In 2017, Amazon generated nearly $178 billion in revenue of which $118 billion came just from product sales.
Out of the 564 million items featured on Amazon’s U.S. marketplace, the Amazon Echo Dot was the top-selling product this holiday season. In fact, it is the best-selling smart speaker on the market.
AI-enabled smart speakers are rapidly permeating the homes of millions. As it stands, one in five Americans – 47 million people– have access to a smart speaker. Meanwhile, Adobe predicts that half of U.S. households will have a smart speakerby the end of 2018.
The bottom line is that these devices (most of which are powered by Alexa) areprecipitately having an impact on how consumers search and interact with their devices.
As Alexa’s market penetration grows, marketers should be aware of how the AI system and the smart speaker market will impact their online efforts.
Mobile-First, Voice Foremost
While mobile devices have undeniably taken over, voice search is still a burgeoning field – though, it is growing rapidly. In 2016, Google revealed that roughly 20 percent of mobile queries were voice-activated.Meanwhile, comScore predicts that voice searches will account for 50 percent of all searches by 2020.
As more consumers adopt smart speaker devices, this figure will undoubtedly grow. As their popularity increases, fewer consumers will turn to their desktop or even smartphone devices to conduct searches, which will have a substantial impact on SEO.
This growing trend means that marketers will have to adapt to a new voice-controlled paradigm, at the forefront of which resides Alexa.
For savvy brands and marketers, the best way to get in front of future prospects will be to leverage the smart speaker ecosystem through Alexa’s ever-expanding database of skills.
AI Skills and Why They Matter
Alexa skills are essentially the equivalent of apps for a smartphone that gives smart speakers new capabilities beyond its built-in functions. While Google has its own set of skills (called Actions), Amazon holds roughly 75 percent of the market share with over 50,000 third-party skillsthat can work with over 20,000 devices.
Skills can serve a variety of purposes and meet a myriad of needs. For example, skills can:
- Provide news updates
- Order an Uber
- Send and receive texts
These are just a few simple examples.
Earlier this year, rumors surfaced that Amazon was experimenting with voice ads for brands. The company denied any such plans. However, Amazon recently revealed its plan for monetizing Alexa via in-skill purchases. In a blog post on consumable skills, Amazon elaborated, stating:
“A consumable is an in-skill product that customers can purchase, use, and then purchase again. In addition to one-time purchases and subscriptions, consumables give developers more ways to deliver premium experiences to customers. With consumables, you can sell products that are relevant in the moment to customers as they experience your skill.”
This new medium has the potential to provide significant revenue to brands and marketers willing to try their hand in this skill arena. This idea is supported data from Sensor Tower which reveals that in-app purchases increased by 23 percentin the past year, with iPhone users spending an average of $58 on apps. Furthermore, these figures exclude purchases from high-spend apps like Amazon and Uber.
While games were undoubtedly the primary source of in-app purchases, lifestyle apps like Tinder displayed the most year-over-year growth at 110 percent, while entertainment and social networking apps also showed a substantial increase.
The big takeaway from the analysis is that iPhone users are spending more money in-app than ever before. This dynamic has primed the market for the introduction of consumable skills.
How Marketers Can Capitalize
Smart speaker adoption continues to grow at break-neck speeds. That acceptance is giving rise to an entirely new channel that brands can use to reach consumers.
Given that nearly 50 million Americans have access to a smart speaker, it is only a matter of time before the portal is used to aggressively market products. In fact, a number of companies are already at work figuring out how to capitalize on this newfound audience.
For instance, Tide’s Stain Remover skillprovides consumers with step-by-step instructions for getting out over 200 different kinds of stains. Meanwhile, the Campbell’s Kitchen skillassists Alexa users with planning and preparing meals by listing ingredients and cooking steps or even sending recipes and shopping lists via email.
Naturally, each of these skills helps to keep the respective brand top of mind for consumers.
While it is still an underdeveloped yet quickly blooming area, there are also opportunities for brands to open up new commerce channels.
For instance, brands like 1-800-Flowers created an Alexa skillthat enables consumers to order flowers via their voice-activated devices. Shoppers can even ask Alexa for recommendations if they aren’t sure what to order. Other brands such as Domino’s Pizza and Best Buy also have skillsthrough which consumers can conduct transactions and purchase products.
However, marketers and business owners can create and leverage skills for more than generating sales or reaching consumers. They can also be utilized to bolster a brand’s productivity and efficiency.
For instance, eCommerce retailers seeking to optimize their Shopify performancecan utilize the Shopify skill to monitor order information, inventory levels, traffic analytics data, performance summaries and many other pertinent business aspects.
Alternatively, Amazon sellers can employ the Amazon Seller Central skill to achieve similar tasks while also keeping up on pending buyer messages and other important aspects of selling on Amazon.
Alexa is rapidly gaining ground in the consumer marketplace, thereby providing brands and marketers with a new method for reaching valuable audiences. Skills are the means through which businesses will be able to engage customers, generate sales, increase efficiency and actualize many new abilities.
Now is the time to begin adopting and experimenting with Alexa’s skills as, historically speaking, it is the innovators who reap the most significant rewards.
It is only a matter of time until skills become a major revenue stream for advertisers and businesses. The only question is if your brand is willing and able to cash in on the inevitable gold rush that Alexa produces.
Enjoyed reading the AG Integrated Marketing blog? Sign up for our bi-monthly newsletter to receive marketing news and advice.Follow me:
Latest posts by Ronald Dod (see all)
- 7 Reasons eCommerce Sites Fall Short - July 16, 2019
- What eCommerce Brands Can Steal from Amazon’s Model - July 2, 2019
- The Pros and Cons of Amazon’s Choice Rating - January 31, 2019