Exploring the Marketing Potential of the Internet of Things
For anyone with a passing interest in technology, in recent years it's been tough to escape a trend labeled the 'Internet of Things' (IoT). An ambiguous term, it remains a handy catch-all to describe a number of diverse technological developments with the long-term potential to interconnect and change the way we as consumers live with our devices. From cars that can identify a driver and match individual environment preferences to smart homes that learn our behavior and adjust accordingly, the potential is as high as the hype that precedes it. For business owners and marketers, the growing adoption of devices that drive IoT in regular households makes this the right time to get familiar with the technology and how your customers are using it.
Unraveling the Internet of ThingsIoT is the network of real-world objects that access the Internet and their own internal sensors to improve operations. The information networks that arise from so many interconnected devices hold the potential to disrupt as many business sectors as have come to rely on those very connections. Today the phenomenon is in its infancy. While essential everyday devices such as tablets, smartphones, and video game consoles are connected via wireless networks, most others are not, at least in the widespread sense required by a hyperconnected Internet of Things. Recently, however, the wider concept has started to gather momentum. Smart hubs like Amazon's Echo and Google's Home sold much more widely due to frequent discounts, while Apple launched its HomePod earlier this year. All use integrated assistants - Alexa, Google Assistant, and Siri - for voice-activated commands, some of which link to other devices, such as lights, Back in 2014, Google acquired Nest Labs for the substantial price of $3.2 billion. The company has two products, one a smart thermostat with the ability to learn your schedule and adjust the temperature accordingly; the other a smoke alarm that feeds information to a mobile device, reminding you to change the batteries or alter settings. More importantly, the two devices can communicate with one another to improve performance. The smoke detector, for example, may detect high levels of carbon monoxide and prompt the thermostat to turn off possible sources. Since those simple beginnings, smart home devices like the aforementioned Amazon Echo and Google Home have started to integrate with all kinds of apps and equipment, though there is no single use case that currently defines IoT. At home, at work, and everywhere we move in-between, connected devices could be at work, reacting to location, behavior, time of day and thousands of other inputs to improve our lives. This is why Google has moved to develop a core of talent in the field, and why executives in every organization must be aware of the phenomenon. Industry analysts are working feverishly to put together the pieces of the IoT puzzle, without knowing exactly what it should look like.
Looking ForwardFrom these isolated and limited beginnings, networking solutions firm Cisco estimates that IoT will bloom to involve "50 billion connected things in the world, with trillions of connections among them.” By various measures, this hyper-connected future could represent something in the region of a $14 trillion business in the next ten years alone. With such huge numbers in play, the Internet of Things marketing potential becomes apparent. But the numbers may prove even less important than the myriad applications that these connections facilitate. At home, the wide range of household uses immediately becomes apparent. Energy efficiency would be an area ripe for improvement, as all home heating solutions begin to learn our temperature preferences, factor in the current weather conditions and our location, then adjust usage accordingly. Lights and electronic devices could combine the mobile location of all household members and shut down when no-one is home. Cost savings in both personal and environmental terms would significantly reduce waste. In the auto industry, we find another business sector ripe for disruption and applying the early elements of connected devices to vehicles. Limited as yet to partial assistant access in mid- to high-end cars and navigation systems that factor in heavy traffic reports, the next steps are exciting. Once a car is fully hooked up to real-time data, it has the ability to use that information in almost any frustrating driving situation imaginable. Parking becomes a non-issue as every free spot with a mile or two is presented to the driver with directions and ETA, while traffic congestion becomes far simpler to avoid as every vehicle relays its position and prevailing delays to the cloud, allowing navigation systems to suggest an optimized route. Smarter routes could also be suggested as a driver's regular habits are learned, factoring in traffic and weather conditions before we even leave the house and relaying the recommendation by an alert pushed through a mobile device. Off of the roads and into the shopping malls, retailers and marketers will be challenged again and again by IoT. Still wading through the repercussions of digital disruptions to entertainment media and its subsequent impact on advertising, executives will find the loop being closed back into the physical world. Smartphones are likely to be at the center of this transition, alerting stores to a consumer's presence and individual tastes. Highly targeted special offers can be served up as they walk by, tempting shoppers in and increasing customer spend with subsequent multi-buy offers. This also presents an evolution for loyalty programs, which will need to spring into action long before the cash register. The data collected on customer preferences to date will be just the tip of the iceberg, as a detailed personal record is built from the almost infinite number of apps and social networks that a business could request the customer to tie into their company's program. While the opportunities are seemingly endless, they do come with some caveats.
Changing the Way Marketers WorkWhat marketers crave most in this current climate of content marketing and targeted communications is relevance. The great promise of Internet of Things marketing is not only relevant, personalized communication, but the opportunity to predict what is desired and provide it at exactly the right moment. The chances of making a sale dramatically increase by catching the customer at that perfect point in time. Marketers will also find increased ability to determine how different factors influence sales. Considerations such as customer feedback, individual purchase history, brand loyalty, and even obscure influences like how the weather impacts sales can be quantified and incorporated into marketing decisions. From that data-driven foundation, it will be crucial to adjust marketing strategies and develop new ideas on the fly, delivering more flexible campaigns that shift in real-time as they receive more information. These continuous touchpoints provide both challenges and opportunities. Every engagement gives your business a chance to make their marketing communications more personal, be it providing a more relevant offer based on someone's recent voice search activity or resolving a problem that has only just arisen. At the same time, supporting such initiatives will require a deep understanding of data and the resources to act on it quickly. The most significant reward wrapped up with Internet of Things marketing will be the potential to develop deeper, more relevant customer relationships that increase brand loyalty. But all of this assumes a willingness to participate. The dangers of overburdening the customer and causing more frustration than benefit are very real. The desire to help must be balanced with the need to avoid intrusion. This is a consideration that has to be factored into initiatives from the very beginning. In short, as connection points to consumers increase, marketers must be passionate about opportunities, yet tread slowly and let the customer take the lead when it comes to acting on these ideas.
Back to RealityFor all the potential, we still have some way to go before the promise of the Internet of Things can be fully realized. Wireless connectivity and web standards continue to race forward, but the sheer scale of devices and the bandwidth required to connect them all must be developed alongside the products that will use them. Before leaving Nest Labs and Google in 2016, former CEO Tony Fadell told an interviewer "we’re just at the very cusp.” Relating the slow progression of IoT to the development pace of personal computers, he added: “How long did it take to get to the ‘internet of computers’? There are so many layers of software and hardware to be built, and standards to be built, that I do believe it’s a 10-year proposition, easily.” Executives looking for the next major disruption to their industry would be well advised to consider where their organizations intersect with IoT, as well as how Internet of Things marketing is going to change promotional activities and wider brand strategy across organizations.
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