Google Faces Some Tough Decisions as Voice Searches Explode

 | Apr 12, 2017 | 8:36 PM EDT
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Adapting to changes in how consumers prefer to search is nothing new for Alphabet/Google (GOOGL) . Over the past two decades, the company's core search engine has evolved to let users conduct searches in browser address bars, see suggested queries, perform natural-language queries, search using a smartphone/tablet app or widget, and, of course, perform searches using one's voice.

But unlike all of the prior adjustments, voice search brings with it some big questions about how Google will monetize the activity. And while the magnitude of the threat this issue poses to Google's incredibly profitable search ad business may be overstated by some, it's nonetheless a real problem that Google is just beginning to wrap its head around.

A pair of recent ham-fisted attempts to bake ads into Google's voice assistant services show how experimental the company's voice monetization efforts still are. On Tuesday, Ars Technica observed the shopping list feature built into Google Assistant--it can be used via commands such as "OK Google, add oranges to my shopping list."--now features ads for "suggested" items that can be purchased via the Google Express rapid-delivery service. In addition, since the feature has been moved from the Google Keep note-taking app to the Google Express site, a number of features made possible by Keep integration are gone.

And last month, Google briefly played voice ads promoting Beauty and the Beast to users of the Google Home speaker. The ads, which ran just after a response was given to a voice command, were pulled just hours after they first appeared thanks to the backlash they caused.

Google's core problem: Whereas most consumers don't find the text and product listing ads that appear on search result pages to be much of a nuisance, and may indeed find them useful, the same doesn't hold for voice ads they have to listen to after getting a voice reply. And if Google deals with this by having a "paid response" occasionally act as the main reply, it risks damaging both the quality and trustworthiness of its services. Which could lead consumers to turn to Amazon.com's (AMZN)  Alexa, Apple's (AAPL)  Siri or Microsoft's (MSFT)  Cortana in response.

Limiting the fallout to some degree: Many common voice searches/commands, such as ones asking about the weather or sports scores, or ones requesting an alarm be set or a contact messaged, aren't ones for which ads are typically run against when done via typing. Google usually isn't losing out on ad revenue when such queries are done via voice, and is quick to note a lot of this activity complements rather than replaces text search activity.

By contrast, a lot of the most lucrative ads Google runs are for products and services for which a user will want to pull up a page on a website or app to learn more, see a photo or video and/or place an order. Having a voice assistant provide details won't be enough in many of these cases.

And here, it's worth noting that when Google fields a voice search through its Search app, its website or the Chrome browser, it (in addition to possibly giving a voice reply) shows a search results page that often displays ads. Performing a voice search via Google Assistant--activated on Android phones by saying "OK, Google"--yields only a voice response and a carousel of search results that lack ads. But a standard search results page can be accessed with a tap, and it's easy to see an ad or two being inserted into the carousel down the line.

But is Amazon is quickly showing with Alexa, voice does have some potential as a commerce platform. Alexa can easily (maybe too easily) be used to place Amazon orders, and also supports third-party "Skills" that let users do things like place Domino's Pizza orders and hail Uber rides. Such interactions risk taking Google's ads out of the picture, whether Google or a third party's services are used. So could ones involving requests for information about local businesses, given Google's efforts to show local business ads on Google Search and Maps.

One possible response to the e-commerce ad issue is to start giving Google voice search/Assistant users the ability to place orders for items currently advertised via Google Shopping listings found on search pages. Such integration could take a little while to pull off, since Google (unlike Amazon with Alexa) will need the help of ad-buyers.

As voice search adoption grows, the stakes are becoming meaningful. Google disclosed last May voice accounts for 20% of the queries made via its Android Search app. And a recent survey of 2,000-plus phone users from research firm HigherVisibility found 21.6% saying they use voice search at least once a day, and another 26.7% saying they use it at least once a week.

Google's success at monetizing mobile searches, in spite of the challenges posed by relatively tiny smartphone screens, provide reasons to be cautiously optimistic that it will figure out how to keep voice from hurting its search cash cow. Over time, the company's efforts to create mobile-friendly search ad formats, provide better measurement tools and work with advertisers to create mobile-optimized sites for users to visit paid off in spades.

But voice does present very unique challenges, and judging from recent missteps, Google is still in the early stages of learning how to deal with them.

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