying a $9.99 monthly bill.
Xappmedia tracked the ad load on iTunes Radio six months prior to the launch of Apple Music and compared this with data from the first two months of the new service.
One key finding was that the ad load time on iTunes immediately before the launch of Apple Music was significantly higher than previously and that this higher ad load time continued, and increased slightly, after Apple Music?s launch.
The higher ad load times are on par with the industry.
Artists vs. brands
The ramp up in advertising in the second and third quarters included the addition of a number of big name national advertisers.
The advertising on Apple Music is different from other streaming services in that 49 percent of advertisers are recording artists or labels, compared to 7.7 percent 0.9 percent, respectively, for the two other services with the highest proportion of musicians as advertisers.
The prevalence of artist advertisers on Apple Music could be driven by the tight integration with the iTunes store.
In terms of commercial advertisers on Apple Music, only national advertisers are represented. No local advertisers are present.
?Apple has a large, affluent iOS audience that leading brands want to access,? Mr. Kinsella said. ?As a result, Apple never has trouble engaging big name advertisers in its projects.
?McDonald's, Nissan, P&G and Pepsi were all part of the iTunes Radio launch two years ago and we still see them today,? he said. ?Others such as MasterCard, Progressive Insurance, Macy's and Starbucks were also onboard prior to and after the Apple Music launch.?
Final Take
Chantal Tode is senior editor on Mobile Marketer, New York
