The Information is reporting (N.B. paywall) that Sony became frustrated last year when Amazon refused to allow ads to be played in the company’s Jeopardy! Alexa skill. The article by Kevin McLaughlin states:
Last year, Sony Corp., maker of the Jeopardy game on Alexa, approached Amazon several times about running ads during the game, said a person with knowledge of the matter. But Amazon refused, explaining that advertising on Alexa apps (which it calls skills) could alienate users and cause them to play Jeopardy on the device less.
Amazon is Comfortable Saying No to Big Brands
Amazon certainly wants big brands like Sony to invest in Alexa as a platform for voice, but the company is not reluctant to say no. This is driven in part by the cover given by equally restrictive ad policies for Google Assistant, the big market share advantage for Alexa and Amazon’s formidable position in retail. It also may be influenced by a desire to avoid the bad publicity Google received in 2017 when an audio ad for a Disney movie was delivered to many Google Home users.
This desire went so far as to impose more restrictive Alexa advertising policies after the Google incident and while VoiceLabs was running a reportedly successful ad test with Progressive Insurance, Wendy’s and ESPN. VoiceLabs later shuttered the program based on the updated Alexa ad policies and this week transitioned its business to a voice commerce solution under the name of Alpine AI.
Subscription is the Alternative Monetization Strategy
The Information article indicated that there remains concern within Amazon that advertising may turn off customers because linear audio ads are not as easily ignored as banners and other visual formats. Amazon is proposing a monetization alternative that enables brands to charge a subscription or one-time fee. Voicebot was first to report in the fall that Jeopardy! became the first Alexa skill to offer a premium subscription offering. Since then, Amazon has formalized the process and brought on other games such as Match Game and History Channel Quiz.
Alexa Ads Are Permitted in Media and Branded Skills
It is not true that Alexa is an ad-free zone. There are ads served by media Alexa skills such as Flash Briefings, podcasts and radio. Custom Alexa skills for brands also often include promotional materials that are indistinguishable from traditional ads. And, you can sell products through Alexa skills such as pizza. Voice commerce is likely the biggest revenue generator on the platform overall. These categories are named exceptions to Amazon’s ad policy restrictions on Alexa.
It seems obvious that ads will creep into more voice assistant use cases over time. However, in the near-term Amazon is focused much more on building a positive consumer experience and habitual use of Alexa. Amazon is offering the subscription and commerce options for Alexa skill developers that would like to wade into monetization. And, it also has a monetary rewards program for developers with popular apps. Some developers are said to generate thousands per months from the rewards. This isn’t as attractive yet as the economics of Apple App store development, but Amazon is cautiously moving toward more formal monetization methods despite advertising restrictions.