Marketing and the Internet of Things
The internet of Everything is here and the impact on marketing is very real.
For many years, we kept being promised that “the year of mobile” was upon us. When it failed to materialize, it was easy to become jaded and write off much of the discussion of that coming wave of innovation as hype.
But somewhat suddenly, we now look around, with everyone reaching for their phones every other minute — or checking them on their Inspector Gadget watches — having integrated them into their soaring digital expectations of daily life, and we realize, “Whoa, it’s a mobile world.” Businesses who figured out how to leverage that ahead of the rest — Uber is the poster child example — gained a tremendous advantage.
Surely, at least some of you rolled your eyes thinking, “Et tu, Scotte?” You’ve been hearing the drumbeat of the Internet of Things for long enough without seeing it materialize that you’re inclined to write off all articles like this as hype.
My humble advice: don’t be so quick to dismiss this. The acceleration of technology adoption is real — revisit The Second Machine Age — and widespread distribution of the Internet of Things is probably much closer than you might think. Once it hits its tipping point, what we accept as everyday reality is likely to change very quickly. Now is a good time to start to learn about what’s possible, even today, and the challenges and opportunities that we’re going to face as marketers.
Andy has a vested interest in this, of course. But in conversations with him, I find he does a wonderful job of explaining the technology and the scenarios by which it is able to impact marketing. More importantly, he has a wealth of real-world examples to share to demonstrate those effects. While we haven’t unveiled the MarTech Europe agenda yet — stay tuned for that next week — I am excited to say that Andy will be one of our speakers, helping to bring more of these examples to life for us.
1. Tell us a little about your background and how you came to EVRYTHNG.
My background hasn’t involved a formal career path. I ended up following the things I’m most curious, fascinated, and passionate about and seeing where that led me. This explains a singular lack of cohesiveness in the story so far – or perhaps, as Steve Jobs pointed out in his epic Stanford commencement address, “You can’t connect the dots looking forward; you can only connect them looking backwards.”
In any event, I’ve run entrepreneurial sales businesses while back-packing in Australia, written songs and played guitar in a spectacularly unsuccessful London rock ’n’ roll band, helped start the first international web agency Online Magic — later Agency.com, which went public in 1999 — co-founded an environmental non-profit Do The Green Thing, and most recently my IoT software company EVRYTHNG (with a bunch of other stuff in-between).
The inspiration for EVRYTHNG was meeting a friend Niall Murphy, now fellow Founder and CEO, in a coffee shop several years ago. After co-founding European Wi-Fi network The Cloud, Niall had been wrestling with the idea of every object having an addressable, real-time presence on the Web. Why couldn’t the physical world be online and referenceable, searchable, mashable just like other forms of digital information?
We both felt strongly that the Web will inevitably include billions of objects sharing dynamic information about themselves in real-time. And it seemed clear that some kind of transactional economy would emerge around this exchange of object information and that there needed to be a new kind of software infrastructure to manage the digital identity of physical things and make it easy for apps to access this data flow and provide new kinds of services and experiences.
At the time it didn’t seem possible to realise this vision, but fast-forward a couple of years and mobile and web 2.0 technologies had become sufficiently widespread and cost-effective to make this scale of information exchange and dynamic service creation possible. And object connectivity tech like NFC, Wi-Fi chips, RFID and printable sensor tags had started to pass key tipping points in terms of cost.
EVRYTHNG was incorporated in 2011. By 2012 all co-founders were assembled — which includes Dom Guinard, CTO and Vlad Triffa, EVP R&D, recruited from ETH and MIT — initial funding was raised and the early team was operational. EVRYTHNG is based in London and New York, with offices in San Francisco, Seoul and Minsk.
2. How real is the Internet of Things (IoT) for marketing today?
A recent Economist Intelligence Unit survey reported that senior marketers globally believe IoT will make the biggest impact on marketing in the next five years, ahead of other related technology trends like big data, real-time mobile personalized transactions, and customer experience. Meanwhile, CTOs and CIOs are working on IoT strategies from the perspective of technology infrastructure and platforms to support the enterprise.
And the range of products that can become part of the IoT is exploding based on the falling costs of connectivity technologies like printed electronics on smart packaging. Smart home devices with native, embedded connectivity are only the tip of the iceberg.
Over three trillion consumer products are made and sold each year (some calculations put this as high as ten trillion). Of these, the most obvious IoT candidates like consumer electronics devices, home appliances, and cars represent 0.2% in volume. The wider IoT opportunity for marketers is the “Internet of Everything,” which includes everyday non-electronic ‘dumb’ household products that can also be given real-time, social web intelligence via smart packaging, smart software and smartphones.
By our calculations, close to a trillion products shipped annually will be digitally-capable in some form by the end of this decade.
By our calculations, close to a trillion products shipped annually will be digitally-capable in some form — from image recognition or RFID to printed sensor tags and embedded chips — by the end of this decade.
3. Can you give a couple of examples of great IoT-enabled marketing? Maybe one for B2C, one for B2B?
We believe that there are three main consumer use cases for smart products powered by an IoT platform like EVRYTHNG.
Firstly: Products-As-Media. Once activated, products become a data-driven, owned media platform to launch digital experiences and content, and acquire ongoing 1:2:1 consumer relationships. Diageo use EVRYTHNG’s IoT platform to let consumers interact with bottles using smart tags and smartphones. For example, letting consumers personalize a gift by adding a unique video gift message to their bottle, or rewarding consumers with loyalty points for interacting with products in “on-trade” bar locations. Additionally, tracking these items in the supply chain to make logistics and product operations smarter.
Secondly: Products-as-a-Service. Physical goods that are packaged and delivered with a digital layer of personalized services can adapt themselves to user preferences and get better over time as they learn and new digital upgrades are made. Like Tesla cars that can upgrade performance and fix product defects while you sleep. Smart products are easier to differentiate and charge premium prices for, harder to switch from, and create new revenue opportunities from subscription or usage-based services.
Smart products are easier to differentiate and charge premium prices for, harder to switch from, and create new revenue opportunities from subscription or usage-based services.
Our customer Gooee, which puts chips and sensors into bulbs to disrupt the industry by selling “lighting-as-a-service.” Running on the EVRYTHNG IoT platform, these connected bulbs lower electricity and maintenance costs, but also contain motion sensors to track retail footfall analytics or trigger security alerts, plus CO2 sensors for smoke detection. So a lighting company is now also in the business of security services, fire alarms, inventory management, and energy efficiency.
Another example is Diageo Johnnie Walker Blue Label. Adding a printed sensor tag from EVRYTHNG partner Thinfilm, powered by our IoT smart products platform, lets Diageo know if the bottle has been opened or not. The ability of the printed electronics label to send a different signal based on a “sealed” or “broken” state, in combination with real-time cloud data analytics and alerts, tackles the issue of counterfeiters re-filling bottles with poor quality alcohol. It also means that when consumers tap the tags with NFC-enabled smartphones, the bottles can switch messaging from pre-purchase incentives to post-purchase cocktail recipes.
Thirdly: Ecosystem-Connected Products. Products can unlock additional user and business value by making more connections with partner products, apps, and data services in the digital ecosystem. For example, your premium Spotify account can now stream playlists in your Uber rides, the new Jawbone fitness tracker offers contactless NFC terminal payment in combination with Amex, and Visa partnered with BMW and Pizza Hut to enable in-car voice-activated ordering and payments.
An example for EVRYTHNG would be how iHome’s smart products use our IoT platform APIs, based on open web standards, to integrate with other clouds so their products plug in to third-party service like Homekit and SmartThings or Wink and Nest.
4. What are some of the other things that are possible, that you expect we’ll see over the next year?
We are moving into the Third Age of Marketing: Product Voice. The industrial media age of Brand Voice gave way to a social media-powered age of Consumer Voice, and now the product itself is having a say. Products are dynamic, web-connected intelligent objects and can play an active, functional part in how they are made, sold and used.
The industrial media age of Brand Voice gave way to a social media-powered age of Consumer Voice, and now the product itself is having a say.
We are fascinated about how shipping and operating physical products with real-time marketing experiences and digital services creates new business value and transforms consumer relationships and product operations for brands. And we haven’t scratched the surface of what’s possible with manufacturer brands using an IoT smart products platform like EVRYTHNG to connect their products to the web and manage a combination of hardware, software, and real-time data to transform the product journey from factory floor to high street to living room and recycling back into component materials.
We expect to see a greater use of streaming analytics and complex event processing software, as well as machine learning systems, in combination with IoT data streams. For example, triggering alerts of a poor user experience so brands can offer customer service prompts. If, say, a consumer who presses a button five times in a row on a new device, it’s a fair bet they’re having difficulty getting their new product to work. To avoid poor negative reviews on social media or expensive product returns, the brand could send a “how-to” video link or the offer of real-time chat support to the user’s smartphone.
For example, triggering alerts of a poor user experience so brands can offer customer service prompts.
Devices will be increasingly valued not just for their stand-alone functionality, but for how well they work within the digital ecosystem. Considering that simply switching on the washing machine will lead to communication with the appliance app, the home hub network, the clothes and washing powder that go in it, as well as other smart home digital service experiences, it becomes clear that silo operations don’t make sense for businesses or consumers. Success will depend on the ability to connect with an interdependent network of devices, apps, and services, which means that data is no longer to be collected and coveted, but shared.
We also think that native apps will overload consumers and fade away as web apps provide users with everything they need in one place — their browser — transforming products into interfaces that are used to access one simple, unified platform — the Web.
Finally, we expect more product engagement data to be combined with first-party data to offer more effective and joined up segmentation and re-targeting in the real-time advertising markets. So traditional and digital media use data-driven decisions to drive consumers to engage with products, and those product interactions are in turn fed back into the calculations about what messages to serve the next time. It clearly makes sense for, say, a shampoo manufacturer to understand that a consumer has digitally engaged with a sample in the last week, and make smarter decisions about where they are in the purchase journey when re-targeting them with an offer to convert to purchase.
5. What does EVRYTHNG do to facilitate all this?
To explain what EVRYTHNG does, lets recap why its Internet of Things platform-as-a-service is needed in the first place.
Consumer product manufacturers need to digitize their products at scale and connect them to the Web to get value from the Internet of Things. The kinds of things companies want to do include:
- Let customers digitally connect to products for a better user experience (e.g. your garage door alerts you if you left it open so you can close it remotely, or a designer bag you’re thinking of buying confirms that it’s the genuine article and not a fake).
- Make supply chain operations more efficient with real-time product tracking intelligence (e.g. know if parts of a shipment go missing, or products end up in the wrong place, or are being counterfeited, etc.).
- Acquire customer and product information they wouldn’t otherwise have had — e.g. who is using their products and where they are, what they are engaging with, and how content drives interaction and sales.
EVRYTHNG exists to help manufacturers of consumer products do exactly these kinds of things with its IoT smart products platform. Manufacturers can connect their products to the EVRYTHNG cloud and access data management and analytics services to make them smart, interactive, programmable, and trackable.
Our specific role in all this is to manage the digital identities of these products as active data entities on the Web — what we call “Active Digital Identities” — with associated real-time data to drive applications for end consumers and business users (e.g. supply chain tracking).
The EVRYTHNG platform allows brands to digitize their physical goods using a range of connectivity technologies — from image recognition, QR codes, BLE, NFC, and RFID to printed electronics and sensor tags to embedded chips — and manages the real-time IoT data to run applications in real-time on the Web that unlock business and customer value.
EVRYTHNG operates as a B2B cloud platform-as-a-service, so brands own all the data and control their digital consumer and supply chain stakeholder relationships directly.
6. What capabilities — not just technical, but organizational — do companies need to implement successful IoT-enabled marketing programs?
People expect brands to play a useful, relevant, and meaningful role in their lives, and the media they consume is increasingly mobile, social, and powered by real-time data. However, marketers default to delivering advertising messages in a regular sequence of campaigns, instead of “on-demand” personalized services and experiences.
Marketers default to delivering advertising messages in a regular sequence of campaigns, instead of “on-demand” personalized services and experiences.
The more broadly IoT technology is used, the greater value it delivers. As an enterprise platform, for example, EVRYTHNG’s smart products software powers “always-on” content and digital experiences, and transactional services like e-commerce or supply-chain tracking to prevent piracy. Real-time purchasing and behavioral data create opportunities for cross/upsell and efficiencies in inventory and supply chain management. Marketers need to see IoT as an innovation and growth opportunity and not another ad tech campaign tool.
Marketers need to see IoT as an innovation and growth opportunity and not another ad tech campaign tool.
Additionally, we believe that the Internet of Things sits at the intersection of a convergence between the worlds of enterprise technology systems and marketing. The CMO has increasing responsibility for leveraging enterprise platforms to generate and capture demand and build brands, while CIO/CTOs are charged with implementing real-time technology systems that connect with customers and business partners to go-to-market more effectively.
By activating products as data-driven interactive media and operating them as real-time digital information services, EVRYTHNG’s IoT platform enables a suite of applications across the enterprise — from consumer engagement, to supply chain operations, to connected product services — where these two domains meet.
We believe that the Internet of Things sits at the intersection of a convergence between the worlds of enterprise technology systems and marketing.
7. How should marketers address privacy concerns associated with these new capabilities?
You can’t really talk about data privacy without also raising the issue of security, since one protects the other. A lack of consumer trust in IoT security and privacy was recently cited in the FTC’s “Privacy & Security in a Connected World” report as the biggest blocker to widespread adoption.
As FTC Chairwoman Edith Ramirez noted: “The only way for the Internet of Things to reach its full potential for innovation is with the trust of American consumers.” A separate report by Business Insider in the UK came to the same conclusion: data security and privacy concerns are the biggest barrier to IoT becoming mainstream quickly.
As EVRYTHNG’s CTO Dominique Guinard points out, “Private data, inevitably, will be exchanged, exposed and leveraged — there’s no going back from where the Web, social-media networks, and smartphones have already taken us.” The point is to make sure that these exchanges now happen inside certain frameworks.
There’s no going back from where the Web, social-media networks, and smartphones have already taken us. The point is to make sure that these exchanges now happen inside certain frameworks.
The question is partly about technology and partly about consumer perceptions and social norms: do people think it’s worth trading personal information for personalization? Technically, the IoT can respect consumers’ privacy and protect their data, but consumers may decide that the exchange of personal information is justified by the value of personalized services they get from their products in return.
Manufacturer brands also need to decide where to draw the line and strike a balance between IoT data management and privacy. BMW deciding not to share any of the real-time data they collect from their vehicles with third parties is a good example. Yes, we want our connected cars to understand where we want to go and use information about environmental conditions and our personal preferences to get us there more intelligently, but we don’t want this digital data trail used by anyone else without our consent.
From a technology point of view, the Internet of Things creates a multifaceted mesh of network connections, devices, data systems, and individual users — and this data is also transported or stored in different places. So it’s vital that multi-level security and privacy controls and policies are built into the core architecture of any IoT system managing this data flow.
In other words, each part of the system should only access, manage, or share data that it’s allowed to. The EVRYTHNG IoT platform, for instance, regulates every step and exchange in this process. Each product layer in the ecosystem uses encrypted keys (or passwords) to identify itself, and fine-grained, customizable policies define the data that each specific component can access or influence.
This lets a customer of ours, like iHome, program customizable granular rules into their smart products defining precisely who can do what in every part of the connected system. So if your neighbour comes over to borrow some milk, she won’t be able to discover your smart products on her smartphone, as she doesn’t have the required permissions or secure keys.
Thank you, Andy. I’m looking forward to hearing your presentation at MarTech Europe in October!