In the first article of the VoiceTech series: ‘Voice Technology: more than a buzzword?’ the basics of this new and exciting technology were discussed. In this second article, we go one step further and dive into the commercialization possibilities. Do consumers already buy goods or services via their Smart Speaker? And if so, how is their purchasing behavior? Should you choose to be present on Amazon’s or Google’s ecosystem? Or both?
Do people already shop via their Smart Speaker?
Long answer short: yes, they do. 26,1% of U.S. Smart Speaker owners already made a purchase by voice. And 16% does it at least monthly. The total market is estimated on 2 billion USD in 2018 (up 10% compared to 2017). And it’s just the start: growth predictions for 2022 are already pointing at 40 billion USD.
But what is Voice commerce exactly?
Voice commerce is the interaction between a consumer and a voice assistant combined with the intent to purchase something. Simply put, Voice commerce is using your voice to make purchases. The opportunities that this brings are huge. So you better get started.
Who is already buying via their Smart Speaker? And what do they buy?
Research shows that reorders take a big piece of the pie. According to the Voice Shopping Consumer Adoption report, only 51,98% of consumers ordered something new. However, the process is relatively easy. Let’s take a simple example. Person X wants to buy a bottle of wine. He says the magical words: “Alexa, I want to buy a bottle of wine”. Alexa will then make a specific recommendation, e.g. a Barolo riserva from 2011. This recommendation will be based on your search history, a top search result, a sponsored result or Amazon’s choice.
Then you confirm by saying ‘yes’ and the order is completed. If you have kids and you don’t want them to order ten kilos of chips or a thousand beers, you can also add a password for extra safety.
But don’t be too worried about safety. Horror stories about Smart Speakers are very limited and as far as we know not a single Ferrari was bought via a Smart Speaker. In general, consumers still tend to buy low priced items via their voice-controlled audio machines. 63,9% of purchases are less than 50 dollars and only 5,9% have a value of more than 200 dollars.
Alexa decides what you buy from Amazon
In fact, Alexa makes it simple. She recommends you a product and either you buy it or either you don’t. Most people don’t like to ask a second recommendation. And certainly not a third. Alexa knows this and immediately recommends you the desired product. Bain research shows that Alexa’s first recommendation is in most cases an Amazon’s Choice (54,0%) or a top search result (41,0%). The other 5% are sponsored results.
Brands can easily tap into this knowledge. For example, a Fashion network research shows a whopping 85% of Amazon customers are likely to accept the recommended Amazon product when voice shopping.
Retailers and publishers are already seizing the opportunities
Retailers are jumping on the bandwagon (being Amazon’s and Google’s ecosystem). More than 50% of them will invest in mobile voice search in 2018. These investments will expectedly flow for a large part to Amazon and / or Google.
Amazon has on this moment the strongest position in terms of Voice commerce. Jeff Bezos’s company is leading the Smart Speaker market with an estimated market share of 61,9%. Another important argument is that a lot of small and big retailers already are active on their ecosystem.
Google (26,9%) has not even half of Amazon’s market share in terms of Smart Speakers and hasn’t got a lot of retail experience. To participate in the Voice Commerce Battle, Google had to come up with a new initiative. And they did. Google Express was launched in the US (still not available in other countries), partnering up with big retailers such as Walmart, Costco and Target. The whole Voice commerce concept and approach is similar to that of Amazon.
Publishers aren’t sitting idle either. A stunning 58% of them will be focusing this year on content for AI, Smart Speakers and Intelligent Agents.
But how do you advertise on Smart Speakers?
Briefly summarized there are three ways to be present as a brand on Smart Speakers:
- your own skill or action
- external advertising
- self-intended advertising
Establishing their own skill (kind of Smart Speaker application) and / or action (same as skill but than for Google Home) allows for brands to bring real added value to their customers by interacting with them. A lot of companies already did it before. You can, for example, already order and manage a Uber-ride or arrange a pizza delivery by voice.
External advertising is all about being present on sponsored content that comes out of Smart Speakers. Simple examples of this are ads on radio channels, music streaming services, and podcasts. Self-intended advertising takes Smart Speaker advertising a couple steps further. It allows users to start a conversation with their Smart Speaker about products, brands, and companies. You can for example hear an ad on TV or on your Smart Speaker and ask more information about this. Or you can ask, ‘Alexa, which bands are playing in Mechelen this weekend?’ to give Amazon the opportunity to recommend you certain gigs. This really ads an extra dimension to advertising. One layer to trigger them, one layer to provide them with more information.
Want to know more about Voice Technology?
Wondering how Voice Technology will evolve? And what’s in it for your brand and for you as a marketer? Is there already such a thing as Voice commerce? And how can you seize the opportunities smart speakers bring to the table?
Register for our 3-part article series and discover the ins and outs of Voice Technology.
References: Voicebot, Bain, Fashion Network, International News Media Association