The advert mimicked a horror film and showed young people being menaced by a scary doll when they played a particular song.
In its ruling, the Advertising Standards Authority (ASA) said the setting and events were "particularly likely" to scare younger viewers.
Spotify has been told to make sure its future adverts are fit for children to watch and are targeted appropriately.
In a statement, Spotify said: "We acknowledge the ruling from the ASA and regret any distress the ad may have caused the complainant."
