Tag Archive: Amazon

  1. How smart speakers are changing the way we search and shop

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    Its Black Friday at the end of this week and bargain hunters across the US and Europe are readying themselves and their wallets to snap up bargains both online and in store. One thing that we can comfortably predict is that many will have their eye on a new smart speaker. The rise of the smart speaker over the last few years has been remarkable: in the US, an estimated 43.9m Americans used a smart speaker at least once a month in 2017, rising to 61.1m in 2018 and expected to increase to 76.5m by 2020 (source: eMarketer, 2018). This proliferation of smart speakers has inevitably fuelled a spike in voice search and voice commerce – and those, of course, have implications for marketers.

    Who’s using them?

    In May this year, eMarketer released its report,‘Hey Alexa, who’s using smart speakers?’. In it, the research firm points out that ‘not since the smartphone has any tech device been adopted as quickly as the smart speaker’. In fact, growth has been so strong that they predicted that the number of smart speaker users would surpass that of wearable users this year. The typical user is still the classic early tech-adopter – affluent, older millennial male – but the device is gaining traction in other demographics, particularly younger generation X women with children. What’s driving this surge? As eMarketer’s co-founder and Chief Content Officer Geoff Ramsey pointed out in his ‘Emerging Trends’ session at the ANA Masters of Marketing last month, it’s easier to talk to a device than to type into one and – crucially – smart speakers adapt to our voices and behaviour, not the other way around.

    The new battleground for the tech giants

    As is to be expected with any major technological development, the smart speaker has become the latest battleground for the tech giants, Google, Amazon, Facebook, Apple and Microsoft. Facebook and Microsoft are still to make waves in the field: the former delayed the release of its smart speaker due to user privacy concerns (understandable, given the year it has had), while Microsoft has partnered with another hardware maker instead of creating an own-brand speaker. Apple released its HomePod speaker, but the high price point and less-than-glowing reviews means it is yet to be a major player, in this space at least. That leaves Google and Amazon as the undisputed kings of the smart speaker arena. Google’s Google Home has a 29.5% share of the market, but eMarketer projected that Amazon Echo – of Alexa fame – would claim 66.6% of the smart speaker market in 2018.

    Transforming how we shop…

    As we discussed in an earlier post, Amazon is well on its way to adding a third leg to the Facebook-Google digital duopoly by increasing its advertising revenue – and its Echo smart speaker is a key way in which it will achieve this. eMarketer points out that voice is the next frontier for online commerce, and while the number of people who shop using their purchases is small (28.2% of US smart speaker owners), they predict that the number of US smart speaker buyers will double to 17.2 million between 2017 and 2018. And it is of course Amazon that benefits from this, thanks to their success in the smart speaker space and their dominance of the general ecommerce space. Echo owners can and do shop using Amazon Prime: indeed, they spend an average of $1700 a year, according to a CIRP report. That’s $400 higher than what ‘regular’ Prime customers spend annually on Amazon and 66% higher than non-Prime Amazon shoppers. CIRP’s co-founder Josh Lowitz said “We’ve long thought that Amazon is keenly focused on building increasingly loyal and frequent shopping customers, and Echo seems to promote that goal.” Brands can also create third-party apps; however, many are choosing to do this with Google Home rather than Alexa so they don’t have to compete with Amazon’s inventory.

    …and how we search

    That’s not the only way that Google may have an edge over the thus-far dominant Echo. The second most popular way that consumers use their smart speakers, after music, is search. Ramsey noted that 72% of US smart speaker users who have a smart device use them to search – it’s the second most popular activity after listening to music, and that doesn’t even include the news, weather or traffic. One third of users use them every day to search for something that they would previously have typed into a device. The implications of this for brands are particularly important. Why’s that? Because voice search usually only yields one result: consumers don’t want to listen to reams of results, and that actually could be a reason that they are choosing to use their smart speaker rather than traditional methods, so that they don’t have to sift through results. Furthermore, they don’t have to stop what they are doing.

    A voice search optimisation strategy

    The fact that there is only one search result on smart speakers means that brands either get first position or no position: it’s critically important that they start developing a solid voice search optimisation strategy to take them to the top of the search results. Econsultancy suggests that an effective way to do this is to help people when they need support with a specific task, such as cooking or trying to remove a stain – what Google has termed a ‘micro-moment’. That fits in with Ramsey’s view that voice is not just another ad vehicle – it’s a utility, and advertisers need to see it as a personalised experience that will bring consumers closer to their brand. Voice can be used to literally start a conversation with a consumer and ultimately set them along the path to purchase. As far as paid search is concerned, sponsored ad words aren’t yet available but that can surely only be a matter of time.

    Will mobile ads be impacted?

    Something else that brands need to bear in mind is that, as consumers are increasingly drawn consumers away from their mobile devices by smart speakers, they will be exposed to fewer mobile ads. We believe that it is unlikely that Amazon and Google will allow brands to ‘broadcast’ ads via their smart speakers; could this mean that digital advertising will start to see a decline?

    Agility and readiness are critical

    As the tech giants look to implement their voice assistants into other gadgets, household appliances, furniture and even cars, the opportunities for brands to become intrinsically valuable and useful to the consumer grows. With that opportunity comes complexity that will need to be navigated. As Ramsey pointed out, even the pneumonics of brand and product names will need to be considered! There is much to be gained by those who are most agile and can stay ahead.

    Thumbnail image: Shutterstock

  2. Amazon is coming for your ad dollars

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    The online shopping platform has streamlined its advertising offering, making it a real threat for Google and Facebook.

    Turning the duopoly into a triopoly

    When we think of major digital ad platforms, our thoughts naturally turn to the giants, Google and Facebook. There is no doubting that for many years the ‘big two’ have had a duopoly of advertisers’ digital budgets across much of the world. Google’s ad revenue in quarter two of this year was a huge $28 billion, while Facebook’s was a smaller but still very sizeable $13 billion, of which 15% was generated by Instagram. We’ve discussed in our blog before how Facebook seems to be struggling to grow in the face of privacy scandals and user stagnation and, conversely, how Google appears to go from strength to strength.

    However, there is a third player that’s turning the duopoly into a triopoly. A report published by eMarketer in September revealed that Amazon will more than double its US digital ad revenues this year, meaning it will overtake Oath and Microsoft to become the third largest digital advertising platform. This news came as Amazon revealed that it had streamlined its somewhat messy advertising offering into a single brand, Amazon Advertising.

    Amazon’s key advantage is its deep understanding of consumer purchasing habits

    Amazon Advertising’s model is based on the fact that around 49% of product searches in the US start on Amazon – and that offers invaluable insights into the minds of purchasers. While Google can store your implicit shopping intention, Amazon knows your actual purchasing behaviour – what you bought, when you bought it, how many clicks it took you and what other product categories you bought or considered at the same time. These insights can be used to create intelligent retargeting campaigns that showcases products that the consumer is more likely to buy at a specific time. With the drive towards Amazon Prime and the purchase of Whole Foods, those insights can become even more pertinent. Furthermore, ads on Amazon can be optimised within a matter of hours, allowing advertisers to drive a much higher return on their investment.

    Advertisers are moving budgets from Google search into Amazon ads

    It is these razor-sharp insights and real-time optimisation that are the headache for Google and Facebook, particularly the latter. Media agency executives have revealed that some

    advertisers are moving more than half the budget that they would normally invest with Google Search (an estimated 83% of Google’s ad revenues) into Amazon ads, amounting to hundreds of millions of dollars. The brands in question are almost all from the consumer product goods category, whose products are sold on the Amazon platform, and are attracted by the offering discussed above as well as the seamless shopping experience: there’s no need to set up an account or input card details, as there might be with a Google search ad. Amazon is also unburdened by the fake news problems that have dogged Facebook and, as an apolitical space, it is unlikely to be leveraged as a political tool.

    Will the lure of profit be at the expense of user experience?

    It’s possible, even likely that Amazon will be bewitched by the huge profits that can be won from advertising, at the expense of the user experience. The purchasing behaviour data that Amazon has at its fingertips means that they can develop much better targeting tools than Facebook – and just as good as Google’s. Highly effective branding campaigns therefore become a reality, and while the consumer could find these at best a distraction and at worst disturbing, it will be difficult for Amazon to resist short-term profit for something in which it is unbeatable.

    Google and Facebook are safe for now – but challenging times are ahead

    Google and Facebook aren’t in any immediate danger. Amazon is a distant third in the triopoly: it commands 4.1% of digital ad spend in the US, compared to Facebook’s 20.6% and Google’s 37.1%. And while Google’s Search revenues may be flattening somewhat, some of the drift is going into other Google properties such as YouTube, and not just Amazon’s coffers. Furthermore, brands from very lucrative advertising categories such as automotive and travel don’t currently have much incentive to move any investment to Amazon as their products are not easily sellable on the platform.

    Challenging times are ahead for Google and Facebook, in this and many respects. Amazon is certainly one to watch in this space.

    Thumbnail image: Shutterstock

  3. The march of the tech titans on live sport

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    Facebook, Amazon, Google, Twitter and others are leveraging the power of live sports to help them grow.

    People are watching sport online

    The FIFA World Cup earlier this summer and other major sporting events have confirmed what everyone has long suspected: that an increasing number of fans are streaming matches online instead of watching them the more traditional way, on television. This is very good news for tech companies such as Amazon, Twitter, Google and Facebook who are looking to leverage the passion of live sport viewers and its appointment-to-view nature as a way of reaching new users and increasing ROI on existing ones.

    Facebook has been looking for ways to super charge its growth

    Facebook in particular has upped its live sports game, aggressively pursuing the rights to air football and other sports across the world. At the end of June, the social network announced disappointing results for the second quarter: this was in part down to issues surrounding GDPR in Europe and the Cambridge Analytica scandal, but also, ironically, due to Facebook’s huge success – it has reached near-saturation point in mature markets in North America and Europe. Its future growth strategy therefore relies on two things: increasing revenue on each existing user in these mature markets, and attracting more users in countries where Facebook is less ubiquitous, particularly Asia and Latin America.

    The answer: live football

    The latter part of the strategy is already well underway, with live sports playing a key role – this was evident when they hired Eurosports CEO Peter Hutton to lead the push. Last week, it was announced that La Liga had signed an exclusive three-year deal with Facebook to live stream all its 380 matches for free to Facebook users in India, Pakistan, Bangladesh, Sri Lanka, Afghanistan, Bhutan, Nepal and the Maldives. The platform has 348 million users across these markets, with 270 million of those in India. India is a key growth market for Facebook: it already has the largest Facebook user base in the world (270 million versus the US’s 210 million) but, with a population of around 1.3 billion and a projected 500 million internet users by the end of this year, there is huge room for growth for Facebook. Increasing smartphone penetration, relatively affordable mobile data and a passionate football fanbase means that the La Liga deal is a smart move from the platform. This move is in addition to Facebook’s plans to roll out its video platform, Watch, into India – it’s currently only available in the US.

    La Liga isn’t Facebook’s only move into live football streaming: just a few days after the La Liga announcement, UEFA confirmed that Facebook had bought the media rights for certain Champions League live matches in Spanish-speaking Latin America for the

    2018-2021 cycle. The matches they have the rights to include the final and Super Cup games, and the number of top international players involved in the tournament means that it is a huge deal across the continent.

    Other tech companies are also snapping up live sports rights

    Facebook’s activities in the live sports space are matched by its competitors’: Amazon in particular has been signing deals to attract more customers to its Prime platform, including a five-year deal for the exclusive broadcast rights of the US Open tennis tournament in the UK, the rights to screen 20 Premier League football games each season, also in the UK, from 2019 to 2022 and streaming rights for Thursday night NFL games in the US. Meanwhile, Twitter works closely with the NBA, partnering with them to help people keep up with the latest news and developments and watch the games, no matter where they are. YouTube has the rights to Major League Soccer games, including the Seattle Sounders and Los Angeles FC, for which it has both streaming and broadcast rights.

    The future of live sport and entertainment looks dramatically different

    There are concerns amongst consumers, particularly in India, that slow broadband speeds will affect their enjoyment of games, and that it will take something away from the camaraderie of watching games as a group on television. This is perhaps mitigated somewhat by the fact that the games will be free to view. From an industry perspective the arrival of tech platforms on the live sports scene is a seismic shift. For advertisers, concern about TV live sports strategies being adversely affected will surely be offset by the huge opportunities presented by delivering targeted ads to passionate sports fans in real-time. For the major players in broadcasting space, it is the fear of the existential threat that this precise situation causes that has led them to rethink and overhaul how they operate; this has led to some of the huge mergers we have seen recently, including the AT&T takeover of Time Warner and Disney’s deal to purchase 21st century Fox’s film and television assets, which was recently approved by shareholders.

    There can be no denying that the media and technology industries are converging at breath-taking speed, and that the landscape will look very different, very soon. Agility and a willingness to innovate and take calculated risks will be the ways to succeed as this transformation takes place.

    Thumbnail image: Shutterstock.com