As Cord-Cutting Grows, How Will Voice Activation Technologies Affect The Future of TV Advertising?

chrisdobson_tvOn TV And Video” is a column exploring opportunities and challenges in advanced TV and video.

Today’s column is written by Chris Dobson, CEO at The Exchange Lab.

The evolution in how we consume video content has been well documented, and we know it intrinsically from our own habits. This development has been driven by and is fueling the disruptors – subscription services such as Netflix, Hulu and Amazon Prime.

The disruptors aren’t going to disappear any time soon. Netflix just raised $800 million to fund new original content in 2017. The clear and present danger for advertisers is that these new leaders in creativity are making content that doesn’t require ads to finance it.

Consumers, especially millennials, now demand as little unwanted noise as possible, so advertisers need to change the paradigm to get their messages to land effectively. Data will be central to the shift. It is already central to online advertising but informs the process much earlier in the cycle.

As cord-cutting grows, there is an opportunity for sequential TV advertising based on an individual for some with OTT services like Showtime, Apple TV and Roku. But could the leap in voice activation technologies such as Amazon’s Alexa contribute to better TV advertising or will it be a potential obstacle?

A fully connected TV and voice command service, which could add voice data to form a more complete picture of the viewer, is surely not too far away. Amazon Alexa already seamlessly accesses Prime music and only lacks a screen to do the same with video.

Video ads of the future need to become more interactive and suited to the consumer’s terms, as demonstrated by YouTube’s recent removal of 30-second ads. What is the next iteration? Could voice offer further information on a product or instant purchasing abilities?

Disruptors Becoming Mainstream

It was clear something significant was happening when the disruptors started winning Golden Globes and BAFTAs. Many realized that original content builds infinitely greater loyalty than repeated TV shows.

The disruptors made their move as consumers started to enjoy content and expect to seek it out rather than have a schedule dictate what they watch. Viewers don’t even have to open their TV’s electronic program guide to access most content they’re watching. As a result, viewers see far fewer ads altogether.

When, in the case of Amazon, for example, that’s cleverly packaged with music and free shipping for purchases – so for a Prime customer, content feels free – the traditional ad model starts to show signs of strain.

Then we add in the extra complexity of voice. Voice AI is developing at a fast pace – currently 1% of all digital interactions are voice-activated, but that’s predicted to rise to 30% by 2020. Amazon Echo was the big winner at CES this year without even turning up in an official capacity. Consumers are circumventing search engines to voice-connect directly with their desired end destination, be that a handbag, song or “Game of Thrones.”

Amazon is forging ahead. Like Microsoft and Google, it realized early that by opening its technology to third-party companies, such as car makers and the growing wave of internet of things-ready consumer products, Amazon Prime customers can order many elements of their life by simply asking Alexa.

From Q4 2016 to Q1 2017, Amazon’s Alexa doubled its number of third-party skills – basically third-party voice-enabled apps – from 5,000 to 10,000. What that means, however, is that Amazon prioritizes its own products and your past purchases, skipping the normal search engine route and narrowing reaches of branding in the funnel.

Google Home, on the other hand, was released two years after Amazon Echo, so it has some way to catch up to Echo, which is reportedly now in 8% of US homes. This could put the search giant at a disadvantage, leading the bastion of digital advertising to lose some of its audience.

Problem Or Opportunity?

Creative thinking in advertising needs to match new content creators. The opportunity is there for innovation to take shape and for genuine change to happen. Marketers are going to have to completely rethink creative ad formats and how they’re advertising to focus on what suits the end user, rather than how to shoehorn an ad into or onto the end of a program. Any smart device has the potential to use voice technology, be that car, phone, TV, watch, ring or whatever is next to be connected. How will brand information be transmitted and broken down?

The future is being able to interact with brands, but not so much through a 30-second standard ad. The next phase of mass advertising may come in the way of advertiser-provided content, directed by a personal assistant or voice technology. Currently only search voice data can be used by companies to inform TV ads, although when added to other device data pools, a pretty clear picture of the end user can be formed.

US momentum with programmatic TV shows that the industry is keen to change to a more data-first approach of TV advertising, but we must include new models that assure content is taken into account. Broadcasters and publishers need to start thinking out of the box because the status quo will increasingly be challenged as millennials become the mass audience.

In TV shows, where there are current native ad placement opportunities, such as through technologies like Mirriad, billboard placements could be changed depending on the individual viewer in real time – rather than just in post-production as is currently the case. Going one step further – what if actual objects, like the brand of a car, could be changed depending on the demographic of those watching the program?

One of the biggest challenges with voice technology is the merging of data sets with others to form a complete picture of the consumer. Aside from differences in the technologies and normalizing data collected from different providers, privacy and data sharing is an important area of consideration. We’ll see company consolidation as one way to get around this.

Also, for Google, Apple and Microsoft to reach a similar level of integration as Amazon and its readymade retail arm, they’ll need retail partners to provide customers with the same instant-purchase opportunity.

TV has always been about movement, sound and vision. Voice represents a new opportunity to personalize the TV ad experience. It could become the dimension that makes TV ads relevant for millennials or it may finally consign TV ads to a linear throwback to a former glory age. Too strong? Maybe today, but do not underestimate how voice is going to change the way we interact with everything in the home and the car – it’s unlikely that our brand interactions will be immune.

Follow The Exchange Lab (@exchangelab) and AdExchanger (@adexchanger) on Twitter.

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1 Comment

  1. Great article Chris. When the industry discusses the future of ‘TV’ it can be unclear whether we are talking about the method of distribution, or the type of content. For example, is a 22min show that is both broadcast via a cable channel and via eg. YouTube still considered TV if consumed via Youtube?
    With traditional media, the distribution method was integrated with the content type (eg video & TV, audio & radio, text & images with print). In a digital world, those content types live on but can also be combined or enhanced. Eg a radio show that can be viewed as video, but that also could be interactive. I think it will be clearer as the industry begins to define new standard categories for content types & experience with the interactive web as the method of distribution. Whether activated by voice or touch, regardless of the screen viewed or its location.