The Internet of Things Will Disrupt Your Business – Will You Survive?

I was recently asked by a digital marketing research firm to provide comments for an upcoming report on the implications of the Internet of Things (IoT) for digital marketing. While I’ve been fascinated by the exploding world of wearables, sensors, and connected objects, I hadn’t yet had the chance to dive in. I jumped at the opportunity.

I won’t go into detail on what IoT is or how the world of connected objects has the potential to disrupt almost every business on the planet. Nor will I predict the winner of the wearables war or rant about the usefulness of a connected slow cooker – it’s high! But I will share my thoughts on how marketers must begin to prepare for a world where we – and our competitors – have access to remarkable streams of high-value customer data and bear the responsibilities that come with it.

The Basics

Today and in the near future, most IoT objects will be data gatherers instead of true input-output devices. While the proliferation of connected screens like smartwatches and Wink Relay, for example, will continue, the vast majority of connected objects will not be addressable in the traditional advertising sense. This is important because it forces us to think about the changing digital landscape in a new way. We need to think about the data first and the actions we will take on the data second. Stay with me because this two-step process will force a profound shift in how marketers plan and execute programs.

The primary benefit of the IoT to marketers is the remarkable consumer data it provides. But there’s a catch: We’ll only get access to that data by providing real value in exchange.

I’m not overweight, but I’ve always struggled to exercise enough. Last year, at the request of my wife, I decided to “get smart” about eating better. I’m not good at self-deprivation, so diets are a waste of time. But I’m interested in the quantified self, so I thought I’d try using a calorie-counting mobile app and see if it helped. Within days I was hooked. I loved scanning UPC codes and learning about high- and low-calorie foods. It became a game, trying to keep breakfast small so I could have more calories at lunch, or having a light lunch if I knew I was going to have whisky in the evening.

Over a few months, once hitting my daily calorie budget became second nature, I started to lose interest in the app, and my use fell off. A few months later I bought a connected scale and then eventually a GPS watch that tracked my swimming strokes and distance. I connected them to the calorie app and instantly added a whole new dimension to my goals, understanding and fun. Sure, the app company had some data on my daily eating habits, but when I added the data streams of these other connected devices, we both gained a much more valuable understanding of my habits and fitness.

Now, I’ve never received an email about adding more tracking devices or been given a coupon for achieving a goal, but I would definitely be open to those messages and offers. As a marketer, I dream of and would pay handsomely for a relationship of the sort created here. In this next phase of connected devices, such relationships will become commonplace.

Marketing Transformation

When marketers can use captured data to identify phase of current buying cycle or predict purchases, they can calculate the dollar value of a new customer data stream for its return on investment (ROI). Many campaigns will become focused on data capture, as we move from awareness and engagement to much higher value exchanges. What can you provide your customers in exchange for their Fitbit data? What about their Nest data? What about their slow cooker data?

I’ve been thinking a lot about tire dealers recently: yup, tires. Today, cars generate a lot of data, and there are a handful of small companies that create little dongles that attach to your car’s data port and then to an app on your phone. I use Automatic. It’s great and helpful, but it’s cludgy. It would be a lot easier, and I’d have access to a lot more data, if my car were connected. The automakers, their software partners – Apple, Google, Microsoft, etc. – and telecom partners – AT&T, Verizon… – know full well the value of that data. But the hierarchy of access is long and top-heavy. From manufacturers to software platforms to telecom companies to dealers and only then, if standards can be defined and privacy managed, only then will the broader ecosystem of car repair and maintenance – like my tire dealers – get access. Whoever can compel me to share my auto data stream will have a key competitive advantage and likely my continued loyalty. If I received a friendly mobile notification that my rear tires needed changing as I drove by the garage, not only would I stop in but I’d also tell all my friends about the experience.

This coming IoT data war will be an existential threat to many. Where are you in the data hierarchy?

The Challenges

While the opportunities are exciting, there are massive challenges for marketers on the road to making this real.

First, few of us have the systems or expertise in place to even capture the data. Legacy systems are just not built for this challenge. Enabling consumers to share their data streams in a way that is digestible and then immediately usable in marketing campaigns requires modern third-party partners. Until recently, this toolset didn’t exist. But vendors like Lytics, for example, are leading the charge, and tech investors are noticing.

Tools like Lytics take a fresh approach to building and maintaining customer profiles with a strong marketing focus. These tools must provide three core capabilities:

  • Connect to disparate non-standard data streams and normalize them
  • Enable marketers to easily create segments and suggest ones they haven’t thought of
  • Easily run campaigns to these segments across social, search, email, display, and beyond

Second, marketers (and their organizations) are not equipped to manage the entire personal data-capture, maintenance, and security process required.

With such personal data, it is essential that marketers be explicit and cautious when both capturing and overtly reaching consumers through IoT data. We run the risk of scaring consumers and hurting our brand, or worse, putting our entire organization at risk of security breaches and litigation. The trends suggest that digital natives are almost oblivious to the consequences of sharing data online, and marketers are loath to put barriers between engagement and opt-in. This has the potential to be a lethal mix.

As folks in highly sensitive industries like health care and financial services know, the opportunity to capture detailed personal data comes with a lot of responsibility and legal implications. Many will get burned. Few marketing or IT departments are ready to manage this type or scale of data, and they will need to rely on partners and legal teams to manage it.

Lastly, while things will get better over time, for the foreseeable future, this data will be messy and constantly changing. Today, there are very few IoT data standards, although there’s a fundamental ethos around interoperability and connectivity. Marketers will need partners to provide the connection, maintenance, and innovation layers that they are not equipped to handle. If I’m a tire dealer, I need a partner who will maintain connections to every new manufacturer’s proprietary data, for example. There will be so many different sources of information that specialist solution providers will be particularly valuable. Auto data management will be vastly different from health care data management, for example, and I don’t see a single company being able to be best in class across more than a few major verticals.

Conclusion

I’ll end this long piece with one last anecdote shared by the analyst I spoke to. Tesla, the electric car manufacturer, is really a connected device platform more than anything else. Every owner has an easy way to share feedback and product requests with the Tesla team. One customer who spends a lot of time in traffic requested a low-speed cruise control. The Tesla team considered it, developed it and deployed it to all their cars remotely.

It’s one thing to connect the objects all around us. It’s an entirely different world when all of our products are high-speed connected computers themselves that can be modified through the air or even through learning about themselves and their environments in real time. Sigh. Once again, we’re at the very beginning of another major digital transformation that will make social and mobile look quaint.

One thing is for sure: This won’t be a slow evolution. Every day new data-capture devices are being developed and sold. Once the systems to aggregate, analyze, segment, and activate are widely deployed, the marketing data war is on. The data is out there now. What are you going to offer for access to it and how will you manage it once you get it? Now is the time to start answering these questions.

Image via Shutterstock.

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