The wild frontier of smart speakers is fraught with risk and reward

More and more people are turning to home voice assistants to do everything from answering their phones to placing online shopping orders and providing diversions such as trivia games. Major tech companies are pioneering in the field, but Amazon’s Echo smart speakers are dominating with about 70 percent of the market, according to eMarketer. Unit sales could top 10 million this year, Digitimes, an Asian tech publication, reported in June, citing unnamed sources.

Like Apple’s HomePod, Google Home, and, more recently, Line’s Clova, Amazon’s Alexa, the brains behind Echo, is a software agent that uses facets of artificial intelligence (AI) such as natural language processing and machine learning. The technology can directly boost interactions and sales: one study found that buying occasions increased 6 percent and spending 10 percent with Echo.

Amazon has high expectations for these smart speakers as the next step in human-computer interaction; on its Alexa Machine Learning recruiting page, where over 200 positions are available, it says it goal is “to make voice interfaces ubiquitous and as natural as speaking to a human.” There are already more than 10,000 Alexa skills, or apps, and Amazon’s ad guidelines allow audio messaging promotions under certain conditions.  

A bad first impression

Smart speakers are one example of the connected home, and advertisers are keen to use them as a new channel for brand content. After all, these platforms can vault them directly into consumers’ homes and online accounts. But just how to do that is far from clear, and there have been missteps. Burger King’s controversial 15-second Whopper spot, in which an actor said, “OK Google, what is the Whopper burger?” triggered Google’s voice assistant service—as well as a spate of hacks to the Wikipedia page that viewers’ devices would read out. A group of Reddit users, meanwhile, noted that Google Home was serving up an unsolicited ad for the latest Beauty and the Beast film after reading out search results. These stunts showed how easily advertisers can place themselves in these home services but they also rubbed some people the wrong way.

“Because home assistants sit right in your living room and engage interactively with the users and all the other family members who are present in the room cannot avoid hearing the dialogue, they are literally a captive audience,” says Ko Fujii, representative director and CEO of Tokyo-based public affairs consultancy Makaira, which focuses on innovation and technology. “Moreover, in an interactive audio-dialogue with an AI, it can become hard to distinguish which part of the AI's speech is advertising and which part is a simple neutral response to the user's question.”

For example, if a connected refrigerator recommends you buy salad dressing, how would you know whether it’s doing that based on an unbiased inventory of its contents, or whether it’s actually third-party advertising? Blending ads with content is tried and trusted technique from other advertising media, however, and could be one way that brands can leverage the technology. Another may be taking advantage of the inherent differences in spoken communication.  

“Unlike with PCs or mobile devices, voice interfaces will provide natural interactions between brands and people,” says Yasuharu Sasaki, head of digital creative at Dentsu. “Users will show their emotions more. They will shout when they’re hungry, and ask for a nice movie when they want to cry. Meanwhile, consumer data from these natural and emotional interactions will be really a treasure trove for marketing.”

While Amazon, Google and other players have been accumulating user data for marketing for years, home assistants will broaden their access to consumer lifestyle patterns, such as what time users wake up, go to sleep, or how long they engage in leisure activities. Meanwhile, third-party brands that are advertising on these platforms have a novel opportunity to both insinuate themselves in all moments of consumers’ everyday lives, opening up the possibility of closer relationships with them. 

“We can imagine brands being able to provide more adequate functions and recommendations when asked to do so by the user,” says Laurent Thevenet, senior technology director at R/GA in Singapore. “It will remain a service controlled by end consumers—they will decide when they need you.”

Go-slow approach

Brands that are keen to jump into the personal assistant ecosystem should proceed with caution, however. Consumers may quickly tire of brands that don’t justify their existence. Thevenet likens this to the early days of app marketplaces. Brands rushed to be on users’ smartphone screens, launching apps willy-nilly, but app fatigue left many by the wayside. Only those that could prove useful and sticky could survive, he adds. The same Darwinian logic will apply to home assistants.   

“The opportunity for brands is to either provide a set of functions (i.e., voice commands) that can live as an independent service within these new assistant ecosystems or ensure their presence by partnering with third-party services already in the ecosystem (i.e., multi-brand ecommerce platforms),” Thevenet says. “In both cases, it is important for brands to ensure that their digital infrastructures are up for the challenge.”

Another issue to consider is that privacy watchdogs and consumer groups are wary about the potentially intrusive role of home assistants, which is likely why Amazon is pursuing a go-slow approach, with limited audio ads.

The approach taken by San Francisco-based startup Voice Labs may be the best guide in this nascent market. In May, it launched a skills monetization platform called Sponsored Messages that allows developers to work with advertisers to include short promotions in content; brands such as ESPN, Progressive and Wendy’s are already on board. The startup recommends messages be short, clearly labeled as ads, relevant to the user, and inserted skillfully, for instance only appearing once every 15 sessions. In a hypothetical example that Voice Labs CEO and co-founder Adam Marchick discussed with CNET, a skill developer could partner with ESPN in rolling out a sports trivia game that would eventually play messages such as “Thanks for playing our game, and thanks to ESPN for supporting us." It could also provide reminders about important games on the sports network. This sort of approach, similar to radio and podcast promotions, might be one way that smart speaker ads gain traction in the home.

“I am personally relatively optimistic that users and the industry will come to terms on the best practice and the best policy,” Fujii said. “At the end of the day, users want free content and convenience, the industry wants to sell, policy makers are mindful of user protection and privacy, so while there may be some confusion at first, things will eventually settle down where they should.”

First published on Campaign Japan: 「スマートスピーカー」の可能性とリスクを考える