Giving Advertisers a [Literal] Voice

In the early 2000s, the rise of search engines led to a tectonic shift in the advertising industry. Through sponsored placements in search results, advertisers were able to significantly improve both the relevance and targeting of their messages. Google was — and is — the undisputed leader in this new world order, building a business that generated nearly $100B in annual revenues last year alone.

With over 20M voice-based devices expected to ship this year, the advertising world may be on the brink of yet another major change. One that has the potential to massively disrupt contextual advertising as we know it.

Simplifying Human-Machine Interaction

For advertisers, the opportunity to reach consumers over voice interfaces is limited by the design of today’s consumer-facing products. When you ask your Amazon Echo for a description of an Eames Chair, you expect a short and simple verbal answer, not a list of sources to dig through. “Imagine for a moment what it would sound like to read a whole Google search results page aloud,” observes Will Oremus in his recent Slate article, “and you’ll understand why no one builds a voice interface that way.”

So if voice-based searching becomes the norm, advertisers may eventually find themselves competing over very limited inventory in the product discovery experience.

Consumers are already adopting voice-based search and spending their money on products that support this capability. In 2015, searches made using virtual assistants like Google Now, Siri and Cortana jumped from a statistical zero to 10% of overall search volume globally. And comScore recently estimated that 200 billion searches per month will be conducted over voice by 2020 — amounting to a $50 billion annual market opportunity. As speech becomes the primary means to both ask and answer search queries, however, this might actually lead to a $50 billion erosion in browser-based search-advertising revenue.

The challenge that search advertising faces is further compounded by two additional trends related to voice-driven technology: (1) a lower tolerance for verbal spam, and (2) a growing preference for seamless advertising.

A Lower Tolerance for Verbal Spam

Few consumers would say they enjoy online advertising, but at least they can choose to ignore it in most cases. One study found that over 70% of users disregarded online banner ads, and nearly 60% did the same for search engine advertising. The use of ad blockers has also skyrocketed, reaching 45 million active users in the US in 2015. Voice ads will likely be more difficult to ignore, and as a result, advertisers will put themselves at risk of being perceived as disruptive and annoying (think audio versions of pesky pop-up ads).

Just imagine searching for a romantic movie with your significant other and being forced to first listen to a 30-second spot for the latest Coca Cola product. Aside from representing a poor consumer experience, this would give a collective heart attack to every Google engineer who has struggled to shave nanoseconds off the search engine’s performance time.

A Growing Preference for Seamless Advertising

In a world filled with smart devices, figuring out where to deliver a message will be just as important as when to deliver it. This applies not just to the consumer’s physical location, but also the specific channel and environment in which it is delivered. For example, would it be better for Alexa to play a Starbucks ad alongside someone’s morning commute recommendation, or for Siri to do so when pulling up the day’s calendar of events? A successful solution has to find the best opportunity to deliver a relevant message in the right environment.

Moreover, in order for a voice ad to avoid seeming intrusive, it should mimic the natural flow of conversation. With all the resources dedicated to making voice interfaces feel more personal and intuitive (i.e., more “human”), they can’t simply be audio versions of display ads. Instead, they’ll need to resemble the conversational tone that consumers enjoy while interacting with their virtual assistants. For example, the next time someone adds toilet paper to their shopping list, Alexa can share that Charmin is having a sale and offer to add that brand to the list.

Problems Lead to Opportunities

As we move towards a world of voice-enabled commerce, there will be many new opportunities to build the enterprise tools that unlock the potential of this growing customer channel. Amazon and Google may give companies the platform through which to access consumers, but not the tools and techniques to maximize its potential. This is where nimble startups can help solve key challenges such as: (1) designing a user experience that feels “native” to voice; (2) building the tools to simplify development; (3) finding ways to unlock insights from conversational data; and (4) balancing conversations across multiple devices.

We’re currently on the verge of another tectonic shift in the way that consumers discover and consume information from the web. Startups that can successfully navigate this new verbal medium will find big revenues in helping companies speak for themselves.