Shazam finding it hard to monetise offering due to user retention
Shazam is having to think creatively to boost its advertising revenue, where the average user flow is 45 seconds. Using TV ads for brand placements with Shazamable songs and scannable tags as part of Visual Shazam, earlier this year Shazam launched "Shazam for Brands," which formalised advertising opportunities and includes predictive analytics to examine user behaviour. Previously, Shazam had partnered with Coca Cola for a campaign in which users were encouraged to lip-sync to a song, while a tie-in with Kung Fu Panda 3 was aimed at London commuters.

It takes a user just a few seconds to identify a song in Shazam, then leave, making monetisation of user flow tricky. To offer a more attractive buy to advertisers, the music recognition service is looking at new ways to retain user attention.

As an app which serves a very quick consumer need, Shazam faces a unique challenge in monetising its users. Now that AOL’s research has found video is going to be the biggest driver of revenue in 2016, Shazam’s head of programmatic Shane Keane discusses which video formats resonate with a rapid user flow.

Most of Shazam’s traffic comes from spontaneous usage, Keane said. The music discovery app has an average user flow of 45 seconds. This means getting advertisers on board, and consumers to watch video advertising, is “tricky”, Keane said.

The app has historically held back on an overload of advertising. Looking at the app now, it runs banner ads and an occasional ad while users wait for results. Yet since its business model relies on digital sales and advertising to keep it afloat, the company is exploring new ways to monetise its users.

The service is currently experimenting with short form video ad spots, similar in length to six-second Vines, that are created for mobile. Keane said advertisers have requested 60-second spots but “that is insane” with such a rapid user flow.

What’s more, while roughly 90 per cent of publishers say they get 25 per cent of their traffic from social referrals, Keane admitted Shazam is “not very advanced” on pushing users to its app or unique content via social means. The app serves a specific user need that doesn’t necessarily require social marketing. It’s call-to-action is music over a campaign.

In light of this, the company is playing to its expertise; putting brand placements on TV ads that have Shazamable songs, as well as launching ‘Visual Shazam’; scannable tags on in-store packaging, print and outdoor ads.

In March, Shazam teamed up with Coca Cola to give consumers the chance to scan the brand’s ‘Share a Coke and a Song’ cans and record a short ‘lip-sync’ video that could be shared on social.

The service has also been using beacon technology to allow users to examine nearby areas and get content based on what is surrounding them. These can be distributed at events to provide sponsors with a second screen, or even on transport (Shazam offered London commuters the chance to Shazam the trailer for Kung Fu Panda 3 via beacons on 200-plus buses in March).

To bring all of its offerings under one umbrella, Shazam launched an initiative called ‘Shazam for Brands’ in April, that formalises its ad opportunities and gives advertisers new ways to work with the service.

For example, Shazam can offer brands the chance to align themselves with potential up-and-coming artists by using its predictive analytics to determine which songs are likely to become popular in the near future. It can also measure “the effectiveness of a brand’s message through analysis of behavioral patterns,” the company said.