Alexa, Should My Company Invest in Voice Technology?

Voice Assistant Technology

If you have a smart speaker (50% of internet users do), you may ask your smart “friend” to provide the current temperature, to turn on your favorite podcast, or to dig into the internet for a factoid you urgently need.

But how about engaging it to turn on your oven or your lights, to retrieve your bank balance, or to place a restaurant order?

Companies investing in these technologies are trying to enhance their customers’ experience with their brand, but do those investments pay off?

Lubar researchers Navid Bahmani (’22 PhD and now an Assistant Professor of Marketing at Rowen University) and Professor of Marketing Amit Bhatnagar, along with colleague Dinesh Gauri of the University of Arkansas have recently published an article on the topic in the Harvard Business Review. Their full study is forthcoming in the Journal of the Academy of Marketing Science.

The scholars studied close to 100 firms that released a voice assistant feature on the Amazon Echo or Google Nest between 2016 and 2020 to compare stock prices for each firm immediately before and after the new feature was announced, essentially quantifying how investors responded to the new technology.

Their findings showed a mixed bag – some positive bumps in valuations, but some with no change, and others that lost market value.

Deeper analysis found that the type of voice assistant feature and the type of business could both be factors influencing the market’s response.

The introduction of an informational voice assistant feature, for example, led to an average 1% increase in stock price, or nearly $925 million in average market capitalization. An example of this could be getting personalized news briefings from your news source of choice or receiving health advice from WebMD.

In contrast, the announcement of new object-control features, such as adjusting a thermostat or starting a load of laundry, had little affect on stock price.

Why might this be? The authors suggest that, first, object-control technologies control a pretty narrow set of features, still requiring the user to interact with the object to take full advantage of its features. In addition, these technologies can be subject to potential “misinterpretations” of the voice command that can be problematic or even dangerous.

So where were the “losers” in their study? Those were found with companies that introduced transactional voice assistant features. Those firms’ stock prices fell an average of 1.2%, or more than $1 billion in average market value.

Their analysis found that transactional features can actually be counterproductive because of their limitations, similar to the object-control features, but also because of the “higher stakes” involved. Specifically, because these are typically financial transactions, any problems because of technological errors can be quite serious.

The study further showed that product firms fare better when launching new voice assistant technologies than service firms, where the technologies typically offer the same access to information customers can already tap into in more “traditional” channels.

Their full Harvard Business Review article can be found here.

Research @ Lubar
Faculty scholarship in the Lubar College of Business spans the business fields and beyond through both theoretical and applied research that is published in leading journals.  Here are some of our faculty’s most recent publications:
Know Where to Invest: Platform Risk Evaluation in Online Lending
Information Systems Research
Authors: Zhao Wang, Cuiqing Jiang, and Huimin Zhao
The Democratization of Investment Research and the Informativeness of Retail Investor Trading
Journal of Financial Economics
Authors: Michael Farrell, T. Clifton Green, Russell Jame, and Stanimir Markov
Putting Analytics into Action in Care Coordination Research: Emerging Issues and Potential Solutions
Production and Operations Management
Authors: Subodha Kumar, Liangfei Qiu, Arun Sen, and Atish P. Sinha
Click here to see more faculty research