The Future of Alexa: separating speculation from facts
A small number of sensationalist headlines have led to questions and speculation about the future of Alexa.
Amazon has confirmed that it is committed as ever to the voice assistant and will continue to invest heavily, but it will be consolidating some teams and programs across its Devices & Services organisation to drive focus.
From Say it Now’s perspective, more focus will be positive for the voice ecosystem and will help continue the strong growth in smart speaker advertising that is in line with a 30% YoY uplift in Alexa engagement.
As you may have seen, there has been some speculation in the media about Amazon cutting jobs within its Devices and Services organisation that includes voice assistants such as Alexa.
We work very closely with Amazon and wanted to put a message out to help friends of Say It Now separate speculation from the facts.
Like any organisation, Amazon constantly reviews its strategies across all of its business areas to ensure it can achieve long-term success. In November, in the face of an uncertain macroeconomic environment, Dave Limp, Senior Vice President of Devices and Services at Amazon, announced that, following a deep set of reviews, Amazon will be consolidating some teams and programs across its Devices and Services organisation.
Limp added that, while this will be challenging for those affected, the Devices & Services organisation remains “an important area of investment for Amazon, and we will continue to invent on behalf of our customers.” Amazon has confirmed that it is committed as ever to the voice assistant and will continue to invest heavily. Voice assistants will continue to be an important part of Amazon’s device and services offering. You can read Limp’s full memo to staff here.
It is important to offer some wider commercial context to help understand the success of Alexa and its ability to support targeted and actionable audio advertising. There have been hundreds of millions of smart speakers sold with Alexa’s ‘Echo’ devices positioned as market leaders in the US, Canada, and many European countries. Edison’s 2022 Smart audio report cites 57% owners engage with their voice assistant daily and engagement with Alexa has risen 30% YoY according to a recent interview in The Times with Alexa’s head scientist Rohid Prasad.
The big growth story across the whole of Amazon is advertising. Amazon Advertising grew from $15BN in 2019 to over $30BN by 2021. One of the reasons we have so much support from Amazon is that we keep winning awards, educating the industry about this use case, and bringing new top-tier advertisers to the platform.
Any digital channel growing its engagement 30% YoY is doing well. We are seeing the benefits of this type of increased engagement in our Actionable Audio Ad campaigns. In September our best-performing campaign ever was for Pizza Hut. In November it was overtaken by TuneIn, and as we go into December the best-performing campaign we’ve seen in the UK is for Tesco. Amazon famously doesn’t share much Alexa engagement data; however, from our unique vantage point, we’re seeing a very strong value proposition for brands who use voice assistants to engage with their customers.
Amazon is rapidly growing its owned media footprint by showcasing Amazon Music, Prime Video, FreeVee (Ad supported Prime), and landing massive rights deals like The Premiership, UEFA, and a historic 11 year deal with Thursday Night Football. All of this owned media offers opportunities for Amazon to deliver custom and unique experiences within the ecosystem delivering lock-in for advertisers to book their media. These include harnessing capabilities offered by Alexa. At Unboxed ‘22 Amazon launched ‘Branded Experiences With Alexa’ which describes an area Say It Now has been actively developing since 2020.
Alexa has played a massive role in changing the face of the audio industry. 77% of smart speaker owners in the UK have an Amazon Echo (Alexa) according to Statista’s survey in 2022 and 50% of the UK population tune into Digital Audio weekly via a smart speaker (RAJA, 2021).
Alexa is not going anywhere, and, as our Advisor and Board Member Neil Munn loves to point out, there is no individual, company, or product that doesn’t benefit from more focus and that’s exactly what we’re seeing here from Amazon. This will lead to greater product acceleration and that’s why we are even more bullish moving into 2023 as we continue our mission to enable every advertising message to be engaged with voice. We’ll also be adding Actionable TV and multichannel measurement to an advertisers toolkit.