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Marketing in the Internet of Things (IoT) Era

AcxiomApril 09, 2015

The 2014 FIFA World Cup seemed to be a major tipping point in soccer strategy and tactics. The tiki-taka style, which had propelled Spain to a series of victories, seemed to have become obsolete in a very short time span. Reigning World and European champion Spain was picked apart 5-1 by Holland, while Germany demolished the local favorites Brazil by 7-1 on their home turf. What happened? The world changed! A winning style for a number of years was improved upon massively in a very short time. An early indicator may have been seen in 2013, when during the UEFA Champions League the perennial powerhouse and tiki-taka experts Barcelona lost by an aggregate 7-0 to Bayern Munich.

The marketing world is also changing faster than ever before. Just as we see gains from the still evolving digital and mobile growth, there is a groundswell from a new type of connected devices, and many old school devices are becoming ‘smart’ and connected. We see early indicators of a more diverse omnichannel being created right in front of our eyes. The Internet of Things (IOT) and wearables often get mixed together, but wearable devices are just a part of the larger IOT, with growth of smart devices seen in a few categories:

1-    Standalone new types of devices such as fitness trackers and other quantified-self gadgets

2-    Existing objects reimagined, e.g. smart thermostats, watches and connected bulbs

3-    Products designed to work with existing standard products to make them ‘smart,’ e.g. sleep monitors

According to Gartner, there will be a 30% increase YOY from 2014 to 2015 with 4.9 billion connected things being used. This number is estimated to grow to 25 billion by 2020. The growth is being seen in both industrial and consumer products and settings. Below are projections for consumer and automotive segments.

Table 1: Internet of Things Units Installed Base by Category

 

2013

2014

2015

2020

Automotive

96.0

189.6

372.3

3,511.1

Consumer

1,842.1

2,244.5

2.874.9

13,172.5

Source: Gartner (November 2014)

With this rate of growth I imagine that within this decade we will get to a tipping point and expect most devices to become smart and possibly connected. The channel of insights and the channel of communications are both growing in scope and scale.  This growth presents two distinct and exciting areas of opportunities to marketers:

1- Smart Insights- Utilize additional data from smart devices to enhance existing information about customers and improve personalized communication, engagement and experience across all channels.

2- Smart Messaging- For two-way connected devices, utilize them as additional channels to engage consumers. The new omnichannel world could include smart refrigerators, appliances, toothbrushes and shoes.

To extract the best results we have to be creative and strategic. A recent article in Advertising Age looked ahead at what the future holds:

“At the crux of IoT discussions for digital media is a rather simple, yet entirely disruptive concept — that individual physical products can become their own media platform for brands. In other words, a connectable product (anything from a bicycle to a soda can that consumers can engage with via their smartphones) can act as its own media channel — operating alongside TV, mobile, magazines and other media channels — and tapping into consumer behavior to create an entirely new form of CRM through physical objects.”

IoT, smart devices, connected devices will have a fundamentally evolutionary impact similar to the web over the last 15 years, and social and mobile since 2008. The potential is massive but on the other hand, the expertise and ability to tackle data…the right data, the right way, to answer the right questions, is proving elusive to many.

To drive value from the new opportunities presented by the Internet of Things, companies must be able to connect these new data feeds with their existing CRM systems to distill enhanced insights and better understand their customer’s needs beyond just the data from a connected device. Rather than leveraging only the ability to utilize data not just from individual device point feeds, a purpose driven information ecosystem approach will provide a more holistic view and give an upper hand compared to simply using single point data as a solo marketing trigger.

As marketers celebrate the victories by current gains in mobile and digital, we can build upon the tiki-taka victories with a view to the future. To win in the approaching World Cup of Marketing where IOT is a factor, marketers will have to understand and implement more relevant, personalized, integrated omnichannel strategies. In my next post I will dive into specific steps to prepare and reap the benefits of the growth in the information ecosystem and the growth in channels.