Spotify‘s Discordant Week: Wrapped Highs to Layoff Lows
Introduction
It was the best of times, it was the worst of times. At least, that‘s how things must have felt at Spotify HQ this past week. The streaming giant went from basking in the glow of its uber-successful Wrapped campaign to facing withering criticism for making major layoffs. Talk about a record-scratch moment.
This jarring juxtaposition of events offers a cautionary tale about the perils of misaligning your internal and external marketing. Let‘s dive into what happened at Spotify and what other brands can learn from it.
Wrapped Delivers the Goods Again
First, the good news. Spotify Wrapped 2023 was a smash hit, continuing the annual tradition of giving users a personalized, shareable look back at their year in music. The Wrapped campaign has become a staple of the holiday season, with people eagerly awaiting their results and flooding social media with the colorful graphics.
Since its debut in 2016, Wrapped has grown bigger and more engaging each year. What started as a simple year-end email to users has evolved into an immersive in-app experience chock full of eye-catching visuals and data points.
The 2021 Wrapped campaign saw record engagement, with more than 120 million users participating. Spotify was able to build on that momentum in 2022, attracting 156 million users to Wrapped, a 30% increase year-over-year. Even more impressively, Spotify estimates that over half of those users (78 million+) shared Wrapped content on social media.
That level of organic reach and earned media is a marketer‘s dream. Spotify users are essentially doing the heavy lifting of evangelizing the brand to their followers. It‘s the ultimate reflection of how culturally relevant Wrapped has become.
Wrapped doesn‘t just drive massive engagement for Spotify, it also provides tons of valuable first-party data. The listening insights and user segments gleaned from the campaign inform Spotify‘s product development and future marketing throughout the year. It‘s the gift that keeps on giving.
Creating a juggernaut like Wrapped is no small feat. While Spotify hasn‘t disclosed the size of its Wrapped budget or team, it‘s safe to say it represents a significant portion of the company‘s marketing resources each year.
The pressure is high to top the previous year‘s Wrapped and find fresh ways to package user data into a delightful experience. It takes an incredible amount of coordination and effort across design, engineering, data, product, and marketing teams to pull off.
Spotify‘s employees, particularly its marketers, deservedly basked in the positive press and social media buzz in the days following Wrapped‘s 2023 launch. Surely all that hard work had paid off and was appreciated by Spotify‘s higher-ups, right?
Record Scratch: Layoffs Sour the Mood
Just four days after Wrapped dropped, Spotify abruptly announced it was laying off 6% of its workforce, or about 1,500 employees. Talk about a record scratch.
The juxtaposition of the layoff news with the Wrapped celebration was jarring, to say the least. While Spotify tried to justify the cuts as a necessary step to control costs and speed up decision-making, the delivery and timing of the news made the company look shockingly tone-deaf.
As it turns out, this was the third round of layoffs at Spotify in 2023, following cuts in January and June that slashed hundreds of jobs. Coming right on the heels of Wrapped, the optics of this latest round of layoffs were especially dismal.
Many saw it as a slap in the face to Spotify‘s marketers and other employees who had just delivered a massively successful campaign. Wrapped‘s glow dimmed awfully quick in the harsh light of the layoff news.
It didn‘t help matters that Spotify had just reported its first quarterly profit of 2023 after a year of losses, posting €56 million in operating income on €3.7 billion in revenue in Q3. While profitability is always welcome news, some questioned why layoffs were necessary when the company had just turned the corner financially.
Even more damning was Spotify‘s choice to announce the layoffs in early December. Cutting jobs during the holidays, when budgets are tight and spirits are supposed to be bright, is never a good look. Many called out Spotify for acting like a corporate Scrooge.
The news sent Spotify employees reeling, with many taking to Twitter and anonymous workplace chat app Blind to express their shock, sadness, and frustration. It‘s hard to stay motivated when you don‘t know if your job is safe or feel like your hard work is disposable to management.
Social media sentiment around Spotify quickly shifted from overwhelmingly positive during Wrapped‘s launch to decidedly negative after the layoffs. According to social listening data, mentions of Spotify with the key word "layoffs" spiked 73% in the week after the announcement compared to the previous week.
Spotify Squanders Wrapped Momentum
Beyond the initial backlash, Spotify‘s bungled layoffs could have a long-lasting negative impact on its employer brand and internal morale. What should have been a shining moment for Spotify‘s marketing team and a springboard into 2024 planning instead became a gut punch.
It‘s hard to imagine Spotify employees feeling very appreciated or motivated after seeing their coworkers dismissed so unceremoniously. The marketers behind Wrapped in particular may feel like their work was exploited or taken for granted.
Creating and executing a campaign as massive as Wrapped each year requires an enormous amount of coordination and buy-in across multiple teams at Spotify. The layoffs likely disrupted workflows and made it harder to build on Wrapped‘s momentum.
Even if all the marketers behind Wrapped kept their jobs, they may think twice about going the extra mile when the next big campaign rolls around. Employees who evangelize a brand as big as Spotify are incredibly valuable, and alienating them so soon after a big win really stings.
There‘s a real risk that the Wrapped layoff debacle could dent future participation and engagement around the campaign. After all, employees can‘t be blamed for feeling hesitant to put their whole hearts into marketing when the rug could be pulled out from under them at any moment.
A Cautionary Branding Tale
Spotify‘s self-inflicted Wrapped wounds hold important lessons for any brand or marketing team. Chief among them is the importance of aligning your internal and external messaging.
You can‘t build campaigns that rely on employee participation and then lay people off with little warning or sensitivity. People who feel betrayed by a company are not likely to stay quiet in this era of social media transparency.
Brands must be very mindful of how employee treatment impacts perception. A LinkedIn poll found that 87% of respondents said a company‘s reputation as an employer influenced their purchasing decisions. Another study by Cone Communications found that 76% of consumers would boycott a brand if they learned of irresponsible or deceptive business practices.
Marketing can‘t just be outward facing. It also has to turn inward and treat employee engagement as a vital campaign. As the Edelman Trust Barometer consistently finds, employees are viewed as the most credible source of information about a company. Their voices carry tremendous weight.
Spotify‘s decision to lay off workers during the holidays and so quickly on the heels of Wrapped‘s launch made the move feel colder and more callous. Timing and sensitivity matter immensely with delivering bad news.
Brands that want to avoid the kind of whiplash Spotify induced should plan layoff announcements very carefully. Be transparent about the reasons for the cuts and show genuine care for departing employees through fair severance and job search support. And don‘t make cuts during times of peak cultural marketing activity if you can avoid it.
The Road Ahead for Spotify
So where does Spotify go from here? The company has a lot of work to do to address the concerns raised by its handling of the layoffs and rebuild trust with employees and users.
Some immediate steps Spotify could take include:
- Offering more detailed explanations of the business case for the layoffs
- Committing to no further layoffs in 2024
- Investing in more internal marketing and employee recognition programs
- Soliciting and acting on feedback from remaining employees
- Finding ways to show genuine appreciation for Wrapped‘s success and participants
- Retaining all remaining members of the Wrapped marketing team
Longer term, Spotify will need to prove its corporate values through action and policy, not just slogans. More progressive family leave, time off, and wellness offerings could help renew employee faith. Transparent and frequent communication from company leadership is also essential.
As for Wrapped 2024, all eyes will be on Spotify to see if the campaign can maintain its momentum without the full force of employee evangelism behind it. No doubt some of the staff who poured their hearts into Wrapped content are now questioning if that work is truly valued.
Still, Wrapped has become such a cultural behemoth that Spotify likely won‘t abandon it any time soon. The challenge will be finding ways to keep making Wrapped feel fresh and culturally relevant when internal morale is bruised.
If Spotify can learn from its 2023 stumbles and re-earn employee trust, it just might have a redemption arc to share in its own Wrapped story. Here‘s hoping the company takes this opportunity to put the groove back in its marketing moves, inside and out.
