With tight restrictions for advertising and a still growing market, some experts say now is not the time for businesses to fully focus on smart speaker advertising.
Digital assistants and their physical smart speaker bodies are dominating consumer tech in 2018. A January Canalys report estimated that 56.3 million smart speakers would be sold this year, making it the fastest-growing consumer technology on the market. The voice assistants housed inside are doing well too, with 66% of US adults using Siri, Alexa, Google Assistant, or text-driven chatbots, and 21% trusting them with complex e-commerce tasks.
Due to this rapid growth, the market is expected to become more competitive this year, with 94% of smart speakers currently coming from Amazon or Google. Apple's HomePod is expected in stores Feb. 9, potentially grabbing consumers with better privacy protections. And Samsung said it will launch its own speaker in the first half of 2018, our sister site ZDNet reports.
As the average consumer grows more advertisement-immune in traditional arenas, speaker buy-in may give businesses and brands more reason to jump into the smart speaker realm to reach new audiences through monetization or advertising.
"We won't be typing in a search engine, we will be asking our in-home device expressing our immediate needs and concerns," John Gentry, president of OpenX, said of the future of advertising via smart speaker. "That is the future, and it presents a gold mine opportunity for advertisers seeking to create more relevant and value-focused consumer engagements."
Analysts say businesses should begin considering smart speakers as a way to grow, but that the field remains in its very early stages.
"I do think it is a good moment for businesses to start looking and experimenting with advertising via smart speakers," Raul Castanon-Martinez, senior analyst at 451 Research, said. "Digital advertising has been largely driven by traffic (eyeballs) but this is changing."
SEE: Internet of Things policy (Tech Pro Research)
The audio nature of smart speakers may draw clear parallels to advertising on radio stations. However, due to Amazon's rules on advertising in Alexa skills, radio-style ads may not be the answer, Michelle Kubot, marketing director for Ambrosia Treatment Centers, said.
Ads are banned on Amazon Alexa skills, with a few exceptions. Music, podcast, and flash briefings can have audio advertisements, and skills that enable people to order things can promote those products or services. If a user asks for offers, skills can respond with promotional deals, and skills specifically designed for promotion can play ads.
Despite the market growth, the advertising rules won't change.
"There are no plans to add advertisements to Alexa," an Amazon spokesperson said. "Skill developers are paramount to creating a unique and compelling voice experience, and we encourage continued innovation within our policy guidelines. We will continue to explore ways for developers to monetize their skills in the future while maintaining the best possible experience for our customers."
Some analysts say it's too early to put advertising on the devices. Smart speakers have around 20 million installed devices—a very low number for advertising, Forrester analyst Satish Meena says. Meena said he thinks more advertising will come when that number hits 100 million, around 2020.
"I believe the focus remains on building a user base before bombarding the smart speakers with advertisements, which is not good for customer experience," Meena said.
How to reach your target audience
So how can brands reach their target audience while still playing by the rules? Formatting their content correctly is good starting point.
Experts say advertisers need to aim for the so-called "position zero": The featured answer that sometimes appears at the top of Google search results and typically provides more context than the normal search result. For voice-enabled devices, the position zero response is the only result a user will have access to, instead of a page or more on a device screen.
"That means local/location-based retailers must rank in the 'near me' searches while larger national brands should aim to own answers to common industry questions as thought leadership strategy," Kent Lewis, president of Anvil, said. "Owning position zero means you've doubled your real estate in select organic searches."
There is no guaranteed way to ensure your content grabs position zero, but marketing and advertising experts have a few strategies.
"If your content is provided in a question-answer form, you are more likely to rank highly on Google and gain Google's coveted answer snippets," Nate Masterson, marketing manager for Maple Holistics, said. Old content can be edited to better suit a query form, Masterson added.
The Alexa app may be a similar battleground, with skills fighting for the top of the list. Forrester analyst Brandon Verblow said this form of indirect advertising is likely to happen before direct ads coming from the speaker.
"The response might be, 'Ok. There are several skills for ordering pizza. Open the Alexa app and pick the one you want.' Then within the Alexa app, Domino's may choose to pay so that its skill appears at the top of the list," Verblow said.
Smart speaker users want to interact with brands through their devices, Google said, so offering content that fulfills users' wishes, is structured in a Q&A format, and qualifies for one of Amazon's ad exceptions may be the secret recipe. More than half of regular smart speaker users want information on deals and promotions, Google found, which is an Alexa ad exception.
Companies already in the smart speaker space will have the biggest influence on advertising, Gentry predicted. For example, Amazon's purchase history recommendations could "set a new standard for personalized digital advertising," Gentry said.
"It is easy to assume Google will be the first, if not the largest, purveyor of smart speaker ad products," Lewis added. "While most position zero results are triggered by questions or cultural references, advertising results would likely be triggered by branded search phrases and incorporate shopping capabilities. Amazon's Alexa would provide similar opportunities at a brand and product level, but only for current advertisers/sellers."
Companies can also monetize skills without advertising by offering paid subscription skills.
"Just as many companies use apps as a mean of advertising and adding value to their product or service, the same applies to skills," Kubot said. "This is a direct method for brands to monetize smart speaker efforts."
The tried and true method of providing interesting content will be kicked up a notch, Robb Hecht, an adjunct marketing professor at Baruch College, said.
"The brands that will stick out the most in this vast new marketing channel will be those that provide interesting and unique content," Hecht said. "Unique content like storylines, mini soap operas, quizzes, games and password interaction scenarios should all win with customers who have a new friend in their home to talk to."
While there are a few options for monetizing smart speakers currently, analysts say businesses should get into the market now and begin finding ways they can exist in the space.
"They should get into it early to experiment and then see what the results are," Ray Wang, founder of Constellation Research, said. "Early adopters in early forms of media channels often reap disproportionate benefits vs. those who come late."
- Special report: Harnessing IoT in the enterprise (free PDF) (TechRepublic)
- Google Assistant: The smart person's guide (TechRepublic)
- Amazon Alexa: The smart person's guide (TechRepublic)
- Apple HomePod: Late, and pricey, but this smart speaker could still have one advantage over its rivals (ZDNet)
- Google Home will now read your audiobooks to you (TechRepublic)
- The growing crowd of smart speakers is ready for your command (CNET)