In 2014, Amazon decided to venture out into the business of smart speakers with its creation of Alexa. The device was itself not unprecedented, as a similar technology had already been experimented with earlier in Apple’s Siri. Last year, Google threw its hat into the ring with the creation of Google Home. For the first time in our history we can, albeit rudimentarily, carry out conversations with a form of artificial intelligence. The level of ingenuity and attention to efficacy that goes into the manufacturing of this technology requires a labor overhead so great that it simply can’t be replicated by smaller tech companies. As such, only the biggest names in tech (Amazon and Google) have dared to venture into the arena at all.
One interesting fact that emerged following the development of this technology was how it was marketed. These companies, which have made their fortunes primarily through the digital domain, decided to incorporate TV campaigns into their advertising. So why is it that companies who have hitherto made their fortunes in the online sphere decided to employ advertising techniques that were seemingly antiquated? So the question I want to analyze today, is why it is these tech titans have refused to give up on TV.
The Nature Of The Product
Google and Amazon have reached an unquestionable level of success through Internet marketing. So to explain their reasoning behind venturing into TV, we should look to the product itself for answers. The exclusive use of Internet marketing is rarely a sterling idea, as it tends to preclude businesses from reaching as many markets as possible. It is only considered by larger businesses when the service being distributed is solely done so online. Google and Amazon’s venture into hardware meant that distribution is done so through many avenues (tech stores and so forth) so the market needs to be pierced as deeply as possible, and every avenue (including TV) must be exhausted.
TV is, after all, still a tremendously popular platform for advertising. 97% of Australian homes contain a television, and the average Australian watches 2.5 hours of TV every day. Google and Amazon are using this platform because they understand that this reach is out on the tail ends of the distribution, and is virtually unmatched by other platforms of advertising.
Another advantage of TV advertising is that it reaches millions of homes irrespective of an individual’s familiarity with the product. This does expose many disinterested consumers to a product, but also many who would otherwise be ignorant of it. Internet advertising, by being so fine-tuned, tends to market to people who are already tacitly familiar with the product at hand. Google and Amazon are marketing through TV as a way to market to a whole demographic of people that are not already intimately familiar with their product lineup.
Return On Investment
Whilst linear TV ad ratings have declined, TV ad spending continues to grow. As a matter of fact, TV ad spending (and consequently traditional media spending) has consistently out-valued its digital counterpart. The reason for this is quite simple; TV generates a greater return on investment than any other medium.
Last year, the research company Ebiquity commissioned a study to examine the level of ROI TV had. It found that for every $1 invested in TV advertising, a further $1.74 were generated in return. This increase was 32% higher than the next closest form of advertising (Internet Marketing).
Thus, the reason for Google and Amazon’s interest in TV advertising is simple; TV provides substantial results. Even with the multitudes of other marketing pathways available, Google and Amazon are growing their TV spending because they realise that this form of marketing provides greater return on investment than any other platform.
Size and Perspective
What’s interesting when discussing businesses such as Amazon and Google is that their size never manages to undercut the rudiments of business. Even with the reputation and universality these names hold, advertising, moreover TV advertising, remains as relevant to them as it is to the smallest of businesses. Even the biggest of businesses are only a few bad decisions away from bankruptcy, and a failure to engage with TV is one of the worst decisions that can be made.
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