‘Hey Alexa, read me an ad’

A few days ago users of the Google Home voice assistant got a little surprise. In response to typical queries such as ‘what’s the name of the drummer in Bon Jovi?’, they received the answer (Tico Torres) plus this:

“By the way, Beauty and The Beast opens in theaters today. In this version, Belle is the inventor. Sounds more like it to me.”

Eh?

There was an outcry. Google quickly removed the message.

The incident reflected just how tricky voice assistant advertising can be. People hate it. And yet Google has stressed that this wasn’t an ad. Disney confirmed it.

So Google got all the hate and didn’t even make any money from the experiment.

The incident must have concerned Google. After all, Alphabet (the parent company) is the world’s most valuable company (by market cap). And the reason for this is advertising.

In Q4 2016, Alphabet generated more than $26 billion. Its ad revenues were $22.4 billion. The biggest chunk of this revenue comes from AdWords on Google’s own sites.

AdWords, as most of you will know, places paid-for ads alongside the organic answers for any typed search. It’s the most brilliant form of advertising there is: targeted, relevant, unobtrusive and effective.

Over the years, industry developments have threatened to chip away at this cash cow. There was the switch to mobile. But Google saw that off by creating Android.

Then there was social. Sure, Facebook has grown into a digital ad giant to rival Google. But it hasn’t dented search.

Now comes voice. And we may have a problem.

When Amazon launched Echo in 2014, most observers were confused. They said: do we need a voice-controlled cylindrical speaker for the kitchen?

Well, we did. People love Echo’s ’Alexa’ assistant. The Echo (and its little sister product, Dot) were Amazon’s best selling products in 2016.

And so Amazon created the first significant comms device in a decade that isn’t some kind of phone. More recently it’s begun licensing its platform to other device makers.

Meanwhile, the other tech giants have, of course, developed their own voice services. Microsoft has Cortana, Apple has Siri and Google has Assistant (and dedicated hardware tower, Home).

Now, Juniper Research says revenue from smart audio hardware could more than triple to $5.5 billion by 2020.

The big question is how?

What’s the audio equivalent of three useful and unobtrusive ads on a search page?

The answer seems to be: no one knows.

Amazon may be better placed than Google to handle the transition. It relies on commerce, not ads, so a command such as ‘turn on the lights’ could see Alexa suggesting a replacement for bulbs that don’t work, for example.

That’s feasible. But reading out three paid for ads when someone asks about nearby restaurants? That’s not.

When analysts asked Sundar Pichai, CEO of Google, about this he dodged the question. He said: “We think about it from a long-term perspective, So I see more opportunity than challenge when I think about voice search.”

And he may be right. After all, many voice queries will return screen-based answers. And it’s also obvious that voice is a terrible channel for some use cases. Who wants spoken directions rather than a map for example?

So it all comes down to whether voice is a replacement or complement for search.

In the meantime, we at Calldorado have our own platform for making money from speaking: caller ID. Android app makers can embed the Calldorado SDK into their apps. The service is activated when the user makes a voice call.

At the end of the call, the screen displays a link back to the app (whether it’s open or not) and also serves relevant advertising.

We’re pretty confident that Amazon Echo will not stop people making phone calls.