Over the past few years, Amazon has reportedly suffered from a significant problem behind the scenes that has impacted its profits.
Echo, its Alexa-powered smart speaker, has caused the company to lose billions of dollars due to a miscalculation in how customers would use the product.
When Amazon first launched Echo in 2014, the company expected customers to use the device to purchase goods on its website by simply talking to the speaker’s voice assistant, Alexa.
Instead, customers used the speaker to complete tasks such as checking the weather and setting alarms.
As a result of this unexpected customer behavior, Amazon suffered over $25 billion in losses from its devices business between 2017 and 2021, according to a report from the Wall Street Journal last year.
To help shore up these losses, Amazon launched Alexa+ in February. Alexa+ is a paid version of Alexa powered by artificial intelligence. It costs $19.99 a month for non-Prime members and is embedded in Amazon’s new Echo devices.
Jacob Krol/TheStreet
Amazon quietly ramps up ads on Echo devices, irritating customers
As Amazon does damage control, another significant change it recently made to Echo is having unintended consequences.
Customers who own Amazon Echo Show devices, which feature smart screen displays, have noticed an uptick in advertisements on their screens and have aired out their frustrations on social media.
Usually, Echo Show devices display ads through Amazon’s Shopping Lists feature and Alexa Skills apps. Ads are also played on the devices when users listen to Amazon Music on Alexa.
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However, customers are starting to spot ads on their smart display’s home screens, which is making some device owners regret their purchase. Some of the ads that are bombarding screens include Alexa+ ads.
“Alexa+ is a work-in-progress. I can deal with that. But now the ads started showing up on my echo show devices. I had already pulled the plug on my Echo Show 5 – when my alarm clock became an annoying advertisement. Advertisements on my Echo Show devices is really a non-starter for me – a paid service (prime) that gives me unwanted ads. No thanks!!!” wrote one Amazon customer in a Reddit post.
“Ads on my echo devices will have me considering dropping Prime and Amazon Music altogether,” wrote another customer on Reddit.
“I’ve just decided to get rid of my echo shows and stick with the dots only because of the never ending ads that cannot be opted out of. It’s gotten so bad the last year or so,” wrote another.
Amazon bets big on ads to boost revenue
The move from Amazon comes after CEO Andy Jassy warned during an earnings call in July that the company would increase Alexa+ advertising as more consumers engage with the voice assistant.
I think over time, there will be opportunities, you know, as people are engaging more multi-turn conversations, to have advertising play a role to help people find discovery and also as a lever to drive revenue.
Amazon CEO Andy Jassy
Ramping up advertisements is a lever Amazon has previously pulled to boost its revenue.
For example, over the past few months, Amazon Prime Video ads have gradually been lengthened to last four to six minutes per hour, which has frustrated customers. When ads were first introduced to the platform last year, they only lasted two to three-and-a-half minutes per hour.
During the second quarter of this year, Amazon earned roughly $15.7 billion in advertising revenue, which is about 22% higher than what it generated during the same quarter last year.
Consumers want more control over how ads are displayed
Amazon isn’t the only company that has recently irritated its customers by shoving more ads in their faces. Last month, Samsung faced backlash from customers for displaying advertisements on Family Hub refrigerator Cover Screens, which appear when the screen is idle.
Consumers nationwide are making it loud and clear that they are sick of advertisements invading their devices.
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A recent white paper from ad-filtering company Eyeo and the Harris Poll contained a survey revealing that consumers believe the disruptiveness of online ads should be regulated.
- 89% of consumers want limits on the number of ads shown and/or their disruptiveness when visiting a website or streaming content for free.
- Another 89% said that they want better ways to control their ad experiences when surfing the internet on their devices.
- Also, 61% of consumers said they are less likely to purchase products when repetitive ads interrupt their viewing experience.
“One of the biggest challenges the ad industry faces in reducing consumer annoyance stems from a lack of innovation and an over-reliance on outdated, intrusive tactics,” said Stephanie Hill, former climate marketing strategy lead at WildAid, in the white paper.
“And often, it is based on laziness and lack of imagination… there’s also a reluctance to move beyond traditional display ads and interruption-based models.”
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