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Smart Audio – A Lucrative Platform… If You Figure Out How To Leverage It

A version of this article previously appeared in Forbes.

My adult daughter recently visited us for a few weeks and she brought along a good friend… Alexa. My wife quickly adopted Alexa as a member of the family, relying on her for recipes, jokes, telling the time, predicting the weather and, of course, playing music.

When my daughter returned to her home, my wife joked that she felt guilty because she missed Alexa nearly as much as she missed our daughter.

According to a recent survey of smart audio users by NPR and Edison Research, my wife’s obsession is not outside the norm. America is smitten by smart audio / smart speakers (the terms are used interchangeably by industry analysts), making it the gift of the 2018 Holiday Season. The entire report is available HERE.

Potential Startup Opportunities

The research organization CIRP announced in August that sales of smart speakers had exceeded 50 million, with sales expected to grow 48% over the following twelve months. It is expected that the majority of these 25 million smart speakers will be sold during the 2018 Holiday Season.

The evolution of home entertainment offers numerous opportunities for startups to leverage the new and innovative ways consumers are digesting audio content. Neither Google nor Amazon offer ads on their platforms. However, just like the early days of the Internet, when Google’s search engine could be fooled with bogus backlinks and content laden with repetitive keywords, some entrepreneurs are trying to game smart audio platforms, in the hopes of engaging smart speaker users.

Although this strategy will generate revenue in the near-term, a more prudent approach is to create marketing strategies which engage users via entertaining and relevant content. Entrepreneurs who utilize a user-centric, thoughtful approach will ultimately gain the greatest benefit from smart audio platforms.

As entrepreneurs think of ways to leverage the explosive sales of smart audio technology, they should take note of the following key takeaways the NPR/Edison Research survey:

Rapid Adoption – 39 million adult Americans own at least one Smart Speaker, representing approximately 16% of the population. The consumers of Smart Audio technology have quickly progressed from early adopters to the early majority, similar to the adoption cycle of iPads, primarily due to the ease of use and the utility of Smart Audio devices.

Amazon remains the market leader, due in large part to its two-year head start. However, sales of Google’s Home product appear to be outstripping those of Amazon. That said, exact numbers are difficult to obtain, as neither company breaks out smart audio sales in their financial reporting.

Big Loser: Traditional Radio – 39% of the respondents noted that the time they are spending listening to smart audio is time taken away from traditional radio. The other big losers are smartphones and televisions, with 34% and 30% of respondents, respectively, indicating reducing usage to listen to smart audio.

Communal Experience – At least for now, most smart audio listening is done in a group setting, with 53% of the respondents noting that they access their smart speakers in the company of others in their household. Additionally, 66% indicated that they use their smart speakers to entertain friends and family members.

Given this group usage, it’s not surprising that 52% of the respondents placed their smart speaker in the living room/den/family room. The next most popular locations were the kitchen (21%) and master bedroom (19%).

Music Dominates – When asked to name the top tasks requested of their smart speakers when friends and family were present, 60% indicated “play music,” followed by “answer a general question” (30%), “get the weather” (28%) and “tell a joke” (18%).

We’ve Only Just Begun – As with most technological adoption curves, early adopters of smart audio typical purchase a single smart speaker. Once the utility is proven, they then expand their smart speaker arsenal throughout their home. 38% of the respondents noted that they intend to purchase additional smart speakers.

Hands-free Buying – It’s no secret that Google, Apple and Amazon’s interest in smart audio is to make hands free purchasing a habit. Google’s current catchphrase for Home is, “Say it to play it,” not a major leap to, “Say it to buy it.”

Early indications are that consumers are rapidly becoming accustomed to using their smart speakers as voice-controlled shopping carts. 31% of those surveyed have used their smart speaker to add an item to their online shopping carts, while 29% have researched a product for a potential purchase and 22% have re-ordered a product they previously purchased.

It’s clear we’re in the early stages of incorporating smart audio into our homes and purchasing habits. However, the speed with which the technology is being adopted is astonishing. Adobe recently predicted that by the end of 2018, nearly 50% of American households will own a smart audio device. This is a significant acceleration of Juniper’s prediction in early 2018 that the 50% threshold wouldn’t be crossed until 2022.

What’s Next? – 64% of smart audio owners indicated that they would like to access smart audio in their cars. Many newer automobiles have a form of voice-activated audio, however a 2017 Consumer Reports article noted that, “An average of only 28 percent of owners were very satisfied with voice-command systems.”

I hope my wife isn’t reading this, as we will (finally) join the ranks of smart audio households this Holiday season. Alexa play “What’s Going On? by Marvin Gaye.”

You can follow John on Twitter: @johngreathouse


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