Will Prime Day Be A Big Power Boost For Alexa?

When a consumer talks to a voice assistant, odds are very good that Alexa‘s is the digital voice they will hear. According to eMarketer data, about 66 percent of voice speaker enthusiasts favor the Echo device, while about 30 percent favor Google Home (the remaining 4 percent are Apple HomePod fans).

But recent reports indicate that those in the industry are starting to wonder if Amazon is losing its edge in the market and running a risk of ultimately being upset by Google. According to the experts at five ad agencies interviewed by CNBC, Amazon has the advantage of size and scale – but Google might have all the smarts.

That sharp competition is, according to the same group of experts, basically a win for consumers no matter what, since it means their options in voice AI are only getting more extensive by the minute.

“The important thing as far as consumers are concerned is that they are both perfecting the consumer experience,” explained Mindshare’s Joe Maceda. “The competition of the two is going to improve the performance from the consumer perspective, which in the long run is great for advertisers.”

Good for consumers, great for advertisers – and a general win for the future of voice activation in general.

But as for the specific race at hand for smart speaker dominance, it’s probably not a series of reports that Amazon much liked.

But on the eve of Prime Day – a day that many think is about to be a very, very big day for Alexa and the products she lives on – is it something that Amazon needs to worry about?

Scale vs. Smarts

“The biggest strength of Alexa, of Amazon, is right now the market penetration and their goal of getting Alexa into everything and everywhere,” noted Chris Neff, senior director of innovation at The Community advertising agency.

With Amazon’s focus on embedding Alexa widely – and even outside their own in-house lineup of devices, Neff noted – Amazon also has spread its Alexa eggs into several baskets, so that even if Echo device sales fall off, Alexa can continue gaining market share.

Moreover, the experts seem to agree that of all the voice services out there, Alexa is hands down the better integrated retail experience because of how tightly Amazon’s voice AI is tied to its core shopping platform. And according to Patrick Givens, vice president and head of IoT and emerging tech division at VaynerSmart, that means Alexa isn’t just good for Amazon, but also for anyone who wants to sell items through Alexa apps.

“That’s a whole different way to monetize work,” said Givens.

And, agencies noted, Amazon is getting increasingly flexible and creative when it comes to their developer ecosystem, with big investments in tools to make their work easier.

“More developers are coming into the Alexa ecosystem, because they’ve made it easier for developers to create skills and apps,” said Dan Calladine, head of media futures for the media and marketing agency Dentsu Aegis. “What we are starting to see is more creativity in the space.”

But the space is large, and the places to be creative are myriad – a fact that has Google creeping up ever closer in Amazon’s rearview.

And where Google is gaining speed – and has by many counts already passed Amazon – is when it comes to actually understanding what is being said to the device. When a consumer is in transaction mode, Neff noted, Amazon is in its own league. But when it comes time for more generalized voice AI services – when it comes time for the machine to actually be a virtual assistant – Google tends to do better.

Thanks to Google’s history in search, it has a better built-in understanding of human speech, and is better at pulling up the right answers in response to it.

Research out of the Dentsu digital agency 360i backed up the belief that the Google Assistant is better at comprehending human speech. The team asked 16,000 travel, finance, retail and automotive-related questions to both devices, and found that Google Assistant was five times more likely to give a correct answer than Alexa.

“Google obviously plugs into the Google search network, which has all the resources that Google has, including all the history of search,” Dentsu’s Calladine said. “It’s why Google has become the most popular desktop search engine. I think that’s the main advantage of the Google Assistant, is that it’s one part of the whole Google ecosystem.”

And that better facility with the interactive part of voice AI – according to Sophie Kleber, global executive creative director for innovation at digital agency Huge – could ultimately be the game-changer that gives Google the lead in the AI race.

“I would potentially say that they are probably neck and neck, but Google has the advantage because of all the deep learning research they do outside of the Google Assistant space that they could tap into,” Kleber said.

The Power of Prime Day

Smarts are crucial, particularly when building smart products – but one can never underestimate the power of massive scale. And right now, of all the players in the market, Amazon has that advantage firmly under its control.

But it’s still early days – Amazon has a much larger share of today’s market, but there are many, many customers who still have not entered the market at all when it comes to voice AI or smart speakers, who remain desirable free agents for the drafting.

This is likely why Apple, which has fallen way behind the market with its 4 percent share, is not quite ready to give up the field yet. As of yesterday (July 11), the company announced that it was tapping the services of an ex-Googler in an attempt to smarten up Siri, so that she might be a bit more competitive in the emerging field. Apple is betting that they can bring up that 4 percent – not necessarily by persuading Amazon or Google customers to switch, but instead by persuading uncommitted Apple ecosystem enthusiasts (of which there are more than a couple) to gravitate toward their platform.

Amazon doesn’t just want to run the market today – they want to own it for the conceivable future, which means the mission to capture market share remains active.

But lucky for Amazon, that mission gets a major shot in the arm in a little under four days, when the 2018 Prime Day kicks off a 36-hour festival of commerce.

Because Alexa has two big ways to power up during the shopping holiday.

The first is device sales themselves, which Amazon aggressively pushed with discounting during last year’s Prime Day, and can likely be expected to do the same in 2018. Four days out, and the Echo Show has already been marked down $100 to whet consumer appetites.

But perhaps more than the devices Amazon sells, the more interesting thing to watch will be how consumers use the devices they’ve already bought. Given the volume of Echo devices and Alexa-enabled tech already out there, some watchers are expecting this Prime Day to turn out to be more than just a shopping holiday – and could actually end up being the inflection point for voice commerce.

When Prime Day kicked off last year, the Echo Show was new, the Echo Spot didn’t exist and far, far fewer people had any kind of Alexa-enabled devices. As of this year – taking a quick glance at Amazon’s holiday 2017 press release – that situation has clearly changed quite a bit. Lots of people have Echo devices this year that didn’t last year, and a lot more people are using those devices to actually transact commerce.

During the holidays, the Echo Dot was the No. 1 selling Amazon device, and the best-selling product from any manufacturer in any category across all of Amazon – and was in fact so popular that it sold out (as did the Echo Spot and Echo Buttons). The release also confirmed that “millions” of customers voice-shopped with Alexa for gifts – and that the gifts people seemed to like buying with Alexa also happen to be enabled by Alexa. The most popular items purchased by voice were the Echo Dot, Fire TV Stick with Alexa Voice Remote, and TP-Link Smart Plug Mini.

This year, there are scores of new devices out there, and legions of consumers who have several months to perfect their voice-shopping skills. That means Prime Day might not just be a record-breaking day for Alexa-enabled device sales, but could also be a record-breaking day for Alexa-based transactions.

Whether or not Amazon will make that known, or publicly release the number of Alexa-based transactions, remains to be seen. Historically, they’ve remained vague on that topic, and have been a bit more forthcoming on device sales.

But this year, in the run-up to Prime Day, Alexa’s potential for future dominance has been challenged. If the numbers are good enough, Amazon just might want to put some numbers behind reminding people which smart assistant currently rules the roost when it comes to consumer interactions.

We’ll keep you posted as Prime Day data rolls in.