One of the more recent entrants into the “smart” devices category, the smart speaker, is poised to have a profound effect on how we buy things. The Amazon Echo, the first of the major smart speakers, first came to market in late 2014, available only to Prime members. In mid-2015, it became available to all. New York consulting firm Activate, Inc. estimates that Amazon sold 4.4 million Echo units in the first full year of sales to the general public. According to Activate, Inc., this has the same significance as the level of early iPhone sales. Since that time, Google Home has been released directly competing with the Echo. Market research firm Gartner estimates that worldwide sales of smart speakers will top $2.1 billion.
Which may be why WPP’s CEO, Sir Martin Sorrell says that what worries him most is not other traditional advertising companies, but Amazon, which has access to consumers through both traditional online and through VPA (virtual personal assistant) channels. While Amazon is still far behind Google and Facebook in advertising revenues, it’s growing fast, and eMarketer estimates that it will generate $1 billion in ad revenue in the U.S. in 2017. It’s got a unique advantage with its database of what its users have bought in terms of item, brand, etc.
Amazon already offers special Amazon Alexa deals each week that the Echo will be more than happy to list out for its listener. And as the application learns about your usage and shopping habits, it will become “smarter” in offering you items you are more and more likely to buy. According to Werner Goertz, Research Director at Gartner, “Vendors that are able to create an intimate, familiar relationship with the user will be able to contextualize ordering to the extent that preferred products will be proposed, and processing details will already be captured. As a result, the user’s propensity to purchase products and services using VPA systems should increase, transactional friction could be reduced and the overall user experience would be improved.”
In other words, just trust your friendly old VPA. It knows what you want, how you want it and when you want it….