The latest battle in the war to reign as the top global tech company has digital giants Google, Apple, Microsoft and Amazon each striving to stake a claim in the smart speaker space. While these behemoths continue to lead innovations in retail, home delivery, online shopping, and much more, the recent trend of smart speakers pits them directly against each other in the race to ultimately lead in the advancement of the Internet of things.
At The Ward Group, we recognize the rise of smart speaker technology as a new method of paid media placement and predict shifts in consumer shopping behavior. What is still unknown is the role of advertising on these devices and what form it will take in the future.
Current State
So, let's meet the contenders. Apple has the Siri-enabled HomePod, Microsoft Cortana is on the Invoke speaker, Alexa from Amazon on the Echo, and the Google Assistant. Echo was the only smart speaker in the market for almost two years before a competitor entered, and it maintains the lion's share of the market for now. Although user adoption of smart speakers is still at its early stages, it is expected to be the fastest-growing consumer technology of 2018 in the United States, with analysts estimating 56.3 million smart speakers being sold.
As developers continue to perfect the technology, the focus currently is on improving user experience, with voice detection accuracy and ability to correctly respond among the top priorities. In recent research from Loup Ventures, Google Assistant outperformed the others with 81% accuracy, leaving Alexa and Cortana behind at 64% and 57% accuracy respectively. Siri came in last with only 52% accuracy. "Siri, I said, 'Where is Timbuktu?' not 'Where is Tim's other shoe?'"
Beyond user experience, you can expect these tech giants to put a lot of effort into increasing adoption and fostering trust in these devices. There is already some level of trust established with these Intelligent Assistants (IAs), with 21% of US adults trusting the IAs with “complex” e-commerce tasks. While on the outside this appears to be a great opportunity for brands, there are still limitations on advertising.
As it currently stands, there are no paid media placement options on smart speakers, with Amazon banning traditional ads on their devices and having “no plans” to change that policy. That being said, Amazon is exploring ways to generate advertising revenue from the platform. One possibility is promoted search results where companies could pay to have their products prioritized when a user searches for an item by voice. Another approach might be product suggestions based on prior shopping behavior or in response to general requests, such as how to clean a stain. The technology is still in its infancy, so much remains to be seen on how advertising will have an impact. For now, the main use for brands is through voice apps such as Alexa Skills or Google Actions that can perform brand-specific
actions using voice commands through the IAs.
Looking Forward and Our Thoughts
In studying the rise of the smart speaker, the main takeaway is not how it can currently affect your paid media placement plan. Instead, it’s the phenomenon of a new method of media consumption and how it will change the way brands interact with consumers. The most immediate consideration for brands should be when to shift from mobile-first web design to voice-first design as more and more screens transition into speakers.
There are no barriers to who can use smart speakers; as long as a person can talk out loud, they can use the devices. The speakers will provide a new touchpoint in the consumer journey and will cut down time spent with other mediums. According to Edison, 34% of current smart speaker owners say they spend less time with smartphones. As the technology develops, that number is bound to increase as the visual web shifts more to the audio web.
Two major marketing aspects that we see being directly impacted in the short-term are data collection and consumer shopping behavior. Consumer data collection is a hot topic currently, but the development of smart speaker technology will only expand that practice. Smart speakers are constantly listening for verbal cues, and in the process are gathering data points on consumers that were not possible before; likes, dislikes, what times of day they're gone from home, etc. This new collected data will allow brands to learn about their target audience like never before and open up channels of communication for brands that are still yet to be determined.
This advancing technology will also affect how consumers shop for and research products and services. Today, we’re accustomed to consumers going to Google or Amazon on a device to search, seeing an ad, and clicking through to purchase, with many opportunities to be influenced by multiple brands along the way. Smart speakers toss that out the window. Shoppers can simply speak aloud, call out a specific brand or product and obtain information or make purchases audibly without the clutter of competing ads interfering. In fact, some experts predict that by 2020, 30% of all web browsing will be done without a screen. Visual ads will take a backseat to more audio-dominated methods.
Businesses will need to optimize their SEO to account for voice search with more conversational, long-tail phrases on their websites. And branding will have a new level of prioritization as consumers make brand-specific voice searches that eliminate the possibility of being served competitive ads alongside their results. Additionally, the idea of a “brand persona” will become a new and important strategy for brands to develop. Similar to Siri & Alexa, the brand persona will evolve the brand into an interactive companion to the consumer.
Both of these predicted outcomes of smart speakers just scratch the surface of the opportunities that can and will ultimately come from this new technology. We look forward to adapting to the changes in the paid media placement landscape caused by smart speakers and innovating new ways for our clients to utilize these devices and the technology behind them.