Spotify is currently testing the Active Media feature in Australia, where it lets non-paying users skip as many video and audio ads as they want.
The company stated that its consumers will only skip ads they do not care about. This will give Spotify an inkling on what ads they listen to how to better target them. Currently, the non-paying users cannot skip the ads.
Danielle Lee, Spotify global head of partner solutions, said that the move is similar to Spotify's "Discover Weekly" feature, which tailors a personalized playlist that is fit for the user's listening habits.
Lee added that the company can use it to significantly improve its streaming intelligence and deliver a more effective and engaging experience to its advertisers. It also hopes to raise the outcomes it delivers to brands.
Furthermore, the scheme is also designed to deliver a blow to Pandora, Spotify's biggest rival, to dominate the astounding $1.6 billion digital audio advertising market.
Just last month, Spotify pulled its ad inventory from the AdsWizz, a digital audio ad tech platform bought by Pandora last May for $145 million. According to Lee, the company ended its partnership to uphold its competitive differentiation.
Additionally, the famous music app is betting its ad revenue on the move. With the new active media feature, advertisers would not have to pay for the ads that will be skipped by the users.
Although it only began testing the feature out in Australia last month, Lee confirmed that the company hopes to roll it out globally.
Sam Kang, vice president of media and acquisitions at Dollar Shave Club, stated that the company has been increasing its ad spending in Spotify and considers it as one of its most important marketing pillars.
Furthermore, he said that he was unaware of Spotify's latest efforts to change their ad scheme but as an advertiser and a user, he loves the idea.
Spotify has reported in July that during the second quarter, it had 180 million active users, including more than 101 million ad-supported users in 65 markets across the globe. Its ad revenue totaled to a staggering $158 million.
Despite this, Spotify's path to ads still has a long way to go. The Share of Ear analyzed how long users listen to different platforms and reported that the time spent by listeners on Pandora's ad-supported offer is about double the size of Spotify's.