According to Canalys, global smart speaker usage is forecast to grow 82.4% in 2019, rising from 114 million units in 2018 to 207.9 million this year. In the UK, specifically, the number of smart speaker users is predicted to grow 31.6% to 12.6 million also in 2019.
So, as user adoption increases – mainly of Amazon Echo, Google Home, and Apple HomePod – the reach for audio advertising via these devices also grows.
Brands are still exercising caution, of course, with issues related to data and trust still preventing many from investing big in audio advertising on smart speakers. However, with the likes of Amazon recently introducing new ad-based opportunities, it is proving to be all the more enticing.
So, why is this the case?
Amazon Music and YouTube music ad-supported rollout
In April this year, Amazon announced a roll-out of an ad-supported version of Amazon Music to all Echo users in the US. This means that customers who do not have a Prime membership or Amazon Music Unlimited subscription will still be able listen to a selection of playlists and stations – albeit with advertising interspersed between songs.
Similarly, Google Home users have been able to access an ad-supported version of YouTube Music since April.
For Amazon and Google, the decision is largely to do with tempting users into signing up to a paid (and therefore ad-free) subscription – and away from rivals like Spotify or Apple Music – as well as, in Amazon’s case, Prime membership.
— Backstreet Boys (@backstreetboys) May 19, 2019
It also gives Echo and Home users more utility, and could act as an incentive for potential smart speaker buyers.
The move spells good news for Amazon’s ad revenue, with the venture potentially allowing the retail giant to improve on the $10.1 billion it earned through advertising in 2018.
Under Amazon’s rules, ads are banned on Amazon Echo, apart from a few exceptions, such as advertising in skills that allow customer to order products or services, or skills that are specifically designed to promote a product or service.
Now, however, advertising through music streaming will also allow brands to get around this rule, with users being fully aware that the freemium service comes with ads.
Streaming services also get in on the act
US-based streaming and radio platform, Pandora, is also getting involved with audio advertising, in this case by selling ads targeted to Amazon Echo and Google Home devices.
Pandora previously enabled advertisers to buy across connected devices, but this move means advertisers can now target specific devices types, e.g. games consoles and smart speakers. So far, National Cattlemen’s Beef Association is one company to test to the feature, promoting its voice app ‘Chuck’ via Pandora streams on Echo.
Spotify has also been testing voice enabled ads, this time solely on mobile devices in the US. Most interestingly, Spotify’s ads are interactive, with users that say ‘play now’ being taken to another piece of relevant content.
Unilever’s Axe and the Spotify podcast ‘Stay Free: The Story of the Clash’ are the two ads currently being tested.
The next step could naturally be smart speakers. Especially considering that, in its recent earnings release, Spotify stated that: “voice speakers are a critical area of growth, particularly for music and podcasts, and we intend to continue to pursue opportunities to expand our presence in that area”.
Of course, Amazon Echo users can only connect to a Spotify Premium account (even if users can still effectively use an Echo as a Bluetooth speaker if they want to) and it seems doubtful that will change.
Advertising in consumers’ homes
In today’s ad-saturated world, many brands are looking towards audio in order to reach users in a more intimate and impactful way.
Audio (particularly via voice technology) has the power to break through the noise, delivering messages in moments when users are more actively tuned into what they are listening to.
What’s more, in comparison to radio, ads on voice-activated devices can be targeted to search behaviour and other unique data that is relevant to the individual (or the household they live in).
The fact that ads are delivered potentially to the whole household, such as a family sitting together, could be a big opportunity but also ads complexity to targeting.
Interestingly, Facebook ads already allow advertisers to target entire households with display ads, pitching the feature to advertisers who want to promote products or services where multiple people are part of the decision process. For example, ads for group activities or holidays, or supermarket or restaurant offers.
When it comes to smart speakers, it might be even harder to ensure the message is delivered in an impactful way, especially if multiple people use the device for different things (and at different times). But the remit for creatives is exciting.
It remains unclear how consumers feel about the prospect of ads on voice-enabled devices. Back in 2017, there was uproar when Google included a promotion for the Beauty and the Beast film, delivered by the Google Assistant when users asked for ‘My Day’ information.
— brysonmeunier (@brysonmeunier) March 16, 2017
Alexa includes cultural references that can be mistaken for promotions, too.
Ads have been absent though from smart speakers (as per most platform rules), with brands instead focusing on voice search optimisation in order to own ‘position zero’ – i.e. the featured snippet that search engines use for their ‘one true answer’ result. Branded skills and apps are the other option, with the most impactful being those that are truly relevant to the user’s journey.
With the arrival of ads via music streaming services, it is clear that new avenues are indeed opening up.
Could the next step be interactive ads on smart speakers, allowing users to respond via voice in order to prompt further activity – and even shop? It might sound like a big leap considering the current rules regarding paid-for ads, but thanks to the likes of Spotify and Amazon making headway, it’s certainly not such an alien concept any more.