Monetization of voice assistants and the end of PPC advertising as we know it
The tremendous development of the voice search topic, is an irrefutable fact in the US. Televisions and smartphones took 8 to 12 years to spread to 50% of the population in the US. It took just 5 years for smart speakers such as Google Assistant and Amazon’s Alexa Echo to reach the same levels.
In 2018, Google dominated Amazon with its Google Home devices, and this trend continues in 2019.
In coming years, there will be another huge change in how people use technology. In recent years, we have learned to use mobile computers and mobile phones. But the next generation of users (i.e. generation Z) will grow up in homes that use voice assistants on a daily basis for searching, shopping and for thousands of other things we can’t even imagine.
As I said a month ago at a e-commerce conference in Prague, “virtual assistants will serve people as a personal assistants. They will make life easier for people by carrying out routine activities and streamlining their functioning”.
This new approach to searching, ordering and shopping on the Internet is linked to hundreds of areas. In this article I consider how to monetize voice assistants.
Is it “post PPC” era?
If today I want my business to be found by my customers (hypothetically, for example, a tire service), I will have a Google ad (very simply). Anyone who searches for tire services on Google will then see my ad and pay for it when someone clicks on it. Setting up this simple ad takes minutes.
However, as the number of voice assistants increases, the number of searches that do not involve any display will also grow. In 2020, such searches without display should be over 30%! In the context of non-display search, PPC advertising makes no sense and it will be necessary to devise other, completely new monetization principles that marketers and companies will be able to use.
But to talk about what monetization methods will make sense, it is important to be clear about how purchasing decisions will take place and what the customer’s path to conversion will be.
This path can be described by the hybrid framework I — R — A, where the first phase I (Intent) and the last phase A (Action) are performed by a human and R (Recommendation) via a voice assistant.
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The Intent phase expresses the intention of a person to buy, reserve or order something. This phase is triggered by need or want. The Recommendation is then an absolutely crucial part of the whole shopping experience and Action describes the final decision to buy, order or book.
The second phase, Recommendation, is the key moment that will affect which movie theater to go to, which hairdresser to book or which brand of coffee to buy.
To be relevant, these recommendations must be based on the buyer’s historical purchases, preferences, and overall knowledge, using artificial intelligence. If I prefer a particular brand of juice, my voice assistant must know which one I prefer. If I say “OK, Google, book me a time at the tire shop on Thursday at 9:00”, the assistant must know which tire service I usually go to and call there and make the reservation.
… and now to the monetization
The Recommendation phase is the one where it will be possible to monetize recommended services or e-shops. But how?
- Service / Product Recommendations (currently in search PPC style)
It will be ideal if there is no user preference. The initial order of any product is the most important one because it will set the preference.
The user will also be able to ask for a recommendation. For example, a recommendation from an Italian restaurant. And this is a great time when advertisers can prioritize their business.
Of course, Google will have to not only choose from the best bid offerings for restaurants, but it will also have to take into account many other parameters — just like “ad quality” today. Two parameters will play an important role. The first is the specifics of the user (e.g. pricing, parking, etc.), and the second parameter is the historical rating of those restaurants, which will have a major impact on whether the Google assistant recommends the business at all.
Understanding the behavior and experience of the user will be absolutely crucial.
2. Cost per conversion
If you are looking for information about a new musical, a concert or a theater performance, Google will find and recite the relevant information and offer you the opportunity to buy tickets by simple instruction. By connecting Google with the theater booking system and your bank, you will be able to buy tickets and record a concert in your calendar in seconds.
In this case, you can imagine that Google will take a commission for a fulfilled goal. Thus, Google’s motivation will not consist in the number of voice recommendations, but rather in the utmost relevancy.
A typical case may be an e-shop through which one buys the latest iPhone. The user is not so often concerned about the e-shop from which the goods will be delivered, but at what price the product will be, how long it will take to be delivered, etc. In this case, when the order is made as follows, I can imagine monetization by paying for conversion.
User: “OK, Google, I would like a new iPhone XS Max”
Voice Assistant: “I found it for 22,000 CZK with delivery tomorrow to your business address. Should I order it? ”
User: “YES”
This will order, pay by credit card, which the virtual voice assistant already knows and delivery to the address of the company it already knows.
3. Offers relevant to the current situation
In the evening, you go to the theater and Google knows that you have been driving to such events recently by taxi. Google’s assistant will evaluate that a taxi will be relevant to you this time and will offer you a direct order.
You recently visited an e-shop but did not complete the order. The operator wants to encourage you to purchase and through a voice assistant will send you a motivation discount to complete the order, which you will do with a few voice commands.
You bought a ticket and there are several services that can be used to do this: Airport parking, buying new luggage, bringing a taxi to the destination airport or booking a hotel at your destination. This and many other proactive recommendations if users are allowed to do so will be another way to monetize voice assistants. Critically important here will be the knowledge of individual users’ preferences and purchasing behavior. However, in the case of relevant operation, this may be the time-saving bonus that users will use.
What prevents monetization?
Before Recommendation level monetization can begin, Google, Amazon and other voice assistant operators will need to learn to understand each owner’s specifics and preferences and tailor their recommendations to fit. By doing so, these recommendations will gain user confidence and it will be possible to ask advertisers for money for these recommendations.
As a second obstacle I see the technological one. Seamless (I do not know the Czech equivalent) operation and choice of more variants (brands, shops, restaurants…) will be possible when the advertisers (hotels, restaurants, e-shops…) are connected to the voice assistants interface. And the more such will be, the more relevant recommendations we will receive through voice assistants.
