With Facebook and Google now said to be taking as much as 74 percent of incremental digital ad spend, one has to wonder whether there’s much left at all for the rest of us. But the dominance of both of these powerhouses is dependent primarily on serving ads to screens.
So what if there were no screens?
We’re starting to find out, as smart home assistants such as the Amazon Echo and Google Home begin to achieve mass acceptance. Some estimates suggest that post-Christmas the Echo, featuring its personal assistant, “Alexa,” may be in as many as eight percent of American homes.
Thanks to advances in fields such as machine learning and neural networks, voice and language recognition technologies are now exceeding the accuracy of humans, making it finally possible for devices such as the Echo to reliably and consistently understand and respond to our queries.
Connected to devices in the home (the so-called “Internet of Things”) and to the global network of services, such as the Amazon store, these devices can now meet many of our requests without the need for us to interact with a screen — whether on a mobile device, personal computer or gaming console. This is the beginning of the era of “No Interface” as foreseen by advocates such as the designer Golden Krishna. It’s simple — if we can make something happen just by speaking, why bother to look at, tap on, point and click or swipe a screen?
This poses incredible challenges for Google, Facebook and others who derive the vast majority of their revenues from ads placed on these screens and positioned alongside the content and services we seek to access. Just when you thought they had sucked all the oxygen out of the digital advertising ecosystem, we can see when looking further into the future that their own revenue foundation is by no means permanently assured.
No big two
Facebook is barely a player in the “no interface” world — they are all-screen, all the time, and at the moment it’s difficult to see how we keep getting those amusing animated gifs, family snapshots and clips of Alec Baldwin imitating Donald Trump if not for those screens in every pocket.
Google Home devices have started arriving in households, but this doesn’t solve for Google the problem of how to deliver ads; already, an increasing volume of search queries are spoken and to compensate for this Google has increased the quantity of ads it shows on search pages. How much more room is there?
By all accounts Amazon is winning the race to deploy home assistants and here it’s easier to see the benefit. Asking Alexa to order an item, to play media or access some of the other things that Amazon is built to provide creates incremental revenue for Amazon with every request. For Amazon, the Echo increases the volume of transactions whereas for Google it’s self-cannibalising as it diverts requests away from easily-monetised screens and toward a device where advertising doesn’t yet work.
Indeed, this is a big conundrum as these home assistants present a highly personalised, conversational style of engagement which leaves little room for commercial messaging. If my wife asks me in conversation to make her a cup of tea she does not want me to introduce an interstitial to tell her about the great selection of teas on offer from the local supermarket. She just wants me to go and make her some tea. That’s the conversational interface at work, and that’s what we want from our home assistant too.
For Amazon this is no problem — the faster and more efficiently they fulfil a spoken request, the more satisfied the customer (funnily enough, that’s how my marriage works, too).
It’s also a reminder of what a genius Jeff Bezos has been to steadily invest in turning his online bookshop — over the sometimes howling objections of shareholders seeking short-term profits — into a technological powerhouse that now possesses all of the necessary elements to deliver on this integrated vision. If voice and the cloud are the next operating system, Amazon may be the big winner.
For publishers who aren’t Google or Facebook, this is all fascinating but none of it solves the problem of how to stem the erosion of both print and digital advertising in order to simply stay afloat and then grow. There may be some consolation in the fact that both these giants may not be as much of a factor in 10 years time — and at least we know that Jeff Bezos personally seems to like newspapers. But even if these giants are threatened they still have more staying power than most of the rest of us.
Advertising as publishers have known it isn’t going to come back to previous levels, and with more user activity happening away from screens it’s going to be necessary for publishers to think again about new formats for their content. The short-term fix of cramming ads onto screens was never a long-term strategy and is going to be increasingly less remunerative.
The New York Times in its recent assessment of its future has set a good example in terms of recognising that revenue growth may come more from paid memberships, and that content creation needs to be driven for digital first, not print. The Times also anticipates that community engagement may become more prominent.
How this gets delivered through voice-activated home assistants is anybody’s guess, but with these assistants linked to our other devices it’s conceivable that they could wake up a nearby screen when there’s something to show. The spoken word, and perhaps some of the old techniques of writing for radio, might even become useful again. The ability to drive transactions, like Amazon, is sure to play a role.
Knowledge of what’s relevant to one’s audience, and the ability to understand the volumes of data being generated around audience interactions and transactions, will be crucial to creating successful content in the No Interface era.
And if your parents happened to name you Alexa, get used to hearing it a lot more often.
Evan Rudowski is a managing partner at Atlantic Leap