How Local Businesses Can Take Advantage Of Their ‘Frenemy’ Relationship With Amazon

As large and small retailers head to the NRF’s Big Show this weekend, the question of Amazon as a friend/enemy or “frenemy” will hang over most of the discussions as the industry seeks to find a way to adjust to the e-tailer’s hegemony and influence with consumers.

Earlier this week, Amazon touted the benefits to SMBs during 2017. Among the highlights Amazon pointed to was that more than 300,000 U.S.-based small and medium-sized businesses joined the Amazon Marketplace.

The company also said that more than 140,000 SMBs selling on Amazon surpassed $100,000 in annual sales, while Amazon Lending surpassed $3 billion lent to small businesses on Amazon since the program started in 2011.

“More and more small and medium-sized businesses are choosing to join the Amazon Marketplace and sell right alongside Amazon to reach customers around the world. Entrepreneurs and small business owners are succeeding on Amazon – they sell half the products that Amazon customers buy, and more than 140,000 small and medium-sized businesses surpassed $100,000 in sales on Amazon in 2017,” said Peter Faricy, VP for Amazon Marketplace. “These businesses are reinvesting in their local communities – creating jobs and supporting local suppliers. We are proud of how the Amazon Marketplace helps empower so many small businesses, not just in the US, but around the world.”

Amazon’s Gravitational Force On Retail

The growth of e-commerce and the decline of store sales has largely been blamed on the gravitational pull Amazon exerts on the space.

And stats cited by  Bryan Eisenberg, co-founder of marketing consultancy BuyerLegends and co-author of  Be Like Amazon: Even A Lemonade Stand Can Do It, would seem to suggest that this is not a case of mass paranoia: Amazon captured 89 percent of all online holiday spending in the five-week period beginning on Thanksgiving, according to an analysis of credit- and debit-card transaction data by Earnest Research in New York.

In comparison, Walmart, which purchased Jet .com in 2016 for $3 billion, remained a distant second a 4.4 percent, Eisenberg notes.

Amazon has continued to move aggressively in expanding its promise of near-immediate delivery and physical pick-up options for its online shoppers by rapidly opening up fulfillment centers in major cities. But as Eisenberg suggests, there is a lot that local businesses can do to take advantage of Amazon rather than be crushed by it.

The Instant Pot Model

The first thing retailers need to do is come to terms with the fact that Amazon is determined to reach every city, town, and block with ease over the next few years.

“You can’t even say ‘Amazon dominates,’ because it’s beyond that when it comes to retail and retail search,” Eisenberg says. “When someone wants a product, they’re going to Amazon. It’s their choice to be there or not. I think retailers have to be there. Yes, you can keep them as a ‘frenemy.’ But keep in mind two things.”

The first is that when brands are exceptional, and they behave like Amazon, they can grow massively without having to compete with the e-tail giant.

One example Eisenberg offers is the phenomenal success of the Instant Pot.

While Amazon has been adding its own versions of many products sold on its platform, it isn’t going to compete with Instant Pot for two reasons, says Eisenberg: Instant Pot is priced fairly and has built a cult-like community around it. The latter is something Amazon would not be inclined or able to do.

As a result of all those factors, Instant Pot thrives in Amazon’s world.

Another example Eisenberg points to is Anker, which makes cell phone accessories, which has similarly built its brand through Amazon despite facing  white labeled items sold under Amazon’s banner. Amazon doesn’t slight or mind Anker because it adheres to what Eisenberg says is Amazon’s “four pillars”:

“They take care of their customers, they get the products to them quickly, they’re constantly innovating and creating new products, they price their products fairly, and they sell well,” Eisenberg says. “So if you live by Amazon’s rules, they leave you alone. But if you’re an Energizer or a Duracell that have gauged consumers on batteries, Amazon will create a private-label knock-off and price it to allow it to take over that market.”

The Amazon Advantage

That product proposition can also be applied to local stores, Eisenberg adds, though many of the benefits are still a few years off.

“The advantage to local businesses is – and I don’t think you’re going to see that today — that you will be able to get global reach,” Eisenberg says. “Amazon has out-Googled Google by becoming a better product search engine. They’re also potentially be competitive in retail services such as plumbers and contractors.”

That’s a space that Google, Yelp, and Facebook have been aiming to capture as well. And that competition from Amazon will give those local businesses a good deal of leverage, especially as the marketing battle among voice-activated assistants heats.

“We know that Amazon is betting the farm on Alexa and implanting that beyond Echo devices,” Eisenberg notes. “Alexa will be more deeply embedded on other people’s phones, it will be on watches and wearables, it will be on refrigerators, and most importantly, it will be in cars. It will have an important place in self-driving cars at some point.”

In the not-too-distant future scenario Eisenberg paints, a consumer will be traveling in their autonomous vehicle and decide they need a shirt for a conference they’re attending next week. They’ll tell Alexa to find it. Considering that Alexa knows the person’s size, where you like to shop, and has their payment info, the voice activated assistant will have the details in seconds. After scanning listings near the route, Alexa will ask if it should navigate to a selected store.

The store will get the sale and Amazon will be able to take a piece of that advertising business, while taking another piece through its payment system. And because Amazon can’t do everything itself, it will be a win-win for retailers, Eisenberg says.

“There are more things that Amazon can offer in terms of services that can’t fit into a warehouse or fulfillment center,” he says. “It’s also more cost efficient to rely on a retailer than on its fulfillment center.”

Eisenberg’s view is already borne out by at least two local retailers that shared their stories with Amazon.

“Since selling on Amazon, we’ve been able to grow our business from three to 40 employees, right here in Delray Beach, Florida,” said Michael Dudley, managing director of Salon’s Choice. “We recently launched on Amazon in the U.K., and are now shipping thousands of orders a day through Fulfillment by Amazon to customers around the world.”

“We launched on Amazon two years ago and are now operating in more than seven countries around the world,” said Phil Williams, CEO and founder of Coffee Gator. “2017 was our biggest year on Amazon, with sales growing by more than 100 percent year-over-year, and we expect 2018 to be even bigger.”

Nevertheless, for those retailers who plan to take their chances in terms of opposing Amazon’s local incursions, Euclid Analytics CEO Brent Franson presented his own battle plan that calls for updating co-op data and marketing strategies.

“Building an effective data co-op for retail is challenging – 55 percent of online shoppers start their product searches on Amazon, says BloomReach – but ultimately worth the battle,” Franson wrote on GeoMarketing this week. “More choice will force the industry’s three major players – Amazon, Facebook, and Google – to improve what they offer to marketers. If the competition is better, then the Big Three runs the very real risk of significant losses. Either way, the consumers – in this case, the marketers – win.

“The right co-op structure will yield better personalization based on actual customer needs and intent. It will earn customer trust by balancing privacy concerns with personalization; for example, the co-op should outline clear rules that ensure obfuscation of certain kinds of data (e.g. PII) before sharing with the pool. Finally, it will prioritize optimized marketing for long-term value. This is about building long-term relationships that reward both the retailer and the consumer; it’s not merely about immediate conversions. Each member of the cooperative should believe in, and be working toward, that goal.”

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Amazon’s Dave Isbitski: With Voice-Enabled ‘Everything,’ Brands Must Get Back To Conversational Basics

With the rise of machine learning and cloud computing to fuel innovation, natural language conversations with AI have become an everyday reality — but even voice-activated intelligent assistants become a major factor in consumers lives, brands’ sense of how to approach them as a marketing vehicle is still in its infancy.

But “every industry can [add] value based on just having a conversation,” explains Dave Isbitski, Chief Evangelist for Alexa and Echo at Amazon. And while the technology that consumers are using to power nearly every aspect of their lives has indeed evolved, “it’s still almost like what’s old is new. We’re going to back to just having a conversation.”

Following a keynote at Yext’s ONWARD conference in November entitled Voice-Enabled Everything, Isbitski talked to GeoMarketing about the reality of marketing through conversation — and the next phase of the mass transition to voice. (Full disclosure: Yext owns GeoMarketing. More details on our relationship here.)

GeoMarketing: Amazon Echo products and the Alexa assistant have become so mainstream. But do brands have a sense of how to approach using Alexa as a marketing vehicle? What’s the top question that you get from brands about how they should use Alexa as opposed to just what people are used to (i.e., text and type)?

 Dave Isbitski: The bigger question that most brands are asking themselves, and that everybody’s coming to, is, “What does it mean to be conversational?”

In terms of digital marketing, we’ve had technology, we’ve had these screens, for a long time. But now, it’s almost like what’s old is new. We’re going to back to just having a conversation. And so, a lot of brands have conversations with customers through their support centers. But those calls sometimes have a tendency to show what the technology couldn’t solve.

So another question brands should be asking: “What’s actually working with my technology today?”

What I start to see is brands will have everyone at the table. It will be, “What kind of calls are we getting from customers in our support center? What are we hearing that’s actually working? What are our reviews in our mobile app – what do people like about our mobile app?”

After that, the questions become, “What do we want to provide? What’s in our specific industry? Where can you do value?”

Because, every industry can do value based on just having a conversation.

What other trends are influencing brands in this new era of artificial intelligent-powered marketing and assistants?

The other thing that I’ve seen is chatbots. Brands who have done chatbots have started to reach that state where they can be more informal with a customer, versus trying to go through what I call “on-ramps.”

You have these on-ramps: “This is how you get to ask a question,” versus “Ask a question,” which a chatbot will give you.

If a brand has started with chatbots, and they’ve experienced that informal conversation, and they’ve seen that customer questions get resolved — which usually, they do — you start to see that expanding their marketing strategy.

Then voice conversation is a smoother transition. What you’re doing is, you’re creating this contract of the types of questions that are going to be asked.

How so?

You can take that data you have from your chatbot. Sometimes the training questions are the same. We have that at Amazon, we have Lex, which is a service through AWS. [Amazon Lex is an AWS service for building conversational interfaces into applications using voice and text].

In fact, with Lex, you can actually take the utterances and intents you’ve built, and create an Alexa skill.

What other issues are brands having to deal with in the transition to voice?

When I was talking about the on-ramps, the worst thing you can do, and I have seen this happen, is to say, “We’ve got a mobile app, this is the parameters through my service that my mobile app calls, therefore I’m going to ask those as questions.”

That’s not conversation. People will know that right away. They’re like, “This is just a back and forth, this is the IVR system. I might as well just hit the buttons on the keyboard. That’s not how conversation works.

You spend most of the time thinking about having a conversation with your customer. So, I guess the bigger question that you’re asking is more about, “What’s the starting point for this?”

Because there are over 25,000 skills, what I tell a lot of people is, “If you’re thinking you’re going to do a finance skill, for example, we’ll see what Amazon customers are saying in reviews, because there’s real data there.” You know what your customers are telling you.

But if you’re looking for voice experience, we share all that in reviews, so you could actually go through, and you could data-mine all that and say, “You know what, I consistently see people are saying this. This one’s got four stars.”

All of that is publicly available. And we saw that in the mobile space, too. If you were going to enter an area, you looked at what was getting to the top of the charts. and the question was always, “How could you create more value on top of that?” And that’s what every brand constantly has to consider.

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What Do Brands Need To Know About Using Amazon Alexa?

Even as Walmart rolls out voice-activated shopping via Amazon Echo’s Alexa and 40 million Millennials are ready to use Connected Intelligence-powered devices to order holiday gifts, most brands continue to wrestle with the implications of audio.

In a presentation at The LBMA’s Retail Loco in Atlanta last week, Noelle LaCharite, senior technical program manager for Amazon Alexa Machine Learning, offered some clear guidelines for how brands should navigate the use of voice-activation for marketing purposes.

Among her four-point outline for brands, LaCharite’s basic recommendations are:

Avoid Feature Creep. Keep It Simple. “Don’t overwhelm your users with features out of the box. Voice is a new way for users to interact with your product. Keep it simple and grow from there.”

As Natural Conversation As Possible. “Try to make your utterances as natural as they possibly can. Top Tip: Have a real world conversations with one another to create these.”

Core Business Functionality As A Minimum. “It’s important to do the fundamentals right. If you are a news company. Your users will naturally expect you to at least provide the news. Do the extra features later.”

Utilize The Built In Library. “There are hundreds of entities that Alexa can understand using the Built-In library. You can handle this in your skill by simply including them in your interaction model and respond with a useful response.”

GeoMarketing: What should brands know about Alexa’s capabilities as a marketing vehicle? Are you surprised at how much they know or how little they know?

Noelle LaCharite: People are not in a voice-first world yet. So, my goal is to be very aspirational in nature, and just expose the idea of “What would it look like if your brand thought about voice?”

The biggest question is what does your brand even sound like? It’s not something most brands have had to think about. But it’s actually there in some of the most well-known places. For example, most people know what the game show Jeopardy sounds like. You immediately have that tune in your head when the name is mentioned. You don’t have to explain anything. It’s almost common language, but it’s hard to put words around it. And yet, everyone immediately recognizes what it means.

You don’t even have to see Jeopardy. That’s what brands have to achieve now. Most brands haven’t even thought through what ear-cons are, those different sounds, chimes, audio signifiers that identify a brand without additional explanation. That is going to be so important for brands to grasp as consumers shift to a voice-first world.

Amazon Echo Alexa Dot

GeoMarketing’s Lauryn Chamberlain recently spoke to the BirchBox CEO Katia Beauchamp about the way the way Alexa has influenced the way consumers get information. So we’ll pose the same question we did to her: Does the rise of voice-activation call into question the need for a website, or the primacy of a website for brands?

The easiest thing for people to do to be successful is just to look at what are the top 10 things people do on their website. And some of them aren’t going to be top tier ranking. Some of them are going to be three clicks down or 10 clicks down. So find out what those are and make those your first things that you do. We call it the “minimum remarkable product.”

So now, brands are going to have to figure out what’s the most popular thing people are already asking for and make that a top-level indicator of intent in order to get the best interaction.

While Alexa is mostly thought of as powering the Echo in the living room or kitchen, it’s also there on your phone, in the Amazon app. Should brands be thinking of the way Alexa can tie on-the-go and at-home experiences together?

Right, Alexa on the Echo and on your phone within the Amazon shopping app is still the same Alexa.

As an example, one of my Alexa skills is daily affirmation and it’s you can do it while you’re shopping or you can do it sitting on your couch, and it’s the same experience. That’s that contextual experience we’re shooting for. So we want people to be able to say the same thing, the same way, whether they’re standing in front of their washer and dryer, in front of their fridge, or in the aisle of some store.

When we talk to retailers, there’s a lot of interest in using Alexa as a virtual sales assistant to help people while they’re browsing in a brick-and-mortar store. Do you think of those use cases as well?

From an aspirational perspective, absolutely. We’re not actively doing anything like that at the moment, but at the core, the Echo is a customer experience device. So how could you not only delight them in-store, out of store. Because someone already has Alexa on their mobile app, we’re always trying to imagine what could you do to make any brand that you either sell or associated with be more successful.

The challenge, obviously, is, with voice, if you’re in a crowded store, it’s difficult to kind of narrow down what one person is saying. Then you have to think about using voice remotes or a push button. One of the crazy ideas could be to create a phone booth that you step in and close the door.

That’s part of the brainstorming we’re constantly doing. The possibilities really are endless and that’s what’s so exciting about the emergence of voice activation.

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Target Adds Google Voice Assistant Shopping Nationwide

Target is the latest brick-and-mortar brand to sign on to accept requests made by owners of the Google Home through their voice-activated Google Assistant (aka “Okay, Google”) for delivery or pickup via its local online shopping marketplace Google Express.

In essence, the arrangement represents an expansion of Target’s existing use of Google Express.

Starting today, Target shoppers at most of its 1,800 stores in the United States can access items through Google Express and with the Google Assistant (except for Alaska and Hawaii). Target will offer two-day delivery, as well as free shipping for any orders over $35, Google says in a blog post.

Coming In 2018

Most of the capabilities of shopping through Google Express won’t be available until 2018. For example, after the new year, Target customers will also be able to use their Target loyalty membership through REDcard to get 5 percent off most Target purchases and free shipping when using Google Express. In addition, in 2018, Target shoppers will be able to link their Target.com and Google accounts, so the service will remember all their favorite items.

“We’re teaming up with Google to create innovative digital experiences using voice and other cutting-edge technologies to elevate Target’s strength in style areas such as home, apparel and beauty,” Target says. “Work is underway for Google and Target teams to bring this all to life.”

In August, Walmart unveiled plans to rollout a similar voice-activated shopping via Google Express and Google Home tools for its 4,700 U.S. stores and its fulfillment network “to create customer experiences that don’t currently exist within voice shopping anywhere else,” including choosing to pick up an order in store (often for a discount) or using voice shopping to purchase fresh groceries across the country.

These partnership on voice-activation comes roughly a year after Google Home debuted as a Connected Home product to augment Google Assistant.

“Shopping isn’t always as easy as it should be,” Sridhar Ramaswamy, SVP for Ads and Commerce, said in a blog post at the time of the Walmart deal’s announcement “When was the last time you needed to pick up something from the store but didn’t have the time to make the trip? Or you went to the store only to realize they didn’t have the brand you wanted? Wouldn’t it be nice if you could get what you want, however you want, from the stores where you already shop? We launched Google Express and shopping on the Google Assistant to do just that: make it faster and easier for you to shop your stores like Costco, Target and  Walmart.”

Okay, Google, Target shoppers are ready to talk.

Target’s Many Omnichannel Steps

For Target, the expanded Google partnership follows a series of steps designed to tackle one of the primary challenges facing its omnichannel strategy by rivals like Amazon. In August, for example, Target acquired transportation tech company Grand Junction to promise same-day delivery to customers to match one of key appeals of Amazon’s discount shopping subscription program, Prime.

It’s the latest salvo store brand has taken to meet consumers’ demands in the age of Amazon and e-commerce. Those demands include personalized recommendation and satisfying customers’ purchasing preferences, such as online shopping/in-store pickup.

But as Amazon has expanded its discounts and two-day shipping with its Prime membership option, and has just heralded its Instant Pickup option, retailers have turned to one advantage they still possess — at least for the moment — in relation to Amazon: proximity to their customers and known inventory, which makes it possible to offer the ultimate convenience of letting someone click “buy” and then having it brought to them within a few hours.

The Rise Of Connected Intelligence, The Knowledge Graph

In general, the adoption of voice-activation and on-demand delivery/pickup follows the wider capabilities stemming from the rise of Connected Intelligence and the Knowledge Graph, which have propelled personalized, one-to-one connections between brands and digital assistants such as Amazon’s Alexa, Apple’s Siri, Google Assistant, Microsoft’s Cortana, and Samsung’s Bixby as they enter the mainstream of consumer behavior.

While Amazon’s Alexa has assumed an early position as a leading voice-activated assistant, Google has stepped up its push into the space as its aligns its services to brick-and-mortar brands such as Panera Bread, which became one of the first national restaurant chains to begin offering voice-activated ordering and payment through Google Assistant.

The voice-activated ordering is currently available in Panera’s hometown of St. Louis and at its six locations in the Silicon Valley area. A full rollout of voice ordering is expected to come to all of Panera’s 2,000-plus U.S. locations by the end of the year, the company has said.

Other national brands that have formally aligned with Google’s voice-activated virtual assistant to accept spoken orders via the delivery marketplace Google Express, including Costco, Guitar Center, Kohl’s, L’Occitane, Payless, PetSmart, Road Runner Sports, Sur La Table, Ulta, Walgreens, and Amazon’s Whole Foods.

In the case of Target, the retailer has been aggressively — and at times, fitfully — revising its omnichannel strategy. For example, earlier this year, it decided to abandon its sub rosa e-commerce program called Goldfish, which was dubbed as the “store of the future.”

Before that, in August 2015, Target started a beacon program with Estimote to round out its in-store sales assistance. It’s unclear how vital the beacon program has been — or even whether Target has continued to use it —  since the company has not discussed those efforts publicly. Along the way, Target’s experiments with interactivity has included retail pop-ups and a showcase IoT-based connected home store in San Francisco.

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Nearly One-Third Of US Online Population Will Use Voice Assistants By 2019

While mobile-centric micro-moments has changed the way consumers search for and discover local businesses, the current revolution in voice-activation appears to be taking things in a different direction.

An eMarketer overview forecast of voice-enabled technology (subscription required), charts the rapid rise of Connected Intelligence-based digital assistants as making the transition from mobile to the living room.

At the moment, over 60.5 million people — 18.5 percent of the population — will use voice-activated assistants like Amazon’s Alexa, Apple’s Siri, Google Assistant, Microsoft’s Cortana, and Samsung’s Bixby, with one-third of US internet users speaking to voice assistants by 2019 (75.5 million people).

Finding Consumers’ Voice

In terms of the use cases, eMarketer cites a February study from HigherVisibility that says consumers primarily employ voice-activated assistants for “simple commands,” such as playing music (14.2 percent), setting alarms (12.6 percent), checking the weather (12.2 percent), looking up a contact (9.4 percent), and getting traffic info (7 percent).

Those numbers were further borne out by an NPR survey this summer that found most of the people surveyed used their smart speakers to play music (68 percent) or check the weather (58 percent), most of the uses offer additional points of connection for brands.

In looking at over two dozen use cases, just 13 percent of smart speaker owners use their smart speakers to find a local business.

Looking more closely at search, 20 percent Google search queries are made via voice, while 25 percent of Microsoft Bing users speak their search requests.

The Search Is On

Understanding how people are using voice-activation is the first step, said Mike Grehan, CMO of Acronym and CEO SEMPO in a panel discussion on the topic last month.

In looking at how digital assistants are impacting search, Grehan pointed a study that found 60 percent of voice queries are from people seeking a service, not search,

“When you look at the patterns that you go through, voice is about recommending and suggesting, and then you have discovery, and then you have all those keywords that are not being used to find something on the web,” Grehan said, at the panel event, The Drum Search Awards USA, which was hosted at GeoMarketing parent Yext’s offices in NYC.

A report from Forrester this past spring warned that it was high time for CMOs to face the facts that digital advertising has not worked when it comes to engaging consumers and that the emerging role of voice-activated digital assistants and the connected intelligence that powers the devices by Amazon, Apple, Google, and Microsoft will lead to only further breakdown of traditional marketing models.

Ad executives have largely dismissed that warning.

“Is this the end of advertising? I don’t think so,” Fernando Machado, Head of Brand Marketing at Burger King, told us last month at an industry event. “New technology has always opened doors for advertising. This represented a creative way to get the message out, a new way to reach our target audience, to reach our fans. That’s how we see technology: a chance to develop bigger idea that can be deployed across different channels.”

Last April, an ad campaign promoting Burger King’s Whopper set off Google Home devicesby asking its personal digital assistant what the quick serve restaurant chain’s signature product was.

Within hours, Google “blocked” devices from recognizing the question.

In the spot (a 15-second YouTube version is here), a Burger King cashier addresses the audience saying that there’s too many “delicious ingredients” in the Whopper to list in a short commercial. So, instead, the cashier leans in to the camera and says, “But I’ve got an idea: Okay, Google, what is the Whopper Burger?”

Even though Google prevented its devices from responding to the prompt, the ad got more than 10 billion impressions around the globe, with the U.S. leading the charge, Machado said.

Anselmo Ramos, founder and chief creative officer of Miami’s DAVID The Agency, said that the spot was indicative of Burger King’s irreverent, try-anything spirit and how voice-activation will simply represent another channel — in other words, a new beginning for advertising, not the end.

“When you look at radio, everybody understands how to write a spot that hits all the emotional spots,” Ramos said. “With Google Home, no one knows. It’s no territory. So we need to guess and learn. Luckily, we have a great client in Burger King that is willing to embrace new ideas, new technology.”

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Nearly Half Of Online Consumers Are Interested In Using Connected Home Devices

Awareness and interest of voice-activated digital assistants has been rising rapidly in the past year and the shifts among the main devices are reflecting that surge.

With Samsung’s Bixby being rolled out and Apple’s Siri-powered Homepod scheduled to be released at the end of the year, Microsoft and Amazon struck an agreement this week to integrate their respective Connected Intelligence agents, Cortana and Alexa.

Source: Magid Advisors

While 49 percent of U.S. consumers use their voice assistants on a weekly basis, compared with 31 percent of global respondents, according to a JWT, Mindshare, Innovation Group study, penetration of voice-activated devices is still relatively low. But the interest in such technology has clearly entered the mainstream.

As such, almost half of 2,400 consumers surveyed online by Magid Advisors expressed interest owning such a device. Among the topline findings of its report:

  • 25 percent of people who have a connected-home device use voice-activated digital assistants to shop for retail items on the internet
  • Siri (not Alexa) dominates both awareness and usage of voice-controlled digital assistant systems
  • 42 percent of people who have used a voice-controlled digital assistant said that reason is because they like to have their hands free to do other things
Source: Magid Advisors

Mike Vorhaus, president of Magid Advisors, offered a few insights into the company’s findings.

GeoMarketing: How do you see the state of virtual, connected assistants like Siri, Alexa, Cortana, Bixby, and Okay Google in terms of consumer and brand adoption/activity/use cases?

Mike Vorhaus: Siri is obviously way out front due to its distribution across Apple devices. Products like Alexa, Cortana, Google Home, etc., are all close to each other in awareness and usage to date by consumers.  This is definitely a close horse race at this point.

How do you think it will change over the next year, as Bixby is being rolled out and Apple’s Siri-powered bid for the Connected Home, Homepod, is due to be released in December?

I anticipate that the Siri/Apple device will be very appealing to consumers.  Nonetheless, the devices/software from Amazon, Google, etc., are all strong competitors.

Noting the appeal of voice-activation’s hands’ free capabilities, do you expect that speaking to a device, versus typing on it, will change consumer behavior in specific ways?

Yes, consumers will likely be less exact and will be able to repeat more information than they might otherwise when typing. That should make for better searches and better understanding of what the consumer is saying.

Does the rise of voice-activated interactions call into question the role of websites, in terms of the way they’re constructed from an SEO standpoint, to the kinds of visual-centric (as opposed to audio-oriented) information they provide?    

Yes, just like mobile devices have replaced a lot of desktop/laptop devices, I anticipate the voice-activated devices will similarly reduce use of the desktop/laptop devices.

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Age Of Connected Intelligence: Will People Pay For Fin’s Voice-Activated Assistant?

While artificial intelligence-based, voice-activated digital assistants are rapidly becoming mainstream, it’s safe to say that the respective comprehension of Amazon’s Alexa, Apple’s Siri, Google Assistant, Microsoft’s Cortana, and Samsung’s Bixby are still in the learning stages.

For the past two years, tech startup Fin has been working on an operating system that will power an interactive, machine learning-based assistant of the same name that promises to “dramatically outperform” the current leading Connected Intelligence-based virtual assistants as well as “full-time help.”

Putting A Price On Virtual Assistance

Last month, Fin, which was started by Sam Lessin, formerly of Facebook file-sharing acquisition Drop.io, and Venmo co-founder Andrew Kortina, began sending out emails touting its combination of human intelligence and AI, noting that it “remembers all of your personal context and interacts over app, email, web, sms, and phone 24×7.”

One big difference: to access Fin, you have to be a paid subscriber.

The current offer being presented to Fin users starts with the first 2 hours of service each month for $120 per month, with any additional time for $1.00 per minute. (Fuller pricing details can viewed here.)

Is Fin Viable?

While Fin’s Lessin declined to comment for this article, saying he and the company are “pretty heads down at the moment,” we reached out to two thought leaders to get their initial impressions about what sort of impact — if any — the proposition of a subscription-based, highly personalized virtual assistant might have.

“Color me skeptical for the moment,” says Local SEO Guide’s Andrew Shotland. “If it’s 10x better than GoogleNow, Siri, Alexa, there’s something there, but this seems like a very high hurdle. It’s tough enough to get the experience to work for free services. In order to get someone to pay for a digital assistant service is accuracy and utility would likely need to be very high.

“I could see some B2B use cases where there are very specific common queries,” Shotland adds, “but that starts to sound like an Alexa recipe so why not do it through that system? “Then again, perhaps Fin has figured out how to overcome some very specific challenges with these systems. And if that’s the case, it will probably get scooped up by a bigger player much like how Samsung scooped up Viv and turned it into Bixby.”

Duane Forrester, VP of Industry Insights at Yext (full disclosure: Yext is GeoMarketing’s parent company. More details on that relationship here) is a bit less skeptical than Shotland, but also senses some significant limitations to Fin’s practicality as a business.

“I love the idea,” Forrester says. “Though the execution had better knock my socks off for that kind of monthly fee. I mean, that’s close to what house cleaners cost, and that’s a value I see — and believe in. For this service to warrant those kinds of costs, it needs to stand not just head and shoulder above our current free offerings, but a whole body above.”

A Superior Assistant

In terms of the specific implications for local businesses, the rise of voice-activated assistants have coincided with the increased importance of location management in SEO strategy — namely, that making sure that business location information is correct across platforms is key to ranking in Google’s “three-pack” of top mapped results, as is using optimal keywords.

Addressing the particulars of voice search is important in the same vein, especially considering that 76 percent of “near me” searches result in a business visit within a day. In fact, last week, we reported that search volume for local places continues to grow — but explicitly stated “near me” requests are on the decline, since consumers now simply expect results that reflect their proximity.

For example, one of the features uses of Fin showcased on its site includes queries like “Please remember Cotogna as a place I can get dinner after 10pm,” or “”Hey Fin, can you identify the plant in this photo, find me a local nursery that sells them. If it is less than $300 buy it for me and have it sent to my house.”

In other words, Fin is betting that people will naturally expect their devices to help them make plans based on where they are and what’s on their calendar.

“It does make me wonder what research they have on consumer behavior that leads them to think current consumers (and more importantly, those coming up behind them) are willing to pay that much for a service we all essentially get for free today,” Forrester adds.

Within the wider context of the Connected Intelligence space of Internet of Things devices and AI, voice-activated connected device usage is skyrocketing. So the timing for an even more aspirational, luxury product like Fin appears right. But as GeoMarketing‘s Lauryn Chamberlain recently noted, voice is just one modality in the world of Connected Intelligence, with image recognition and search beginning to play a vital role as well with the introduction of Amazon’s Echo Show.

“Everything about how voice-activated assistants [talk to users or to each other] is going to be centered around: It’s got to be user-friendly, and it’s got to be an experience that can truly benefit the user,” Ben Brown, Google Home & Wifi product lead, said at the June 2017 Connections conference. “It can’t just be because an internet service provider feels the opportunity to aggregate. That doesn’t necessarily offer value unless it actually is something that someone really wants to have.”

The way Brown sees the evolution of virtual assistants is that it will follow the path we’ve seen with mobile phones and with mobile operating systems before: People may want to interact with multiple different devices [from different providers] in their lives. At the same time, people tend to build an affinity towards certain devices over time.

In that case, a platform like Fin could benefit from the growth of a Google Home, Amazon Echo, Apple Homepod, Microsoft Cortana, or Samsung Bixby, as they seek to augment one AI assistant with others.

“If I had to make a call on this, I’d say it’s a cool idea, the superior assistant, but this doesn’t feel like the path forward,” Forrester concludes. “Even a company like Samsung, with huge resources applied to the problem of building a good digital assistant has struggled with their launch of Bixby in English-language markets. Unless I’m missing something obvious and untapped, I’m not seeing what problem is being solved to such a degree as to merit the cost. And I’m hung up on the cost! In a world where people won’t pay $20 for an app — once! — how does a recurring $120/month, random-use item survive?”

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How Voice-Activation Is Becoming The New ‘Touch’

The adoption rate of smart speakers with voice assistants grew 140 percent from 2015 to 2016, according to a survey from music streaming service Pandora and Edison Research.

In particular, Pandora usage on these devices grew by a 282 percent year-over-year.

Wit that growth in mind, Pandora sought to get a sense of how the rise of devices such as Amazon’s Alexa, Apple’s Siri, Google Assistant, and Microsoft’s Cortana is opening up new opportunities for marketers to reach multiple household members in contextually relevant ways they couldn’t before.

The research bears out much of what NPR found in its recent examination of the role of voice-activation and consumers’ media usage. Roughly 65 percent of people who own an Amazon Echo or Google Home can’t imagine to going back to the days before they had a smart speaker, and 42 percent of that group say the voice-activated devices have quickly become “essential” to their lives, NPR’s research said.

Among the obvious points both NPR and Pandora’s separate studies found: listening to music was the initial reason people sought these devices for. But the use cases of have quickly mushroomed.

With Apple emphasizing entertainment as part of its marketing behind its Siri-powered smart speaker, Homepod — which is set to be released in December — the next phase of audio and voice activation may be only just emerging. But it is emerging at a rapid rate.

From Touch To Talking

As Keri Degroote, vice president of research and analytics at Pandora, notes,  it is critical for brands to align their strategies accordingly.

“Voice-activated-everything is spreading like wildfire,”Degroote says. “From what we’ve seen, yes Smart Speakers have just surpassed any fad or experimental phase. The demographics of users (particularly the high proportion of 55+) suggest that this is no longer early adopters, but has hit the mass market. And the frequency with which these devices are used amongst consumers show the true value of bringing them into their homes.”

There is still room to grow in terms of users, functionality and integration – look back on the iPhone’s launch a little over 10 years ago, she adds.

“What brand can you name that doesn’t have a presence on the app store these days?” Degroote says. “And how many brands wish they were on the top of app-store charts in the early days to secure that prime home-screen positioning? It is important brands don’t play catch up in two- or three years’ time and find themselves in the same position.”

Still, Larry Rosin, president of Edison Research, notes that the adoption curve may be different from some of the other technologies and platforms that consumers have popularized since the iPhone emerged.

For example, Facebook, Instagram, Snapchat, as well as fitness trackers and wearables, have tended to be driven first by younger tech aficionados. The rise of voice-activation has been driven by people who are older and more affluent.

“This is not just a ‘young people’s technology’ like video gaming, for example. It’s much broader in terms of its appeal. So the adoption curve is going to be a bit different than with previous technologies. To start, connected home devices are not the cheapest products. But it depends on how you consider them: if you think of them as a computer, they’re generally not that expensive. If you think of them as a novelty, then you might consider them a bit pricey. For people who can afford these devices, voice-activated devices are quite practical.”

Here are some of the topline findings of Pandora’s study, which was based on interviews with 444 U.S. adults who own a voice-activated smart speaker: Amazon Echo, Dot, Tap, or Google Home:

  • Voice-enabled home devices are creating a rise in audio consumption and music. On a weekly basis, 69 percent of people are regularly tuning into audio content on their voice-enabled smart speakers with 58 percent tuning into music for an average of 4 hours and 34 minutes per week.
  • We now search, make inquiries and buy with our voices. 46 percent of people are checking the weather, 42 percent get a joke, “Easter egg” or converse, and 40 percent are asking general questions on where to find a store or how to cook a particular recipe. 29 percent plan to make purchases with top items being technology, household goods and beauty products.
  • Adoption is beyond fast. While it took many years for there to be multiple TVs in the home, 1 out of 3 people already have 2 or more voice-enabled devices across different rooms in their home.
  • These devices are not just for the young and tech-savvy. 40 percent of these device owners are between the ages of 35-54 with younger Gen Z and Millennials, 18-34 (35 percent) coming in second (35 percent). 
  • Voice-activated devices are also social. 77 percent of people are listening to music on these devices with friends and family: creating new ways for advertisers to engage multiple members of the household at home.

What Does Voice Mean For Marketers?

When looking at the the most popular usage patterns Pandora’s study notes, it’s worth considering whether voice-activation is for all marketers — or just some who can meet a direct question-and-answer response that depends on a certain immediate need.

Can voice-activated assistants have greater impact on the purchase a consumer packaged goods product, as opposed to, say, buy a car or real estate?

“From a short-term perspective, yes it appears that brands that serve immediate needs (like CPG products) are best positioned to capitalize on Smart Speakers,” says Degroote. “This is another way of search functionality, only this time done through voice. Users are already turning to smart speakers and voice assistants to talk, search, entertain, shop, etc in moments where they may have used a screen in the past.

“However, data from a follow up study on the Pandora Soundboard suggests that Voice Assistants are going to be key referral sources for a whole range of consumer needs,” she adds.

Around 60 percent said that they’ll use Smart Speakers to find stores and business locations, suggest entertainment content like TV shows and movies, and make restaurant recommendations in the future.

“We can easily see this evolving to Voice Assistants being the first ‘port-of-call’ on how to maximize tax deductions, or develop a training routine or physiotherapy exercises –a perfect opportunity for more service-based industries to deliver their messaging and offer their services to consumers,” Degroote says.

Advertising And The Company Of Others

As Pandora’s research suggests, the use of voice may have a more social aspect to it as opposed to the smartphone, which has come to represent the most personal of “personal computing.”

Does that mean the advertising we’re used to seeing on mobile and social channels will need to reflect that the voice-activation experience is not necessarily “solo.” What impact is that social aspect likely to have — or should have — on marketing strategies aimed at leveraging smart speakers?

“Brands need to be aware of messaging to consumers on Smart Speakers, or any Connected Home device for that matter (Smart TVs, Fridges, Games Consoles),” Degroote says. “On Pandora, the majority of our listening is on mobile which usually dictates a one-to-one creative approach.”

If a listener is in their car listening via their Connected Dash, the situation changes — they could be with their children or by themselves, which may change the way a brand wants to communicate with them and “show them they know them,” Degroote notes.

“We estimate that over 50 percent of listening via Connected Home devices is done in the company of others, which gives brands the opportunity to reach many listeners at once during a number of moments and occasions,” she adds. “Being able to serve a contextual message to a father playing with his kids on the weekend, or a couple hosting a dinner party for their old college friends on Saturday night provides marketers a great opportunity to reach consumers at key moments that create relevance for their products.”

For Edison’s Rosin, who notes he’s something of an outlier among digital assistant owners: he has one voice-activated device in his kitchen and one in his bedroom. Most people tend to have them in their living room. And that will have a significant affect in the experience that people expect from the media and ads they receive from these devices.

“There is plenty of evidence that most people are using these devices while they’re together, as opposed to being alone,” Rosin says. “Audio has been hot for awhile, and the combination of audio and shared interactivity, suggests that voice and listening is only going to become more central in the way people use computers.”

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Will Voice-Activated Assistants Change Search Advertising?

With sales of voice-activated devices rising rapidly, marketers and platform companies face a big question: what will Amazon’s Alexa, Apple’s Siri, Google Assistant, and Microsoft’s Cortana mean for the search advertising?

In a panel moderated by The Drum’s Lisa Lacy, the question of Connected Intelligence-powered assistants and agents’ impact on SEO ads was put to a panel of executives who think about this daily: Purna Virji, Senior Bing Ads PPC Training Manager, Microsoft; Mike Grehan, CMO of Acronym and CEO SEMPO; Larry Kim, founder of Wordstream; Christina Connor, Global Product Lead, DoubleClick Search; and Duane Forrester, VP of industry insights at Yext (Full disclosure: Yext is GeoMarketing’s parent company. More details on that relationship here).

Distinctions Between Assistants And Agents

Understanding how people are using voice-activation is the first step, noted, Grehan, who cited a study that found 60 percent of voice queries are from people seeking a service, not search,

“When you look at the patterns that you go through, voice is about recommending and suggesting, and then you have discovery, and then you have all those keywords that are not being used to find something on the web,” Grehan said, at the panel event, The Drum Search Awards USA, which was hosted at the Yext offices in NYC.

Another point of distinction: understanding the differences between “agents” and “assistants.”

“Bill Gates did a paper where he talked about the difference between personal assistants and personal agents,” said Yext’s Forrester. “We’re all used to personal assistants, where you ask Cortana, ‘Get me an Uber’ and it opens the app and with one click, you’re ready to go. That’s versus the agent, which is actually empowered to take actions on your behalf. That fits in the world that Mike’s talking about, where it knows my affinity programs.”

Businesses are going to have to develop systems and skills they want to be a part of the “virtual conversation.”

“The way to participate is for a business to develop a ‘skill,’” said Bing Ads’s Virji. “To use the travel example, if Expedia had a skill that it creates for Cortana, I could talk to Cortana to book me a flight. I could say, ‘I’m going to Boston next week, can you get me a hotel?’ Expedia would know that the last time I stayed at a Hilton and ask me if I want to stay there again and if it wants to use the same credit card. Because Cortana is my agent, it can do all that activity in less than 60 seconds.”

The Future Of Advertising

A report from Forrester this past spring warned that it was high time for CMOs to face the facts that digital advertising has not worked when it comes to engaging consumers and that the emerging role of voice-activated digital assistants and the connected intelligence that powers the devices by Amazon, Apple, Google, and Microsoft will lead to only further breakdown of traditional marketing models.

The report, The End Of Advertising As We Know It? by Forrester analysts James McQuivey and Keith Johnston, posits a “great unraveling” of advertising that’s coming with the new models taking as much as $2.9 billion away from display advertising in the next year.

Lacy put the question directly to Google DoubleClick’s Connor: Can search advertising even exist in this voice realm?

“The answer is ‘not yet.’ We’re still trying to figure out what voice search is like, what’s a good experience versus a bad experience, what kind of questions people are asking, and how that conversation evolves over time,” Connor responded.

Bing Ads’ Purna Virji and DoubleClick’s Christina Connor

“Until we get to the point where we understand how people engage with voice search for the long term,” Connor added. “Then, we’ll be able to take steps in terms of commercializing it. Until the art of voice search has been figured out, we won’t be able to fully commercialize it.”

Wordstream’s Kim interjected that this challenge is not exclusive to pay-per-click advertising.

“If what you’re saying that a voice is going to read out a direct answer to a person’s query, then that obliterates both paid and organic search. What you’re saying is that I’m just going to get one answer, instead of 10,” Kim said.

AsVirji cautioned, it’s impossible to predict what format voice-centric advertising will take. Kim was dubious that the marketing models would quickly disappear.

“I would imagine that Google would not want to destroy a $70 billion revenue stream,” Kim said. “So I would think there could be a ‘voice ad’ before the ‘voice answer.’ Would they want to list out 10 organic answers? Probably not. ‘We want to annoy our users by speaking three answers.’ I don’t think that’s going to happen.”

Connor then suggested that the current cross-channel/multi-channel approach would naturally incorporate voice-activation and Connected Intelligence.

“We’re so used to thinking in single channel formats,” Connor said. “We’re talking about voice-to-voice right now. However, there’s also a conversation happening about cross-channel, cross-screen, the Internet of Things. What if you ask your Google Home a question and the response comes up on one of your screens? There are infinite possibilities for commercialization. You might ask a question and your Google Maps app pops up. Who knows where we’re going to be in two- to five years?”

Consumers Want Many Answers, Not Just One

For Kim, there’s still more doubt about marketers having to make any drastic changes when it comes to voice-activation.

“This is the Kool-Aid that I hear: you have to optimize for a gajillion long-tail queries for voice SEO,” Kim said. “Well, no, all these algorithms can infer the intent. So you don’t have to create a billion more keywords for every query.”

In Connor’s view, which emphasizes the notion as voice-to-voice operating within a range of connected marketing channels, when it comes to someone seeking a quick answer, voice will make traditional interruptive forms of advertising difficult, if not impossible.

But marketers can continue to count on the fact that consumers aren’t always going to want a single answer. They’ll always want choices.

“When you’re in the discovery phase — ‘show me my options for the best Thai restaurants within a three-block radius’ – I don’t just want one answer,” Connor said. :I want to be able to see all of them. I want see all the various price options for a hotel in Miami. You want to be able to visualize it as well.”

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BIA/Kelsey: Mobile Search Is Cannibalizing Desktop

The dominance of mobile and social is having a demonstrative impact on search, particularly at the local level, BIA/Kelsey’s latest local media marketplace forecast finds.

Local search on desktop devices will grow at a 5.7 percent CAGR. As more search activity takes place on mobile devices, mobile is cannibalizing search dollars from desktop.

As the use of Connected Intelligence via voice-activated assistants like Amazon’s Alexa, Okay Google, Apple’s Siri, Microsoft’s Cortana continue to make the move into the mainstream, local search is only going to undergo greater upheaval. The changes wrought by mobile versus desktop will be mirrored by the shift from screen to speaking.

That said, the full impact of voice is still just gathering.

At the present, BIA/Kelsey’s report finds trends of past years fully ingrained in marketers’ spending patterns, as online/digital is projected to grow at 13.5 percent, from $44.2 billion in 2016 to $50.2 billion in 2017.

In comparison, traditional print and broadcast will combine for a decrease of 2.4 percent, falling from $101.1 billion in 2016 to $98.6 billion in 2017.

Overall, total local ad dollars in the U.S. to reach $148.8 billion in 2017, up from $145.2 billion this year, representing a growth rate of 2.4 percent.

“A range of factors will drive local ad revenues higher in 2017 and through the end of the next year,” said Mark Fratrik, SVP and chief economist at BIA/Kelsey. “An improving U.S. economy, increased spending by national brands in local media channels, extraordinary growth in mobile and social advertising, and the continued expansion and selection of online/digital advertising platforms. In fact, we are predicting that online/digital local ad share will exceed the share of print media by 2018.”

Online/digital revenues are generated by online companies that sell locally targeted advertising that includes display, search and classified/vertical advertising. The advertisements are sold by local pure-play online companies, national online companies offering geo-targeted advertising, and local traditional media groups’ online/digital efforts.

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