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Songza raises $4.7M to scale new ad platform

Branded Moments allows brands to sponsor moments, and playlists, on the app

Financial trends and news by Steven Loeb
September 10, 2013 | Comments
Short URL: http://vator.tv/n/31de

I've recently started using Spotify Radio on my phone when I go on walks, and, man, that thing is a pain to use sometimes. The genre stations are painfully unspecific (there are many, many things that come to mind when choosing "rock," or "alternative" but I have no idea what I'm going to get) and all it does is show me what I've already listened to. I don't want to have to sit and think about what I want to listen to; I want it to just know.

Free streaming music service Songza does just that, and now it has raised $4.7 million in an equity financing round, it was announced Tuesday.

The investment came from a syndicate of investors, including Amazon.com, William Morris Endeavor, Lerer Ventures, Deep Fork Capital, Metamorphic Ventures, Troy Carter, Scooter Braun, Gary Vaynerchuk, Geoff Judge, Nicole Junkermann and others.

The round is a continuation of the $3.8 million that it was revealed that Songza had raised in an SEC filing earlier this year.  The company previously raised $2 million in financing in September 2011, from Deep Fork Capital, an unnamed strategic investor and Geoff Judge, co-founder of 24/7 Real Media, who also joined Songza’s board of directors.

The money will go toward scaling Songza's new advertising solution, called Branded Moments, as well as growing the sales team, Elias Roman, co-founder and CEO of Songza, told me in an interview.

 The company's new advertising solution is the bigger news than the fund raising, he told me.

Branded Moments

With Branded Moments, brands are able sponsor a life moment, such as working out, driving, or entertaining. They can them put their name on branded playlists and product advertisements.

For example, Taco Bell is one of the early adopters of the solution. So, when choosing what they are doing, users can click on events such as "drinking gourmet coffee," "falling back asleep," or "Getting Hyped with Taco Bell."

If the user clicks on the last option, they will get a choice of playlists that include, "Hyped All Day," "Your Own 80s Training Montage," or "Swag Triumphant."

Once they choose one of the options, they will see a commercial for Taco Bell, but then will not be subjected to another ad while listening to the playlist (Roman said he was "uncomfortable" interrupting what people are listening to to bother them with ads.)

What this advertising solution does is go beyond merely trying to sell a product to a consumer; it proves to them that this is a brand that knows them, and knows what they want. And that, in turn, sparks higher engagement, and believability, Roman said.

"Of course they are trying to sell Tacos, but, more importantly, they are able to prove that they know what their customers want," said Roman. "This is a great perk for our users."

In short, the brands become a native part of Songza, delivering their message in an entertaining way that does not take away from the overall experience of using the service.

Roman believes that this model could lead to a "massive shift in how advertising will be thought of going forward."

'Advertisements do not have to be a neccesary evil," he said. "They can drive messages that endear them to their customers without alienating them."

Other brands that are using solution include Nissan, Samsung, HSN, Victoria’s Secret PINK, Vitaminwater, Mr. Clean, and Colgate.

A bit about Songza

Songza, which officially launched in September 2011, is a cloud-based digital music service that allows users to create and share music playlists. It offers a Music Conceirge that will give users suggested playlists that are based on day and time, along with filters for mood. For example, since I am writing this on a Monday night, it has options for "unwinding," "studying (no lyrics)," "bedtime," and "love and romance." If I switch it to Wednesday afternoon the options include, "unwinding," "bedtime," and "studying (no lyrics)."

What separates Songza from other music streaming services, like Pandora and Spotify, is that they are "competing for listening hours."

"They are all very similar. Their product is music. People use them to hear music that sounds like music they like," said Roman.

Songza, on the other hand, tries to give people what they want, when they need it. Right now, they do that with music, but the company is “not about music, its about lifestyle enchancement."

"Music is a means to that end," Roman said, noting that he wants to do the same thing with other verticals, such as video and podcasts, the same way the company handles music right now.

The ultimate point of Songza is predicting what people will want, and when they will want it and then giving it to them without them having to ask for it.

Founded in 2010, the New York City-based company last reported that it had 4.7 million users per month, who listened to 70 million minutes per day. Songza has chosen not to release any new numbers.

The company also does not disclose revenue, but Roman did say that the company is "growing well," and that it had doubled its team in the last few months, hiring people in sales and native advertising.

In addition to its advertising revenue, the company also makes money from its recently released premium version, called Club Songza. It gives its users exclusive content, as well as no advertisements, and costs $3.99 a month, or 99 cents a week.

(Image source: http://songza.com)

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