Amazon’s Echo might have had a go-g0 2017, but the web giant’s smart assistant could just be getting started.
And to keep momentum up, Amazon is reportedly courting potential advertisers for its Alexa voice platform.
Generally, companies looking for some Echo exposure have developed Alexa skills, software add-ons that convey consumer information and news, or connect to outside apps. Now the company might be ready to let sponsors promote products directly through Alexa. According to CNBC, Amazon is in talks with large consumer goods companies such as Procter & Gamble regarding Alexa ads.
An Amazon spokeswoman told WWD, “There are no plans to add advertising to Alexa.” And P&G did not immediately respond to WWD queries on the topic Tuesday afternoon.
But if Amazon is able to build out a sizable voice commerce business, experts believe ads in some form or another could ultimately follow.
Voice ads could show up as search results from Alexa, whenever a user conducts a related product search. Or it could be a promoted recommendation whenever someone asks, “How do I clean a red wine stain?” or “What’s the best skin-care routine for combination skin?”
The time may be ripe for Amazon, as consumer interest in its smart speakers grows. The Echo Dot, the most affordable model, swept Amazon’s holiday sales chart as the best-selling product on the marketplace. The retailer said it sold “tens of millions” of Echo devices, and analysts believe Alexa will accelerate commerce sales by $10 billion to $11 billion in 2020.
In a note to investors last month, RBC analyst Mark Mahaney wrote, “With tens of millions of users and 20,000-plus skills, we see Alexa’s value prop as becoming increasingly powerful, as awareness and ownership ramp.”
That’s music to Amazon’s ears. Despite its dominion over online commerce, the company ranks fifth for digital advertising across U.S. companies, according to eMarketer. Sponsored listings on its site make up most of its ad business, and they are estimated to increase 42 percent next year, drawing $2.4 billion — impressive growth, but the ad portion of the business is still much smaller than Google’s, which clocks in at $40.1 billion, and Facebook’s, which rings in at $21.6 billion.
That’s an enormous gap, and even if Mahaney’s right, Alexa advertisements alone won’t be enough to close it anytime soon. But if this new ad model gets traction — without irritating consumers or diminishing the user experience — it could set off a voice advertising race across the category.
And that could make 2018 the year Alexa ads really get under way, speeding voice commerce right along with it.