09-25-2018

Is Alexa eating brands for breakfast? Marketers: watch out!

Picture this: It’s a hectic morning. You have countless meetings ahead, so you gobble down breakfast in your kitchen. But suddenly, you pause. Where did the pan come from that your eggs sizzled in? Come to think of it, the coffee tastes different, too. And are those knives new?

It dawns on you that, in fact, you don’t recognize half of your belongings. You’re a creature of habit. So what happened? Alexa happened. She’s your personal shopper and source of information, goods, and services – all in one. You trust her to take care of things, without questioning her decisions.

When your schedule is demanding and you juggle professional and personal responsibilities, Artificial Intelligence-powered voice assistants like Alexa make life easier. She’s the brain behind countless Amazon devices like the Echo, which is a fixture in the homes of 25 million people in the US already. Germany is increasingly catching up. Currently, 6% own an Amazon Echo and 1,2% a Google Home, according to the Statista global consumer survey.

An AI assistant collects, analyzes and stores reams of data, tracking your every move and past shopping behavior. As the platforms get smarter, they better understand your personal preferences and quickly anticipate your needs. Instead of shopping in a physical store or online, by 2022,

every sixth euro will be spent via AI assistant . Today it’s just every fiftieth euro.

In the US, over 70 million households will have a voice-powered smart device in four years, according to Juniper Research.

But beware of the fine print. An algorithm determines the choices consumers have. When you say: “Alexa, order me batteries and coffee capsules,” she’ll suggest only a handful of products. Often, those happen to be Amazon brands. This poses huge challenges for marketers. Consumers will be shopping by voice without browsing for products, which impacts traditional advertising models. While it was enough to be visible among the first 15 to 20 search results on Amazon or Google, they now have to make sure that Alexa names them first.

The key to success for marketers will, therefore, be to understand the customized AI algorithms to place and promote their products on AI-powered platforms. This could entail competition models like Google’s AdWords auctions, where marketers place bids to have their products come up first in Google search results. It could also lead to new partnerships: Big retailers like Target, Walmart, Costco, and Home Depot have partnered with Google Assistant. As part of the deal, the companies’ products will be listed on Google Search, the Google Express shopping service, and the Google Assistant app on smartphones and voice devices. In return, the retailers will pay Google a share of each purchase.

Investing in voice SEO and developing apps for smart speakers will also be crucial. German fashion retailer Zalando, for example, has created a gift-finding chatbot, which asks questions to get to know the customer better and then makes recommendations.

In today’s world brands owe their success to their ability to signal quality and win buyers’ loyalty. In the world of AI platforms, customer allegiances are shifting from trusted brands to trusted AI assistants. Across Germany, the US, UK and France, 25% have used voice assistants like Alexa, Apple’s Siri, Google Assistant or Microsoft’s Cortana. 35% had purchased a consumer product or retail item using a voice assistant according to Capgemini.

Since AI assistants are becoming a dominant means of communication with consumers, they are changing the game for retailers and makers of branded products. Marketers’ current priority with creating an omnichannel customer experience will fade as AI platforms become a powerful marketing medium, sales and distribution channel, plus fulfillment and service center – all in one. Juniper predicts that advertising is the biggest revenue opportunity for voice assistants. Ad-spend could reach $19 billion globally by 2022. Advertisers will need to adjust their strategies to build a brand’s voice strategy around information provision as well as sales.

Technology is rapidly adapting to consumers‘ needs, providing convenience, speed, and ease. Marketers have to keep up – fast. Because, let’s face it, if AI assistants won’t mention your products, your business will find itself in exceedingly troubled waters – no matter how much money you spend on advertising, packaging, or branding.

So yes, Alexa is eating brands for breakfast – like management Guru Peter Drucker could have said it 😉.

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