By Vivian Reifschneider
20. Oktober 2021

Advertising Innovation - Part 1: Smart Speaker

Advertising Innovation - Part 1: Smart Speaker

This article has been translated. You can find the original in German here.

Radio was said to be dead. But now podcasts, digital audio, and smart speakers are creating an audio boom and making advertising on smart speakers attractive for brands. Smart speakers in particular, with their wide range of interaction options, hold great potential for native advertising. For example, according to a study by Capgemini, consumers increasingly prefer to interact with bots rather than humans, especially when it comes to researching products and finding out about new services. Nearly 70% of respondents said they will increasingly replace in-store visits with their voice assistant over the next three years.

Is this why every advertiser should integrate digital audio into their media plan? Which advertising formats can be implemented via smart speakers and how does targeting work? Answers to these and other questions can be found here.

Content:

The term "voice assistant" is often equated with "smart speaker" and used synonymously since voice assistants very often appear in this form. However, smart speakers are only the hardware that is used to use voice assistants. Voice assistants are the software that is used on smart speakers and that can retrieve information, conduct dialogues, and provide assistance services of various kinds by means of communication in natural, human language.

Definition Smart Speaker
A smart speaker is an internet-enabled speaker that is controlled by voice commands and is capable of streaming audio content, information, and communicating with both people and other devices.
 

Smart Speakers on the Rise

Smart speakers have conquered the market in record time. Within just one year, they have gained 50 million users. No other medium has ever achieved this. Traditional radio took 38 years, TV 13, and the Internet another three. One reason for this is the intuitive interaction through speech. For us humans, it is the most natural form of communication. But the barrier to entry is also very low and contributes to the rapid spread. For example, an Amazon Echo Dot is available for under €50, without a contract like the first smartphones, and is therefore affordable for a large proportion of consumers. According to the 2020 Smart Speaker Study by RMS, 92 % of 16- to 69-year-olds in Germany know at least one smart speaker provider. Amazon Echo, Google Home, and Apple HomePod are the best-known smart speakers. At the time of the study, 41% of consumers in Germany owned at least one smart speaker and 37% actively use them. This figure has even increased since the Corona lockdown.

Smart Speaker Study 2020 from RMS
Translation of the RMS graphic of the results of the Smart Speaker Study 2020


OMD's "Age of Voice 3.0" study, published in September 2021, found that 52% of German online users are now actively using voice assistants - by the end of the year, this figure will be almost 60%. Another result of the study, the use of smart speakers are becoming more and more routine. One in five uses voice control at least daily and a further 20% of respondents said they intended to do so in the future.

"Smart speakers will replace the majority of analog radios."

Elmar Stein
Head of Digital Sales,  RMS Radio Marketing Service

And if we take a look at the USA, where 64% of smart speakers are installed and thus make up the absolute majority (2nd place: China with 10%, 3rd place: Great Britain 6%, 4th place: Germany 6%, 5th place: South Korea 3%), we can see that the market is not yet saturated and continues to grow.

Advantages and Disadvantages of Audio Advertising on Smart Speakers

With the smart speaker revolution, the potential of voice advertising is growing. In particular, the possibility of direct interaction with the target group, which is missing in the classic radio, opens up new opportunities for advertisers.

"Brands that establish their own audio identity today will enjoy a head start in the market as early adopters of the technology."

Julia Stüdemann
Social Media Author

The "Spot on Voice" study by Facit Research and AS&S already found in 2018 that 61 % of users who listen to digital audio on smart speakers want to get the relevant information right away when they hear interesting content; 58 % find it good to use the reminder function without interrupting their current activity. Smart speakers are also increasingly being used as a source of information for purchases: Around half of users are interested in products and prices. 34 % have already made online purchases via smart speaker.

But there are also concerns among users: 69 % of respondents to the Ponemon Institute study "Privacy and Security in a Digital World" said they are very worried about protecting their data when using smart speakers. They are afraid that Amazon, Google, and co. are listening in. The concern is not entirely unfounded, as the devices can be mistakenly activated up to 19 times per day on average. In the study, an additional 66 % of consumers said they had received online advertising that, while relevant, was not directly based on their online search behavior and publicly available information.

Pros

Cons

  • Innovative interaction with target group through skills that are fun and offer added value

  • New touchpoints via personalized advertising formats
  • The most natural, easiest way to interact with opportunities for dialogue
  • Not a temporary phenomenon, but a sustainable trend

  • Mistrust in data security
  • Requires to establish an audio identity 

Examples of Advertising Formats on Smart Speakers

  • Sampling: Listeners hear voice advertising with a call to use the smart speaker. Sampling can be ordered via a skill, which is then sent directly to the listener. A rating can also be made via the smart speaker.
  • Extended content: Via an audio teaser spot, the listener is encouraged to call up an extended, editorial brand content via voice control, e.g. a podcast or an interview.
  • Podcasts: Via an audio teaser spot, the smart speaker user is encouraged to call up the advertised podcast via voice control.
  • Skills: Brands can develop skills for smart speakers, which in turn can be advertised in audio spots.
  • Market research: Market research can be conducted directly via smart speakers.

Targeting Options for Smart Speaker Advertising

In the audio sector, there are many different devices, WiFi radios, multi-room sound systems, smart TVs, and smart speakers with voice assistants that are not cookie-capable, so-called dump devices. Contextual targeting is possible and is offered, for example, by the audio marketer RMS, which has developed a digital audio DMP that makes it possible to refine the data from dump devices. This enables targeting as in the traditional digital channels of display and video. Instead of a cookie, each listener is assigned a so-called listener ID and enriched with first-party data they receive via the broadcasters and ad server information. The matching results give a very accurate picture of the user. Socio-demographics, interests, purchase intentions, etc. can be precisely addressed. This enables programmatically bookable inventory usage not only on desktop and mobile but also on dump devices.

Adobe Advertising Cloud's DSP also launched automated, data-driven digital audio ad buying last year in partnership with TuneIn. At launch, contextual targeting is available by device, station type, and multicultural segment. The ad format - 90-second audio ads that run twice an hour on each station - allows advertisers to drive more engagement in a less cluttered environment.

Expert Break Out with Elmar Stein, Head of Digital Sales at RMS

On the spread of smart speakers

Smart speakers have been available in Germany since 2016 and already have a market penetration of around 14%, which is extremely high. We can clearly see that after Christmas, the share goes up again significantly, here we were also already at 20% market penetration because apparently many people give a device as a gift and try it out afterwards. This directly ensures a strong uplift in traffic.

Every listener who comes via a smart speaker is a digital listener for RMS. Smart speakers are therefore a huge driver for digital business.

The potential of smart speakers

Another advantage is the back-channel capability advertisers have via the device. They can enter into a dialogue, ask consumers and provide various response options, e.g. "We have a new product. Do you think it's better in black or red? Would you like to try it?" Smart speakers actually make it possible to engage in interaction, to engage in exchange with customers, to engage in dialogue. These are all possibilities that have so far only been used in a very rudimentary way by advertisers, but still offer great potential.

Examples of audio advertising on smart speakers

What we have already done at RMS, for example, is to play ads for a podcast and then offer the possibility to open it directly via Alexa or to receive further information. Afterwards, the user comes back directly to the program. This is already possible and we are implementing it. It is also conceivable, for example, to book appointments for a workshop visit or a test drive. It is also possible to carry out samplings via smart speakers, especially at Corona times, this is difficult in the pedestrian zone by traditional means, but possible directly from home via the smart speaker or smartphone. Advertisers can send products directly to people's homes and interview them afterwards. This opens up completely new possibilities that audio offers in this area and radio cannot. This is partly due to advancing technology but also to new media usage. People are used to using smart speakers and have integrated podcast use into their media consumption, which complements each other well. Smart speakers are therefore a very big driver for us.

You can read the entire interview with Elmar Stein here.

Summary

Smart speakers enable advertisers to interact and engage with target audiences in innovative ways through new advertising formats. The daily use of voice assistants is becoming more and more routine. It is important here that advertisers place a strong focus on usability in order to offer users a positive experience.

Sources

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