Amazon is preparing to expand its platform and better position itself for the increasing prevalence of voice search.
The ecommerce giant will launch a paid search product, Amazon Media Group VP Seth Dellaire intimated during last week’s Industry Preview in New York.
This could be a boon to marketers looking to leverage the potential of voice search. The growing popularity of Amazon’s Alexa-powered devices including the Echo and Dot, as well as its impending addition to Huawei’s flagship smartphone, could provide a solid testing ground.
Voice is likely to be the next frontier for human-computer interaction, complementing today’s touch-and-display paradigm, and potentially replacing it as the primary interface. And runaway sales of Alexa-integrated devices suggest that voice is gaining traction among consumers. Amazon sold nine times more Echo devices than during last year’s holiday season. There’s no sure number of Echo devices sold, but Consumer Intelligence Research estimated in November that Amazon had sold over 5 million Echo devices since the product launched in 2014.
Given the overall growing success of paid search on mobile and desktop, it makes sense that Amazon would investigate ways to integrate the service into voice as it looks to leverage its increasing reach over the emerging tech. Online spending coming from clicks on paid search ads increased 45% year-over-year (YoY) in the 2016 holiday shopping season, according to data from Adlucent, a digital marketing agency.
If successful for Amazon, paid search could serve to guide strategy for other voice search companies. Figuring out how to effectively monetize voice search will be at the forefront of Google’s future strategy, Business Insider notes. Ad revenue is at the core of the search giant’s business, with paid search becoming an increasingly important part of that, particularly considering its effectiveness on mobile’s smaller screens. However, the voice search market is a completely foreign one, which will require a new way of thinking about how ads can be filtered into the environment without causing too much disruption to the user experience.
And while theoretically, sponsored content could be added to voice search results with relative ease, the issue is that the real estate for voice is much smaller than it is for screens, which can feature multiple ads without impeding on the user experience. Moreover, users turn to Amazon with a specific use case in mind (purchasing a product), but Google’s much larger sandbox landscape means that ads must be relevant and well targeted to users; this will be integral to Google maintaining its dominance in search.
The U.S. smart home market has yet to truly take off. At its current state, we believe the smart home market is stuck in the 'chasm' of the technology adoption curve, in which it is struggling to surpass the early-adopter phase and move to the mass-market phase of adoption.
There are many barriers preventing mass-market smart home adoption: high device prices, limited consumer demand and long device replacement cycles. However, the largest barrier is the technological fragmentation of the smart home ecosystem, in which consumers need multiple networking devices, apps and more to build and run their smart home.
John Greenough, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on the U.S. smart home market that analyzes current consumer demand for the smart home and barriers to widespread adoption. It also analyzes and determines areas of growth and ways to overcome barriers.
Here are some key takeaways from the report:
- Smart home devices are becoming more prevalent throughout the US. We define a smart home device as any stand-alone object found in the home that is connected to the internet, can be either monitored or controlled from a remote location, and has a noncomputing primary function. Multiple smart home devices within a single home form the basis of a smart home ecosystem.
- Currently, the US smart home market as a whole is in the "chasm" of the tech adoption curve. The chasm is the crucial stage between the early-adopter phase and the mass-market phase, in which manufacturers need to prove a need for their devices.
- High prices, coupled with limited consumer demand and long device replacement cycles, are three of the four top barriers preventing the smart home market from moving from the early-adopter stage to the mass-market stage. For example, mass-market consumers will likely wait until their device is broken to replace it. Then they will compare a nonconnected and connected product to see if the benefits make up for the price differential.
- The largest barrier is technological fragmentation within the connected home ecosystem. Currently, there are many networks, standards, and devices being used to connect the smart home, creating interoperability problems and making it confusing for the consumer to set up and control multiple devices. Until interoperability is solved, consumers will have difficulty choosing smart home devices and systems.
- "Closed ecosystems" are the short-term solution to technological fragmentation. Closed ecosystems are composed of devices that are compatible with each other and which can be controlled through a single point.
In full, the report:
- Analyzes the demand of US consumers, based off of survey results
- Forecasts out smart home device growth until 2020
- Determines the current leaders in the market
- Explains how the connected home ecosystem works
- Examines how Apple and Google will play a major role in the development of the smart home
- Some of the companies mentioned in this report include Apple, Google, Nest, August, ADT, Comcast, AT&T, Time Warner Cable, Lowe's, and Honeywell.
To get your copy of this invaluable guide, choose one of these options:
- Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
- Purchase the report and download it immediately from our research store. >> BUY THE REPORT
The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the smart home market.
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