The Internet of Things – the world of connected devices – represents an interesting and potentially transformational shift in the way humans, hardware and software interact.

This programmble world is creating connections between technology enabled pieces of the environment such as central heating, vehicle engines, home appliances or production line machines that forms the foundation for ‘smarter’ physical infrastructure – infrastructure that can intuit the usage patterns of its human owners and fine tune their environment accordingly.

There are some very obvious consumer benefits from a world in which humans are surrounded by tiny intelligent things that can (and do) communicate with each other to coordinate their activities. The Smart Home is the most obvious example of how device connectivity can improve time and energy efficiency.  Nest Labs’ home automation systems will turn up the thermostat when your Jawbone Up24 tells it you are waking up, or turn on thermostats when your Mercedes alerts it you are heading homeward.

Not only that but it’s a learning organism – it learns regular patterns and automatically adjusts to reflect your home use. There are also clear commercial benefits from inter-device connectivity – manufacturing efficiency, service scheduling, supply chain management. Rather than a human analyst intermediating the use of data, machine-to-machine (M2M) or internet connections allow machines to communicate complex information effectively to assist each other.

These obvious use cases make, well, a lot of sense. But it seems the Internet of Things has become a hot concept for marketers as well. Does machine data and inter-device communication help marketers to reach an audience? Well… yes. Potentially. But probably not in the way they envisioned, and perhaps not with the outcome they expected.

Some description

Let’s take a step back and look at just what the Internet of Things contains that might excite marketers.  IoT, the result of a growing number of M2M and internet enabled devices, produces vast and diverse amounts of machine created data such as log files, GIS coordinates, thermostat data, and other sensory data. This data is transmitted to a location (or many locations) outside the device, and can trigger actions in other devices that either guide manufacturing efficiency, change environmental factors or overtly assist human users in selecting a course of action, be it workout intensity, room temperature or driving route.

These data driven decisions and suggestions, when well designed, have the power to surprise and delight device users with their perceptive power. And its that feedback loop -the expectation of users that these devices are trustworthy and will advise them of best thing to do – that presents unparalleled albeit slightly big-brother-ish marketing potential.

Unlike the last few years of marketing technology trends which have been all about trying to squeeze a tiny bit more performance out of saturated media channels through inferred context and the annoyance that is retargeting, the truly one-to-one characteristics and inherent usefulness of smart devices presents notable potential for well curated marketing communications.

Envision, if you will, a world in which humans become increasingly trusting of and dependent on data driven cues from their various devices to navigate through daily life. In reality, there is already a growing population of ‘plugged in’ technophiles who depend on the beeps and cues of various devices to keep their lives ticking along nicely. These various machine communications are a powerful and precise one-to-one communication channel, and so far a largely virgin space commercially. But one with great potential – at least for the early movers into this space.

Audi’s new range of vehicles come with smart onboard computers that offer to direct the driver to the nearest gas station when the fuel system indicates it is running low on fuel. Say yes, and the navigation system springs to life to point you on your way to refuel. It’s a real-time, needs based opportunity for branded content – a ‘low fuel’ alert sponsored by, say, Caltex, and a navigation system instructed to direct the driver to Caltex branded petrol stations.

 Similarly, GE’s smart refrigerators can let you know when the milk is running low. Which is useful, but still means you have to go out into the wilds of suburbia and procure said milk. Wouldn’t it be handy if, as you’re passing a 7-11 on your way home, your fridge SMSes your iWatch to let you know that milk is low – and that (marketing alert…) 7-11 has your preferred brand for $1.85.

Contextual relevance

Both of these examples leverage known contextual relevance to make branded suggestions, increasing the likelihood of positive response. But as with any marketing channel there are perils associated with getting too personal. Just because my Jawbone knows I haven’t been for a run this week, doesn’t mean I’ll be happy about getting a ‘this week only’ offer for Jenny Craig, or a suggestion from my fridge to not restock on chocolate or wine. The more personal the channel, the bigger the brand damage caused by a targeting ‘fail’.

The technology framework is already available, but the channel has not yet been established. As a possible sticking point, for the potential of IoT enabled branded messaging to be realised, brands will need to embrace a more open ‘shared information’ worldview, working wity multiple device manufacturers and technology partners to create smart branded content that doesn’t destroy the integrity of the channel.

Fortunately, predictions from tech market experts such as Matt Turck of FirstMark Capital are that the trend towards democratisation and openness of data will continue into the IoT space, and that success in this space revolves around how cleverly brands can develop software and/ or hardware that gives them a dominant position either vertically across a product sector or horizontally as a device connective platform to establish branded dialogue.

This then raises another question. With the ability to target precisely and at the highest level of personalisation, will the manufacturers of smart appliances and wearables attract large chunks of media budgets? And if so, where does this leave already struggling above-the-line advertising channels, especially digital news and brand properties? Could we see the likes of GE, Garmin and Jawbone becoming the new media moguls? This is one ‘what if’ that may cause a few sleepless nights for the media industry.

About the Author

Anna Russell is a director at Polynomial, a Sydney-based analytics and strategy consultancy. Polynomial works with businesses to drive value from technology investment and develop effective data driven strategies for marketing and customer engagement

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