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VoiceLabs is putting interactive ads into your Alexa skills

After "months of testing," the analytics startup is now connecting the developers of your favorite Alexa skills with advertisers like ESPN, Progressive and Wendy's.

It's been said that nothing is certain save for death and taxes -- but perhaps advertising belongs on the list, too. Case in point: news this morning that an analytics firm called VoiceLabs is now helping developers to add interactive "sponsored messages" from "tier one" names like Wendy's or Progressive into Amazon Alexa's voice skills.

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The Amazon Echo, Tap and Echo Dot.

Chris Monroe/CNET

"We're the first and only company that's doing this, as far as I know," says Adam Marchick, CEO and co-founder of VoiceLabs. It's actually his third company. Marchick's last one, Kahuna, secured $56 million in investments over two rounds from the venture capital firm Sequoia Capital before he stepped down as CEO early last year. He retains a chairman role.

Kahuna's claim to fame? Inventing "the world's first customer engagement engine dedicated to targeting and delighting customers of all demographics." The company's listing on Sequoia's website goes on to tout Kahuna's "powerful artificial-intelligence-driven products that target customers through social networks at just the right time and in just the right way."

Marchick is still in the same game, but he's playing in a new arena now: voice. And, with the stratospheric rise of Amazon's virtual voice assistant Alexa -- and the growing number of Amazon Echoes and Echo Dots in people's homes -- it's hard to blame him.

The VoiceLabs approach is to bring advertisers and developers together. Marchick gave me the example of a developer making a sports trivia skill for Alexa. After opting in with VoiceLabs, that developer could pick which advertisers they'd like to integrate into their skill. Say they choose ESPN, one of the big names VoiceLabs is launching with.

The user won't hear anything different the first few times they launch the skill, Marchick tells me, but after that, they might hear something like "Thanks for playing our game, and thanks to ESPN for supporting us" upon launch. Then, a few uses later, the skill might pause to tell them that there's a playoff basketball game on ESPN that night -- would they like to be reminded to tune in?

There's just one problem. That approach doesn't seem to fit into Amazon's established guidelines for advertising on Alexa. Those guidelines state that Amazon can and will reject Alexa skills that:

  • Contain any advertising for third-party products or services, except in streaming music, streaming radio or flash briefing skills where ads are not the core functionality of the skill.
  • Contain any advertising using Alexa's voice and/or Alexa app home cards.

To get around that, VoiceLabs is, for now, sticking to that exception Amazon carved out for streaming skills and flash briefings (Marchick admitted that the sports trivia skill example was hypothetical at this point, but told me that I could just swap in a sports podcast skill to get a sense of what they're able to do today).

"We are 100 percent in compliance with Amazon's policies," Marchick said, but added, "Today, there are around 3,000 flash briefing and streaming skills. What are the other 10,000 skills developers that have invested even more in developing their skills going to do for monetization? This needs to be addressed."

In other words, if Amazon softens its advertising policies for Alexa, VoiceLabs stands to quadruple its customer base -- including countless small-sized, independent developers eager to find new ways of monetizing their work.

"Pretty much everyone wants to make money," says Marchick.

At the start of 2017, the number of Alexa skills had topped 7,000. That number has nearly doubled to 13,000 since then.

Voicebot.ai/VoiceLabs

Amazon has good reason to think long and hard before opening that floodgate. Early attempts at voice advertisements -- most recently, a Burger King television commercial that hijacked viewers' Google Home smart speakers -- have been met with raised eyebrows, if not raised hackles. And passive advertisements that you can just sit through or ignore are one thing, but interactive ones that require you to pipe up in order to get back to your skill? That's a potentially difficult pill for Alexa users to swallow -- especially those who've been enjoying Alexa's ad-free approach since the very beginning, two and a half years ago.

To that end, Marchick points to VoiceLabs' existing analytics work for developers -- particularly a practice the company calls "voice pathing." It's essentially what it sounds like, with VoiceLabs mapping out aggregated user experiences for specific skills -- flow charts for the different ways people are talking to Alexa when they use one.

VoiceLabs is able to separate those experiences into positive and negative interactions, then troubleshoot the problem areas. If a bunch of users are giving Alexa an unexpected command and tripping the skill up, the developers can address the issue with a quick update that turns those negative experiences into positive ones. As a skill's percentage of positive experiences increases, Marchick says, so does the percentage of users who will decide to continue using that skill.

"We were the first company to talk about the problem of retention," Marchick told me, citing the company's 2017 "Voice Report" from January of this year. Marchick claims that voice pathing has helped some clients see their user retention rates double -- it's the same approach Marchick wants to apply to sponsored messages in order to ensure that they don't cause users to chuck their Echoes out the window.

I had several questions for Amazon about what VoiceLabs is trying to do, but a spokesperson would only refer me to Amazon's existing policies on advertisements.

"We don't have anything new to share today regarding skills monetization," the representative said, adding, "We're actively listening to the community and are always looking at ways to make the experience better."