Amazon is turning to Alexa and asking it to build a big digital advertising business.
The e-tailer has been in talks with several companies about letting them promote products on the best-selling Echo devices, which are powered by the Alexa voice assistant, according to several people familiar with the matter who asked not to be named because the discussions are private. Consumer companies, including Procter & Gamble and Clorox, have been involved in these talks, according to the people.
Some of the early discussions have centered on whether companies would pay for higher placement if a user searches for a product such as shampoo on the device, similar to how paid searches work in Google.
The move by Amazon, which right now does very little advertising on the Echo, could mean big things for consumer companies that are fretting their influence on a voice-powered shopping experience.
With Alexa’s clout anticipated to rise, brands are worried about being left out of the voice-shopping platform entirely. Advertisers and brands are particularly focused on search placement on Alexa because shoppers are more likely to select a top result on a voice assistant than they are on the web, where it’s easy to scroll down or ignore written suggestions.
Amazon has hinted in the past that it will launch a paid search ad product for Alexa, but sources said that the latest talks show the e-commerce giant is preparing to make a serious run at the ad market as early as this year.
CNBC reported last week that Amazon is testing a number of ad types, including videos, for 2018.
While Amazon dominates online commerce, its web advertising business ranks fifth among U.S. companies, according to eMarketer. Amazon’s ad sales, which today mostly come from sponsored listings on the website, will grow 42 percent in 2018 to $2.4 billion, still putting the company way behind Google at $40.1 billion and Facebook at $21.6 billion, eMarketer said.
With Alexa, where advertising is currently limited, Amazon is in talks to offer companies a variety of promotional opportunities, including some that are already being tested.
One experiment in the works is letting companies target users based on past shopping behavior. For example, Alexa may suggest to a shopper who previously bought Clorox’s Pine-Sol to consider buying its disinfecting wipes. Amazon is also looking to tap advertising in Alexa’s skills. Someone asking the Echo for help cleaning up a spill might be nudged to use a specific brand.