Amazon wants more people to purchase more stuff through Alexa — and it wants the companies that make the stuff to foot the bill.
Amazon wants brands to advertise Alexa voice shopping — essentially for free
Consumer goods represent Alexa’s best chance at getting voice sales off the ground.
Rani Molla was a senior correspondent at Vox and has been focusing her reporting on the future of work. She has covered business and technology for more than a decade — often in charts — including at Bloomberg and the Wall Street Journal.
The e-commerce giant has been reaching out to consumer packaged goods companies this year, asking them to include in their advertising campaigns Alexa branding and an Alexa utterance — the phrase you’d say to make Alexa purchase, say, Tide detergent or Blue Bottle Coffee.
The terms are pretty steep.
Amazon is asking for millions of dollars worth of advertising impressions and months’-long campaigns on non-Amazon platforms to include the Alexa utterance — essentially for free, according to emails viewed by Recode.
It’s likely brands will ask for better terms if they are going to actually do this.
“In negotiations, you don’t want to start with the most reasonable offer,” Jason Goldberg, SVP of commerce at digital marketing agency SapientRazorfish, told Recode. “You start with the most favorable deal for you.”
In exchange, Amazon will give CPGs data about how well their product is performing within its category on Amazon, as well as some advertising on Amazon’s sites — stuff they don’t have to spend out of pocket to offer. Amazon will also help engineer the brand’s skill, which is basically a voice assistant’s version of a mobile app.
“In their perspective, it would be great for Amazon if all the holiday ads this year are for voice shopping,” Goldberg said. “The effect is that consumers will think voice shopping has arrived.”
Amazon declined to comment or confirm details about this marketing push.
So far, voice is nowhere close to where Amazon wants it to be, which is why Amazon is doing this in the first place. Co-marketing deals aren’t uncommon between tech companies and partners — big banks advertise Apple’s Apple Pay feature, for example — but Amazon’s efforts underscore the uphill battle to build awareness and traction for this new purchasing method.
People are doing plenty of things with voice commands on their smart speakers, but shopping isn’t really one of them. Only about a quarter to a third of U.S. smart speaker owners have ever purchased something using voice. Very few do so on a regular basis. An Information article this summer said just 2 percent of Alexa owners had made a purchase via Alexa in 2018.
That’s bad news for a revenue source that is projected by some to bring in $5 billion in a couple years.
The problem: Shopping tends to be a visual medium and people are used to pages upon pages, or shelves upon shelves, of items from which to choose. On voice, if you ask to buy a microwave, you may only get one or two brand options. That means voice would be better suited to inexpensive goods that people buy often, rather than discretionary purchases like appliances.
That’s why Amazon has targeted CPG companies, which make products like soap, diapers, packaged food and snacks: They are the best chance of getting voice shopping going.
And brands so far can’t buy ads on Alexa. What they can do is create utterances that people might use to buy their products.
Even if it doesn’t work, Amazon still gets free advertising.
This article originally appeared on Recode.net.
