Voice Control Could Cause a Boom in Ad-Supported Music and Podcasts

Creativity and commerce have a tempestuous relationship at the best of times, yet both recognise the other’s importance in monetising their work. Nowhere is this more pronounced than in ad-land, which aside from direct monetisation (paid subscriptions etc.) or a Medici-style patronage, has throughout the post-piracy era offered one of the few consistent sources of financial reward in the form of brand partnerships.

Ad dollars are relatively unsophisticated. They go wherever they feel they will receive the best return on investment exists; wherever the advertiser believes their most receptive audience is, whether that is TV or social media.  Additionally, ad spend in developed economies is also reasonably predictable as throughout the industry’s (albeit brief) history, it has remained around 1% of GDP in the US and UK for over a century. Spend also follows patterns of lower expenditure in Q1 before peaking during the Christmas season in Q4.

Why does this matter for content?

Because we are potentially about to witness a revolution in advertising via the Echo, which, as a primarily audio device, is most embellished by music and podcasts. Amazon has declared war on brand for the 90%-plus of purchases that most consumers simply do not care about. These may not be the most desirable industries, but they are staggeringly profitable. For context, the entire recorded music industry in 2016 was worth around $16 Billion. In that same year, Procter and Gamble alone delivered revenues of $65.3 billion. Its competitors in the FMCG space Unilever and Nestlé also had revenues of $65.5 billion and $68.9 billion respectively — $199.7 altogether, and we haven’t even accounted for the independent sector. Whilst such companies have in recent years cut their digital expenditure in reaction to what they perceive as poor reporting via social media platforms—expect this to be a bump in the road, they still need to reach consumers.

These companies are about to undergo a disruption. Everything into which they have invested decades of marketing to build brand equity, is about to be removed by the zero UI factor of voice. From packaging, shelf space to visual advertising cues, these companies have spent billions to incentivise consumers to buy into a brand that aligns with their personal values. In the frictionless purchase cycle the Echo engenders, Amazon in one clean swoop has rendered much of this investment superfluous.

With TV viewership declining, voice, along with social and ad-supported online video (YouTube), will become one of the few opportunities to reach consumers, thus instigating a dramatic uptake in the advertising leverage of podcasts and music shows via voice-controlled devices. Such content forms are a lean-back experience in which the user often does not skip advertising. With Amazon likely to push its own private-label brands through the device, expect this sector to invest heavily in diversifying its advertising and for audio domains to be a chief beneficiary.