Joox: We don't believe in conversion through audio ads

While Spotify and its partners, such as The Trade Desk, plug the power of audio ads as they "deliver close to 100 percent listenability” and allow a "full sonic palette at your disposal to tell stories", audio ads are not even on the list of tactics Tencent-owned Joox encourages its advertisers to consider.

We spoke with Poshu Yeung (pictured below), VP of the International Business Group at Tencent, which owns Joox.

Please explain your monetisation model for Joox?

Our core business model is ad-driven.

We spent the first 12 months of our launch [Joox launched in Hong Kong in December 2014, Malaysia in June 2015, Indonesia in October 2015 and Thailand in January 2016] working on user experience and boosting user numbers. Now, we are customising campaigns for clients with the right balance between user experience and advertising.

Apart from revenue from ads, we’re growing revenue from paid subscriptions online, top-up cards at major convenience stores offline, and other means, such as telco collaboration.

Subscription rates are however super low, probably less than 5%. We are still working on getting users to pay for legal music. In China, where our sister product QQ Music has exclusive music licenses, this process is not so difficult. Outside China, the process is more difficult because consumers are not used to paying for music, especially in Southeast Asian markets, plus lower credit-card penetration in those markets makes paying harder.

A lot of work is still required for effective monetisation across all Asian markets.

In the early days, how did you build awareness for Joox?

We ran a lot of promotions on Facebook and Wechat, particularly in Hong Kong and Malaysia.

In Thailand and Indonesia we used TVCs to ensure a high-impact, explosive entry into the markets.

A key part of our success was to be very local. In Hong Kong, we organised eight concerts branded under the Joox banner which were structured for VIPs only. This ensured that users had to become VIPs - a process that drove subscriptions. Soda Green's concert during November 2016 in Hong Kong was sold out in 11 minutes.

What is your main focus when it comes to advertising formats?

We work on splash ads, banner ads and campaign-style ad solutions for clients.

For example, with Tim Tam [pictured above], our recent campaign featured Hong Kong Cantopop duo Shine doing live-streaming events from a branded mobile van in high-traffic areas in Hong Kong, such as Causeway Bay and Mongkok, along with H5 pages. This is a great example of a campaign-style ad solution that combines online with offline elements.

Also, working with Coach designers, we created a branded ‘skin’ [pictured below] that can be downloaded by users as a backdrop to customise their mobile devices while playing music on Joox. 

We now have dozens of clients, including Cartier, Dior, Fendi, KFC, FWD, Coca Cola, Oppo, who all use Joox to target the 15- to 35-year-old age group. The only specific difference between campaigns is normally gender, as is the case for Fendi, which wants to reach a female-only audience.

We are now talking to media agencies to explain the success of our campaigns. For example, splash ad CTRs [clickthrough rates] have been very high at more than 10 percent [on average]. We’ve checked these CTRs very carefully and compared notes with our partners, and we’ve found that Joox has more valid clicks than other platforms.

Splash ads make a bold statement and are very popular in Hong Kong; 10 percent of our audience see the entire splash stream, but we cap splashes at one per day per user.

However, we don’t want to encourage advertisers to do just splash ads or banner ads, because a campaign-style approach including offline activities is more effective.

Our video ads have also seen some great performance figures: 50 percent click-through rates on Joox, whereas normal rates are around 5 percent. For example, during CLP Power's campaign, the client ran two rounds of video ads with Joox, which converted a significant number of users to sign up for a subscription. 

This seems like a different strategy from Spotify, which requires users to listen to audio ads during free music.

Yes. We don’t want to take the same approach as Spotify. 

Users of the free version of Joox hear our house ads outlining features of the service. But that is all. We don’t believe in conversion with traditional audio ads. We instead use more interactive ad formats, described before.

Do users instinctively expect audio ads?

Well, they are listening to music so they may have some expectations of hearing audio ads, but we have to consider how to sell to them in the best way.

You really can’t measure the performance of audio ads. We do offer audio ads, but we tell our clients that we can’t provide good report results.

Since Joox users usually click on our app (99% of our users use the app vs the browser) several times when choosing songs before they go into full audio mode, we know that there are many 'eyeball touchpoints' on the screen for our video ads to work.

Are video ads a good direction, given how fiercely competitive the video space is?

The audio environment is more passive than video. There is a lot of opportunity to convert users into consumers for our clients with in-app video. It's also 100 percent effective. We don’t have the same trouble measuring ad effectiveness that other apps face. In our case, each video ad is 30 seconds long and non-skippable. Because you can’t skip it, so we count 100 percent complete viewability all the time.

One key driver of user behaviour is: if users do not finish viewing a video ad, they cannot get VIP status, after which they listen and download songs for free. This is a universal attraction of our freemium model.

What is your strategy for programmatic audio?

‘Programmatic’ is really just a buzzword. Programmatic advertising is cheaper and technically easier to deliver, but produces low engagement and low CTRs. It may be at a lower cost, but you get what you pay for. Programmatic advertising only works for building awareness.

As I mentioned earlier, Joox emphasises a localised campaign style, including offline interaction for better consumer engagement. This approach also often generates media coverage which makes clients even happier.

And for Hong Kong in particular, the market is best suited to broad-based advertising without segmentation, as the audience is too small here.

Why was QQ Music, also a music-streamer brand under Tencent, not expanded outside China into other parts of Asia?

It was a simple business decision. China is a very competitive market and to win big, we must have intensive focus. If we had different teams for domestic and international markets at QQ Music, the international team might have had lower priority. The markets are also different in terms of music licensing, legal requirements and online payments.

Keeping it separate with Joox pushed in markets outside China just made sense.