How advertising could develop on Alexa if Amazon gives brands access

If any business is set to have a happy new year, it’s Amazon; the retailer closed the holiday season with more Prime members than ever before and record sales for its line of devices, with its Echo Dot and Fire TV Stick with Alexa Voice Remote taking the top two spots for best-selling products on the site.

In the year ahead, it looks as though Amazon has no intention of slowing down. Considering it sold “tens of millions of Alexa-enabled devices” worldwide this holiday season, it comes as little surprise that the e-commerce giant would want to find ways to monetize these gadgets - the company is reportedly in talks with P&G and Clorox to discuss letting them promote their products on its Echo smart speakers, which are powered by its digital assistant Alexa.

Some of the early discussions have “centered on whether companies would pay for higher placement if a user searches for a product such as shampoo on the device,” according to CNBC, a strategy that would mimic how paid search works on Google. Amazon has denied that it has any plans to add advertisements to Alexa.

Advertising on a voice-powered device like Echo proves to be new territory for brands because of the nature of the medium itself. The interactive yet audio-based nature of speakers like Echo means that brands won’t have the benefit of visually enticing consumers, but will have the ability to interact with them in a way that’s at least somewhat conversational.

Aaron Perlstein, broadcast director at creative media agency Noble People, thinks that consumers will be divided on whether or not they want to hear ads from their Alexa device. According to Perlstein, brands who can provide value in some way, shape or form to consumers will be welcomed more than ones who are just pushing products.

“If [a brand] can figure out where it’s additive to the experience and helpful, then I think that’s a home run versus just, ‘Hey, I paid more money than somebody else to have Brawny paper towels show up over Bounty,’” he says.

Perlstein also says it should be clear to consumers when they’re being served a sponsored response versus one from Alexa. Whether it’s through a change in Alexa’s voice or some other demarcation, he says there needs to be some type of distinction since Amazon could find itself in trouble with the FTC if consumers are unable to determine when Alexa is speaking on behalf of a brand.

While it’s still unclear how exactly advertising will play out on these devices, there are still ways for brands to connect with consumers via Alexa that don’t involve pay-to-play tactics. Perlstein points to Campbell’s, whose Alexa skill offers up recipes to users based on things like taste and time preferences. He says these “opt-in” environments are a good way for brands to utilize something like Alexa since they provide something useful for the consumer without directly trying to sell them something.

Even so, he thinks that consumers wouldn't necessarily be put off by hearing blatant advertising on their Alexa device.

“Amazon doesn’t make any secret about the fact that they are a major retailer and they’re there to sell you things,” he says. “So it shouldn’t come as a shock when advertisers want to be able to jump the line or shout louder to get somebody’s attention.”

For what it’s worth, Alexa already suggests certain products over others to consumers since suggestions are based on buying history. For example, if someone asks their Echo to “reorder dog food,” Alexa will suggest a brand that the customer has purchased before. However, advertising on the platform could potentially provide brands with the opportunity to circumvent this process if Alexa were given the ability to suggest a sponsored product rather than one the user has purchased previously.

This type of advertising could confuse and annoy consumers who are used to having Alexa suggest products they already have a shown a preference for. Brendan Witcher, principal analyst at Forrester, warns that consumers could resolve to stop using their Alexa devices altogether because of unwanted ads.

“The last thing Amazon would want is for customers to stop using their devices because suddenly there’s advertising on them,” Witcher says.

Ads from Alexa could also end up going beyond Echo devices: Amazon recently announced that makers of things like smartwatches, headphones and fitness trackers will now be able to build the smart voice assistant into their products.

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Minda Smiley

Minda Smiley is a senior reporter at The Drum covering brands. During her time at The Drum, she has covered industry events including SXSW, ANA Masters of Marketing, 4A’s Transformation and C2 Montréal. She is a graduate of the City University of New York’s Graduate School of Journalism.

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