Amazon may put Alexa to work pitching brands
Source: Amazon

Amazon may put Alexa to work pitching brands

According to CNBC, Amazon is in discussions with some major CPG vendors about presenting ads via Echo devices. The ads promise to work similar to Google search with brands paying to be mentioned higher than other suggestions.

The ads may be offered as suggestions when users ask for information from Alexa. CNBC wrote, “Someone asking the Echo for help cleaning up a spill might be nudged to use a specific brand.” An ad may also be presented as the first suggestion for a brand when shopping for a certain item. Complementary add-on suggestions could also be sponsored. Currently, Alexa’s suggestions are algorithmic and not paid.

“If sponsored brands become the first names that Alexa lists on a long list of results, it’s likely more people will just accept the top result, even if it’s an ad, because that’s preferable to listening to the voice assistant drone on,” wrote Shannon Liao for The Verge.

Some brands might be able to tie advertising to Alexa’s functions — or “skills — although the options are limited. According to Amazon’s developer guidelines, “streaming music, streaming radio, podcast, and flash briefing skills” may include audio advertisements as long as they don’t use Alexa’s voice or a similar voice, refer to Alexa, or imitate Alexa interactions. Any skill-linked ads also must by similar to ad content available outside of Alexa.

Amazon also issued a statement indicating there are “no plans to add advertising to Alexa,” indicating the company is early in the exploratory process.

But many believe brands should already be working on ways to reach consumers via voice assistants and the artificial intelligence underlying the devices as voice shopping expands. And yet sounding like a radio ad isn’t expected to work on smart speakers.

“If an assistant is going to be the delivery mechanism, then it is going to be in that vein that the advertising is developed,” Greg Hedges, vice president of emerging experiences at Rain, a digital consultancy that created an Alexa skill for Campbell’s, among others, told Adweek. “It will be honed as a way of helping the consumer based on their shopping history, their skill/action/app use, their info.”

BrainTrust

"If there is a way to create voice ads that do not negatively impact the customer experience, Amazon will figure it out."

Meaghan Brophy

Senior Retail Writer


"It is a slippery slope for Alexa. Will Amazon figure it out? They have to because Apple will."

Tom Dougherty

President and CEO, Stealing Share


"A significant segment of the population already thinks that Alexa is listening all the time and Big Brother has arrived."

Dan Raftery

President, Raftery Resource Network Inc.


Discussion Questions

DISCUSSION QUESTIONS: How do you see ads, if at all, working on voice-activated speakers like Echo? What benefits and drawbacks do you see for voice ads vs. other digital ads? Would sponsored suggestions disrupt the virtual assistant experience for users?

Poll

32 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Mark Ryski
Noble Member
6 years ago

To think that voice-activated virtual assistants will not be used to promote sponsored product is naïve. These are not merely benign devices meant to provide convenience to their owners — they are a sophisticated marketing channel that will be fully exploited by the companies that provide them and the brands that promote on them.

Sterling Hawkins
Reply to  Mark Ryski
6 years ago

Right. And the key is that they have to net a value add for the consumer. Advertising and sponsorships don’t need to be a burden. It’s obviously becoming much more personalized and I think we’re at a point where it’s getting so good that it can be in alignment with actual consumer interest and add value all around.

Dr. Stephen Needel
Active Member
6 years ago

This would cause me to turn mine into an expensive paperweight! If I don’t know what product I want, letting sponsored products come up first is okay — as long as I can verbally have the offerings sorted by my criteria, not the sponsored ones first.

Bob Amster
Trusted Member
6 years ago

Notwithstanding that Mark Ryski is right, the idea sounds intrusive from the consumer’s perspective. I remember when I started listening to rock and roll on FM radio because there were no ads (and because they had the best disc jockeys in the business).

Dr. Stephen Needel
Active Member
Reply to  Bob Amster
6 years ago

The good old days, Bob.

Max Goldberg
6 years ago

I can see why brands would want to be noticed via Alexa, and why Amazon would want to create another revenue stream, but as an Alexa user I would find ads to be an unwelcome intrusion. Pitching products could make Alexa’s answers suspect — am I really getting the best information or a form of reality that an advertiser wants me to hear?

Charles Dimov
Member
6 years ago

Ads are great. We are surrounded by them. However, when you download an app … you expect the paid version to be ad-free and the Free version to have ads on it. In that regard, customers who have bought an Alexa or Echo should have an expectation that they will not have an influenced source rather than a trusted assistant. The challenge with voice is that you cannot easily scroll past the ads when you are in a hurry. I will be curious to see what consumers think.

If this becomes too much of an ad platform, or influenced platform, then shoppers simply won’t use it or will use it sparingly. This is a potential pitfall for each technology adoption.

Kim Garretson
Kim Garretson
6 years ago

To imagine the possibilities here, all you need to do is scan the list of skills on the Amazon site. You will notice there are dozens that are reminders to buy or do something.

Brandon Rael
Active Member
6 years ago

Sponsored ads that are powered by consumer analytics would enhance the shopping experience and not disrupt it. Alexa and other voice-activated commerce solutions are at the moment brand agnostic, however the future is bright for brands and retailers to take full advantage of any future partnerships in this area. Voice-activated commerce has only begun to pick up momentum. Once this channel has matured, it will not only provide a more seamless shopping experience but one that is a perfect channel to provide personalized advertising.

The digital-first generation has grown adverse to generalized advertising, and there are plenty of opportunities for brands to capitalize on the personalization side of advertising. Once you weave these strategies with your social media presence then you will have a compelling combination.

Meaghan Brophy
6 years ago

I’m having a hard time envisioning a voice ad on Echo that doesn’t erode consumer’s trust in the device or impact the device’s utility. But, Amazon has always been a consumer-first company. If there is a way to create voice ads that do not negatively impact the customer experience, Amazon will figure it out.

Art Suriano
Member
6 years ago

I see a tremendous opportunity for ads on voice-activated speakers, but they need the right presentation. They can’t sound like radio ads. Instead, they have to be very personalized and have a purpose. Amazon should be working with advertisers now to offer them a chance to speak directly to their customers based on the customer’s needs. For example, if a customer is interested in shoes, has been looking or asks Alexa for a nearby shoe store having a sale, I would see Alexa responding with: “I don’t believe they are having a sale today, but I do know a shoe store that might have what you are looking for, would you like to hear more information?” If the customer says, yes, then a carefully worded short audio advertisement could play to the customer, but it has to address the customer by name when possible and share some products that match the customer’s interest. This should all be doable through technology.

The big issue is that the customer has to have complete control over the ads. The audio ads can’t be too long, they can’t be annoying and they can’t become a problem for the Alexa user to the point that they want to turn them off. Do it right and it can become the next best medium for advertising.

Seth Nagle
6 years ago

Ads if done right can be very helpful and create a new value offering to the consumer but recently many of the ads I hear via audio lack substance and fail to connect the brand with the messaging.

If Alexa starts yelling out ads maybe Amazon will offer a premium subscription service where the user can avoid them for a small fee.

Chris Petersen, PhD.
Member
6 years ago

The operative word here is “pitching.” Amazon and most other sites rank order products with preference to brands who sponsor products. Customers expect to see promoted products on the top of their search list. But if pitching means actual voice ads promoting products, that completely changes the dynamics of the Alexa experience and will certainly turn many customers off. Actual pitches for products creates a substantial risk for Amazon that may offset any ad revenue.

Cathy Hotka
Trusted Member
6 years ago

Asking Alexa a question is going to be a little like going to the Kraft site to explore recipes, where the recommended cheese will certainly be a Kraft product. Alexa will include ads, and customers will learn to filter them out.

Gene Detroyer
Noble Member
Reply to  Cathy Hotka
6 years ago

… perfect!

Cynthia Holcomb
Reply to  Cathy Hotka
6 years ago

Totally agree!

Jennifer McDermott
6 years ago

I have long wondered when this would happen … when a company builds and engaged and captive audience, it stands to reason that they would want to monetize it. Perhaps an opt-in model will allow Amazon to test the impact on the consumer experience, but I can’t imagine many would willingly invite ads in.

Celeste C. Giampetro
6 years ago

Context will make or break these ads. I definitely see the upside of asking Alexa for a tomato soup recipe and receiving a suggestion to buy X brand of tomatoes and even where they might be on sale. Doesn’t that make the consumer’s life better? I wouldn’t underestimate Amazon’s ability to beat the odds, yet again.

Steve Montgomery
Steve Montgomery
Member
6 years ago

The ability to do something doesn’t mean you should. What comes next — an option to buy the devices in two versions — with or without ads? Oh yes, the one without ads would cost more.

Lee Kent
Lee Kent
Member
6 years ago

Mark is right that retailers will want to find ways to promote through Alexa but — oh no. Let’s not go there, please. Not every gadget is made for marketing. When I ask how to do something, I am not looking for an ad. For my 2 cents.

Tom Dougherty
Tom Dougherty
Member
6 years ago

It is a slippery slope for Alexa. No doubt this was the commercial plan all along but commercial messages from “my personal Alexa” will anger consumers who already feel a bit annoyed with the commercial intrusion in things like Facebook. Will Amazon figure it out? They have too because Apple will.

Ricardo Belmar
Active Member
6 years ago

This reminds me of how Amazon’s Kindle devices are available in both ad-supported and ad-free versions based on the price you pay to buy the device. If you have the ad-supported version you see them rather unobtrusively on the screen saver but not mixed in to the actual Kindle content. Since Amazon continues to deliver ads this way, I’d say it’s working for them and must provide some meaningful revenue — enough to offset the cost reduction of the devices. If we assume Amazon can deliver ads via Alexa in the same unobtrusive way they do on Kindle devices, why wouldn’t they?

As long as they are labeled in some way as sponsored, consumers will either like them or learn to tune them out. And if you’re not asking Alexa a shopping-related question, I suspect you won’t see any ads delivered as that would erode the consumer’s experience pretty quickly.

Gene Detroyer
Noble Member
6 years ago

Oh, I think it will be tried. But there are huge dangers. To what extremes will people go to avoid ads?

I remember when I was was a teen and the local rock station would announce from “7 to 8, music only, no adds, no interruptions (except from the DJ).” Everyone seemed to know when that time would be and even talked about it.

Then, on television came various types of DVRs that gave people the ability to record programs and fast-forward through ads, which they did. (I would love to see if anyone who records actually doesn’t fast-forward the ads.)

This is a typical CPG type of thinking. How can we take what we have always done and impose it on people? Instead, how about an entirely new paradigm that doesn’t include something as intrusive as advertising?

Doug Garnett
Active Member
6 years ago

This is a bad idea. And hopefully someone at Amazon can get out of the Echo Chamber (so to speak) and see that clearly.

And here’s a contrarian prediction: Alexa devices hit garage sales en masse in about three years. Why? A rumor like this suggests that Alexa is searching for a way to monetize. From what I can see, its primary value for the large majority of consumers remains changing the channel for music. That isn’t enough consumer value for these devices. Hence garage sales. (My metric for products: “Mean time to garage sales.” The lower the number, the less valuable the product.)

Steve Montgomery
Steve Montgomery
Member
Reply to  Doug Garnett
6 years ago

Love your “Mean Time” metric.

Doug Garnett
Active Member
Reply to  Steve Montgomery
6 years ago

Thanks, Steve… I suppose it reveals that my wife and I have spent a fair amount of time at garage sales and estate sales… 🙂

Jen Johnston
6 years ago

If one is using their Echo to stream their free Pandora account, they are used to some radio-style ads already. However, as an Echo user myself, if I am going to be pitched to via my interactive assistant, I want the products to be extremely relevant to me. And I don’t mean me as a 30-something WOHM. I mean me, Jen Johnston, with all my quirks.

Surely there is big data out there about the products I want to learn about — clothes, toys and household goods with natural materials (wool, stainless steel, wood, etc.) and better-for-you brands (cleaners, foods, and personal care), for example. Yet I don’t feel Amazon has cracked that code yet with me, based on the Recommended Products which are often plastic materials and mainstream brands.

Perhaps Amazon Echo could turn advertising into some sort of retail discovery game where the consumer is in control instead of being forced to listen to ads they don’t find relevant. Or maybe they could let me set up a profile with the types of products I want to know about and let me opt in to hearing ads about them.

Cynthia Holcomb
Member
6 years ago

What happened to the promise of Amazon? Will Amazon Echo become a transmitter of ads like a radio or TV station? Every Echo request — “Echo, what is the weather forecast today?” — will be followed by a paid ad! Paid ad placements and incoming missives are the antithesis of individual customer experience; the antithesis of the much-touted goal of one-to-one personalization.

This could be a barricade that Amazon Echo users must endure to use Echo to shop. Wow! What happened to the Amazon mission of connecting people with products they actually love and want to buy?

Joan Treistman
Joan Treistman
Member
6 years ago

The series of responses suggest an expectation that ads are most likely to occur during an interactive phase, i.e. a request for information. Well, if the ad relates to the information I can see where that will work. If the ad pops up randomly and out of context, it’s going to be an opportunity for an Echo competitor.

Consumers open newspapers’ free-standing inserts because they’re looking for the ads/coupons/discounts. There are magazines that are read as much for the ads as the other content (perhaps “Vogue,” “Real Simple”).

In other words, Echo listeners must want the ads/extraneous information (give permission) and the ads’ executions have to fit the format and at the same time break through. Sounds possible, but not easy.

Peter Luff
6 years ago

I agree with various members of the team; Mark Ryski makes a great point. It’s naïve to think these devices are purely there for the benefit of their owners. Only recently we discussed the lowering of the prices of these devices for market share. The devices will be collecting data and pedaling specific messages.

I then agree also with Bob Amster and this has a real potential to drive people to turn them off. While this is this year’s hot product, it does not guarantee longevity. I can speak from my experience with my older teenage kids that had “Dots” over a year ago and independently they have both turned them off. Amazon will need to ensure all content enriches the experience — highly tricky for paid ads.

Dan Raftery
6 years ago

A significant segment of the population already thinks that Alexa is listening all the time and Big Brother has arrived. Then there’s the rest of us wondering why this is taking so long.

Development of the this functionality will be complex and challenging, but not without precedent. Amazon advertisers have learned what works and what backfires in that search environment.

Jeff Miller
6 years ago

I find it interesting that most of the people on this thread think that Amazon’s current way of prioritizing what is “said” via Alexa via their algorithm is much different than advertising. Right now- we are all only given what Amazon wants to give us and in many cases the only choice is Amazon’s branded products. Try to order batteries or baby wipes on Alexa now and see.

There was a time when many people thought that paid Google search ads would cause people to move away. The main issue is whether the ads provide value to the user or not. I argue that TV and even radio ads take away value from the experience hence the rise of alternatives. But in voice like in search, If a voice ad would save me $1 from a brand like Duracell vs Amazon Basics batteries (the only current choice I have) then it benefits me.

Finally, Amazon is again playing the long game. Media and advertising like AWS are high margin, easy to scale businesses compared to physically selling things. Look at Google and Facebook profit margins compared to Amazon. There will be a day when share holders will will ask for profits from Amazon and the more they make from high margin businesses — the better — so expect them to continue to focus and grow this part of their business. If CPGs are paying them to advertise and then are also their number 1 sales channel, they will have an insane level of dominance in retail.