Amazon has held talks with several brands to allow greater promotional opportunities on its Alexa voice platform. PlanetRetail RNG senior editor Howard Lake looks at the implications.
is exploring launching paid search marketing on its Alexa virtual assistant which would let brand owners such as P&G and Clorox influence when their items appear in product queries made via its Echo devices, according to a CNBC report.
Such a tie-up would cause consternation among grocery retailers, because it would strengthen relationships between Amazon and some of the most popular consumer brands, putting them at the heart of Amazon’s ecosystem and increasing the online Goliath’s appeal to food shoppers.
Voice-enabled shopping is growing fast, and voice search is quickly gaining popularity.
Amazon leads the market with its range of Alexa-enabled devices such as the Echo Dot, the top-selling item on Amazon this Christmas.
Amazon is eager to monetise this growth engine. It is also keen to drive its online advertising revenues. Analyst eMarketer predicts Amazon ad revenue to reach £1.8bn in 2018, way behind Google (£31bn) and Facebook (£16.8bn).
Voice versus text-based search
As voice shopping becomes more popular, both retailers and brands are increasingly concerned at its impact on the search process.
Research by One Click Retail shows that 90% of all online purchases begin with search, with the top three ranked hits generating 64% of clicks.
With voice systems, prominence matters far more than with text-based search. Users are unlikely to listen to as many results as they might read through a traditional search.
“Owning the leading proprietary hardware in voice lets it dictate search prominence, as well as the terms for obtaining pole position”
That puts Amazon in a strong position. Owning the leading proprietary hardware in voice lets it dictate search prominence, as well as the terms for obtaining pole position.
For instance, Alexa might respond to a generic product search request by suggesting a specific brand. Such paid-for positioning already happens on Amazon’s own site and on Google.
But given the immediacy of voice search, users are far more likely to respond to the first suggestion because, unlike with text search, they cannot ignore a prompt by scrolling to the next.
Shopping behaviour targeting is also reportedly being considered, leveraging the vast amounts of data Alexa harvests from users.
Consumers could be targeted depending on their previous shopping history with complementary products or preferred brands.
Amazon has so far shied away from using Alexa for promotional purposes, and has focused more on building usage and placing the hardware in as many homes as possible than actively monetising the functionality.
While Alexa’s popularity represents a significant opportunity for Amazon, it will likely proceed with care.
This form of search and hardware is still in its infancy and consumers – some of whom actively resent online advertising – may be less than impressed by unwanted search interventions.
“Caution is probably warranted. Despite its success, Alexa is not the only voice system in town”
Caution is probably warranted. Despite its success, Alexa is not the only voice system in town.
In 2017, Google Home teamed with a bevy of major retailers (Walmart, Home Depot, Target and, among others) in what can only be seen as a counter move against Amazon’s strength in the space.
Alexa’s position is secure for now. But any perceived over-eagerness to inappropriately capitalise on its number one status – by, for instance, annoying shoppers with ads – could see that lead eroded.