Why one marketer thinks smart speakers have their work cut out for them

Voice technology and voice search have, arguably, been adopted faster than any other technology in history. Analyst estimates on smart speaker penetration in the U.S. range from 40 to almost 80 million devices by the end of this year.

Despite lots of hype and anticipation, these devices have not yet emerged as viable marketing or commerce platforms. Is that because it’s still “early days” or are there other issues and challenges to be overcome?

Rebecca Stone, LiveRamp’s VP of Marketing, who leads the identity resolution company’s efforts to bridge the omnichannel experience, weighed in on the current state of smart speakers and what needs to happen for them to realize their marketing and commerce potential.

Q: What’s holding smart speakers back as a commerce platform?

There are two primary barriers inhibiting mass adoption of smart speakers as a [commerce] platform, and they’re both closely related. First, the technology has to get better. It’s not quite there yet in terms of sophistication in order to be fully embraced.

I like to use the example of my five-year-old daughter, who loves talking to Siri. Siri can handle many of her simple commands, but [my daughter] is only just learning to read, and so she’s unable to understand the search results that pop up. She’s in a dance recital this month and asked for help remembering the dance steps to her routine. The results weren’t pictures or videos, but text search results.

The next generation of smart speakers will be driven by whichever company can be fastest to market with integrating visual capabilities. This leads me directly into my second assertion, which is that, until the technology is better, it will be difficult to compel consumers to use smart speakers to make purchases.

Although consumers are increasingly including smart speakers as part of their shopping journey, mostly for discovery, they are opting to go in-store or online to complete their transactions. I attribute this, in part, to the technology and the fact that it’s not fully matured. But it’s exacerbated by the fact that most of these devices lack screens. People like to see their options visually; if they don’t, it makes it difficult for them to enter the lower marketing funnel. Until both of these barriers are addressed, I imagine mass adoption may be slow to reach critical mass.

Q: Numerous surveys indicated that consumers were buying things on smart speakers in meaningful numbers. Then  “internal documents” from Amazon suggested that fewer than 2 percent of Alexa users had purchased anything through an Echo device. How would you explain this? 

It’s difficult to know exactly what’s led to this discrepancy, but it likely has something to do with how consumers define “making a purchase.” For example, if we were to ask consumers whether or not they’ve used a smart speaker to make a purchase, some may mark “yes” if they used the speaker to begin their search. Some may mark “yes” if they used the speaker to help narrow their search results. And some may mark “yes” if they actually completed their transaction via the speaker.

So the variance could be due to research methodology. As the technology evolves, and as brands and advertisers become more invested in the channel, the way in which we measure and evaluate consumer habits, behavior, etc. will evolve with it.

Q: Do you believe that smart speakers can become an effective marketing channel? 

According to Mary Meeker’s 2018 Internet Trends Report, voice has been adopted faster than any other technology in history, so the potential is there. But in terms of harnessing the opportunity for marketers, there are a few precursors.

Reports indicate that at this stage, consumers are largely using their Alexa or Google Home devices to ask about things like the weather, traffic, and sports instead of products. There’s certainly a trust factor there — simple searches don’t reveal as much about someone — but we can’t overlook the fact the technical infrastructure of these devices is built for simple commands. So there’s no surprise that that’s how consumers are interacting with them most.

Just as with any technology before it, smart speakers will have to work to gain the trust of consumers. With simple searches on smart speakers, there isn’t as much at stake. But as voice assistants and smart speakers become more entrenched in the omnichannel consumer experience, the usual rules of engagement from a privacy perspective will apply.

Already, there is a misconception among consumers that their speakers are always on, always listening. It’s up to brands to be aware of these sensitivities and to be upfront and transparent about how data is stored, used, etc. At a time of heightened privacy concerns, giving choice and control to consumers will be critical for marketers to build trust in this emerging touchpoint.

Q: Are smart speakers better suited to brand and awareness marketing or direct response — or both?

We’re in the really early stages of asking ourselves, as an industry, “How do we use this as another channel in our suite of tools to get customers?” I don’t think it’s an “either/or” situation. Depending on activation and execution, smart speakers could be used to increase brand awareness, or to inspire one-to-one engagement and communication with consumers, or both. The answer, which remains to be seen, will be determined by how brands and advertisers decided to build campaigns around the technology, and where they prioritize their resources.

When I was in New York the other week, I had a conversation with a peer, and we started thinking about – what if, instead of “Hey Google, add X to my cart,” imagine if we could use the device more experientially, like a way to focus on top customers. Let’s say I work for a major retail brand and I said to our top 1,000 customers, if you start using Google Home as a personal shopping assistant, we’ll tailor an in-store shopping excursion just for you. All the consumer would have to do is tell Google to add a calendar invite for the event, and when they arrive in-store, we would have five or six full outfits for them to try on.

My point is, the technology can be as basic or as sophisticated as we make it out to be.

Q: What is the most likely form that marketing on these devices will take (ads, content, sponsorships, etc.)?

I think advertising is going to have to get more subtle in the coming years, so I would focus on sponsored placements within content. I don’t think people will take kindly to video ads on their fridge like we’re subjected to as the gas pump.

I also think it’s about creating an experience that entices customers to want to interact with you on their next device. You’re getting free stuff for downloading chain restaurants’ mobile apps now. Perhaps a custom “chat” with an on-demand customer service team, via a device?

Q: In terms of potential alternatives to advertising, are we likely to see a “freemium” model with upsells to exclusive content or ad-free versions of content?

As with the broader connected ecosystem, I think it will be a mix of both. Both models work, but in different ways. If you’re an upstart, you’re probably going to start out as freemium. If you’re an established brand, you’re going to have to choose adoption or placing a premium on your brand in any new channel.

Q: Why haven’t things like booking or reservations taken off on smart speakers?

Ease of use is the hardest here too. Airbnb works because their users love looking at the pictures of the spaces. People pore over the different options for flights on airline websites to pick the exact date/time and/or price that work for them. Those are both difficult experiences to recreate with voice.

I go back to my suggestion that perhaps the smart speaker will contribute to the rise of another “on-demand” call center (no wait times, or the speaker will call you back) similar to what happened on Twitter in the early days, when you had to have a customer service Twitter handle to ensure you were managing complaints. Or, perhaps, booking sites like Expedia and Booking.com, for example, may integrate with an AI service similar to amy.IO to help streamline and simplify the customer experience.

Q: What’s the outlook for smart displays? The role of the screen right now is sub-optimized. How might that change over time?

I expect part of the natural evolution of the technology will be seen in the way that vendors rise to the occasion from a user experience or user interface perspective. The vendors that focus on simplicity (like what we have seen with the iPhone) are going to win in the long run. And keep in mind, the goal will be to design for simplicity across users, in a way that transcends demographics. In other words, my daughter and my grandfather will both need to be able to navigate the device easily.

Q: What about skills or voice actions? Despite Amazon’s statements about thousands of skills, there’s a discovery problem. Do you see that changing? 

In all honesty, it’s just one of those things that will take time. More companies need to embrace working with smart speaker vendors, and they are going to have to push those services through to the consumer to inspire adoption. Alternatively, we’re in such early stages here, that a “challenger” vendor could emerge, one that isn’t even on our radar today, and be the one brand that wins out, going in the direction of the competitors.

The other thing to remember is that smart speakers are not protected from the walled gardens; those still exist in a very real sense. So maybe, the so-called challenger will be retail agnostic. That could be the ticket to encouraging mass adoption on a global scale.

Q: Do you see a future where smart speakers and smartphones are more directly linked, with voice searches initiated on smart speakers and follow-up actions on smartphones?

Absolutely. This will likely parallel, or at least underscore, the burgeoning IoT market. I expect all our devices will be equipped to “talk” to one another, and the consumer will be able to move from device to device without any extra effort.

Q: Is it possible that the use cases that we’re seeing today (e.g., content consumption, smart home control, music, etc.) are the use cases that will prevail and these devices will not become a major marketing channel?

The answer really isn’t black and white, and it will depend on how the smart speaker vendors embrace and activate their partner network. Right now, the barrier is viewing them as competition, rather than a channel.

Q: Any final thoughts? 

We’re still in the very early days of voice engagement, but rapid consumer adoption and technology advancements will give marketers a compelling reason to get into the game soon enough. Preparing for this future today will allow you to master engagement on a valuable touchpoint long before your competitors do.

About The Author

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.