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Internet of Things: The Future

Remote controlled ovens, cars that locate parking spots, jumpers that can tell our mood, our lives are increasingly digitalised, connected, and made easier. An opportunity for more products? Andy Hobsbawm, founder & chief marketing officer at EVRYTHNG (pictured below), looks at the future of the 'Internet of Things'.

The scale of the transformation represented by the Internet of Things (IoT) cannot be underestimated. Consider how essential today’s digital technologies are to modern, globalised societies and economies. Most of us would struggle to survive a few hours in our personal or professional lives without access to digital necessities like smartphones, email or social networks.

Then consider that in the two decades since the birth of the mainstream web, this indispensability has been achieved by connecting only information, data systems, and people. Now physical objects and environments are also becoming part of the same network and real-time, social flow of applications, ideas, services, and conversation.

As many as 100 billion smart objects will be connected by 2020 – but this is only tAndy_Hobsbawmhe tip of the iceberg. Over three trillion consumer products are made and sold each year. The most obvious IoT candidates, products with native, embedded connectivity, like consumer electronic devices, home appliances and cars, represent a tiny fraction of this total volume.

With smartphones, almost all consumers are carrying around the communications infrastructure for the Internet of Things in their pockets: sensors, connectivity, and the mobile Web. The ‘Internet of Everything’, including everyday non-electronic products that can also be given dynamic digital intelligence via smart packaging, smartphones and smart software in the cloud, represents the bigger IoT opportunity for marketers. But what are the best ways to harness this potential, take advantage of these new opportunities and unlock the value from IoT for brands and customers?

Products as media

The IoT makes physical products the next frontier for direct, real-time engagement and service delivery between consumers and brands. Manufacturers should ask what their product would do for consumers if it had its own digital life. If, in effect, your customer could ‘friend’ their product, what would it say? What stories could your product tell them, what advice would it give them, and what real-time services and ‘in the moment’ experiences and people could it connect them with?

If your oven breaks down, perhaps the product can find you trusted repair shops nearby, or better yet diagnose and fix itself with software updates ‘over the air’ while you sleep. You’ll touch your phone to the NFC tag on a new jacket so it can tell you about the most recent looks and what goes with it, or prompt you to take an umbrella when you go out because it looks like rain. You’ll scan your cereal packet to unlock new characters in your favourite mobile games, your beer will come with free Netflix movies for a night in, and expect your other grocery products to provide you with healthy recipes, loyalty offers and ways to re-order direct from the product itself.

When consumers no longer take possession of just the physical product, but also the layer of personalised digital content and services that come with it, this creates the ultimate, data-driven, owned media channel for brands. Digitally activated, products become a platform for content, tools and direct interactive relationships with end consumers. Once products get a digital voice, this facilitates a constant data conversation between people, products, spaces, services, and brands.

Products as data

As a powerful new owned media platform for brands, smart products must work with other channels of consumer engagement. Brands need to consider how they will integrate 'First-Product Data' (data generated from digital engagement with physical products) with the first-party data collected from consumer engagement on digital media, for more effective segmentation, activation, messaging, and personalised engagement.

Brands will be able to access consumer data that was previously unavailable to them – including analytical profiles on individual consumer product histories and content interests, plus real-time analytics on segment-based product usage and consumption locations and times – and in return can provide targeted offers and rewards to the customer, to help boost engagement and loyalty.

We will also likely see a new kind of connected physical-digital media platform emerge where third-party networks broker the display of content and messages on screens in newly connected smart-home products. There will be lots of user permissions and privacy implications to navigate, but many consumers may be happy to opt into an ad-supported appliance if it’s cheaper to buy or run. After all, most of the web content we consume is under-written by advertising, why not our appliances too?

Products as a service

In fact, as Nike’s VP of digital sport, Stefan Olander, pointed out: “Once you have established a direct relationship with a consumer, you don’t need to advertise to them.” An in-depth Harvard Business Review study even concluded that strong customer relationships and the ability to engage them directly, was twice as valuable to the enterprise as the strength of a brand. Indeed, platform giants like Google, Facebook and Amazon built their empires first by providing services that allowed them to collect and exploit data from direct customer relationships, and the building of their brands naturally followed.

As a result, a new generation of company is taking a leadership role and creating new enterprise value by digitising their products to acquire and manage direct, one-to-one customer relationships. These companies know who bought what, how and where they used it, how content drives interaction and sales, and what other products customers also bought and interacted with. Let’s call this Product Relationship Management™ (PRM) – the opportunity for direct data relationships with customers via smart products.

Instead of degrading and losing value from the moment you buy them, smart products earn the right to have a direct brand relationship with their owners by practicing the art of digital self-improvement. They use their data connection with customers to keep getting better the more they are used. Nest thermostats and Big Ass Fans keep learning and adjusting to their users’ preferences over time, while Tesla and Sonos customers are now used to waking up in the morning to find that their products have been upgraded overnight with new features and performance improvements.

The IoT can even create new subscription or usage-based service revenues based on the real-time data flowing to and from the product. For instance, Rolls Royce added sensors into their engines that monitor, diagnose and make recommendations to optimise aircraft maintenance and flight operations, and created a new subscription model for customers to access engine capacity based on usage.

EVRYTHNG customer Gooee is turning LED light bulbs into smart, connected objects with multiple services and revenue streams, like remote lighting control and energy management, motion sensors for retail footfall analytics and even CO2 sensors for fire alarm services.

Conclusion

The global market opportunity represented by the Internet of Things has been estimated at USD$19 trillion by Cisco’s CEO, so it’s not surprising that businesses see this as a critical area for innovation and the next playing field of competitive advantage. Without establishing direct customer relationships via smart products, and being able to correctly translate the resulting real-time data and connectivity into valuable, actionable intelligence, brands will fall behind the competition. Or, to put it another way, if you thought that there was a lot of data on the internet today, just wait until all the things start talking.