20/08/2015 2:06 PM IST | Updated 15/07/2016 8:25 AM IST

Connecting The Dots In Marketing Through Internet Of Things

The ubiquity of digital technology offers a level of interaction with consumers that yesterday's marketers could not have imagined, from geo-targeting to 24/7 connectivity to content consumption across multiple media platforms. It also makes for a lot of relevant data flowing over networks.

Yet the world is getting even more interconnected by way of an emerging set of technologies known as the Internet of Things. The IoT promises to add intelligence to everything from commonplace consumer items such as cars, light bulbs, and refrigerators, to industrial items such as machinery, railroad ties, and agricultural fields. Those "things" can collect and broadcast data across networks, enabling the data to be analyzed to add more value.

Consumer and industrial products will be valued increasingly not just for their standalone functionality, but also for how well they work within the digital ecosystem.

Data Rules

In the consumer realm, companies' marketing success will depend on their ability to connect with, and creatively exploit, the interdependent network of apps, devices, and services. Such interdependence suggests that companies will no longer strictly contain customer data but instead will share it with trusted partners.

In terms of sharing data, Uber, the ride-sharing service, is enabling marketing opportunities for its partners by mining data about its customers' movements: where they go, where they shop, where they work, and so on. For example, Uber users who are also preferred guests of Starwood are given the chance to earn Star points whenever they climb into an Uber ride. Redeemable for free stays! Upgrades! Air miles!

Hospitality service Airbnb is also meticulous in its use of data. When Airbnb relaunched its referral program a few months ago, it began measuring everything, including invitations sent via e-mail, Facebook, Twitter, and direct link.

Using data analytics, the company found, for example, that an invitation sent with a photo of the sender was perceived by the recipient to be more like a gift than a promotion.

Airbnb also found that using the recommended contacts features in the Android operating system and Gmail resulted in a higher conversion rate, likely because these contacts are closer to the sender.

The Thing Itself

A recent survey of senior marketers by the Economist Intelligence Unit found that the highest percentage (51%) of respondents think that, by 2020, the IoT will have made the biggest technology impact on marketing, edging out real-time mobile transactions (50%). The IoT promises to revolutionize not only marketing, but business models as well. Take Gooee, for example. Gooee's LED light "engine" not only manages energy usage and lowers maintenance costs, but it also incorporates motion detectors and CO2 sensors. This means a connected lighting company can use Gooee's platform to provide electric light but also energy management, security, and fire alarm services--even retail traffic monitoring.

CX Marks the Spot

Customer experience is paramount in the digital economy, and marketers are beginning to realize that it's theirs to control. While only a third of senior marketers are responsible for it now, according to the Economist Intelligence Unit survey, three-quarters think they will be responsible for end-to-end, lifetime customer experience within three to five years. Customer experience can drive corporate identity.

For example, what draws many guests to Airbnb is the desire to experience the foreign "scene"--culture, environment, and people. And given Airbnb's two-sided marketplace--the need to grow both the supply side (hosts) and the demand side (guests)--the company is not just in the business of renting a place to stay. It's also focused on the logistics of the entire trip and providing that elevated experience to the traveller.

The Airbnb example also helps make an important point when it comes to marketers and technology: Don't confuse the platform with the product. In other words, technology is how Airbnb does what it does--it's not what Airbnb offers.

Let's look at Nest Labs, a company that makes IoT-enabled smoke detectors, thermostats, and video monitoring cameras. Nest Labs creates revolutionary tech products, but its marketing department is deliberately "anti-tech," says Doug Sweeny, VP of marketing. Its strategy is to avoid a Jetsons interpretation of its message, he explains, to downplay the imposition of high-tech intelligence into everyday life that might intimidate potential customers or make them skeptical. Instead, the company intends to talk, simply and straightforwardly, about how the products benefit homeowners, Sweeny says.

Triggering Alerts

In the future, as a function of the interconnected IoT digital ecosystem, marketing will make greater use of real-time data analytics, complex-event-processing software, and machine-learning systems. For instance, companies will combine product-engagement data with their customer data to promote effective "re-targeting." Both traditional and digital media will use data-derived strategies to drive consumers to engage with products, and data from those IoT-enabled product interactions will in turn get fed back into the calculations about which messages to serve to consumers the next time they engage.

A negative example involves triggering alerts of a poor user experience. If, say, a consumer presses a button five times in a row on a new device, it's a fair bet she's having difficulty getting her new product to work. In response to that IoT real-time data, the brand could send a how-to video link or offer real-time chat support to the user's smartphone, and thereby avoid poor negative reviews on social media and/or expensive product returns.

If that all sounds pretty complicated, take heart. Internet technology will get simpler. Native apps will overload consumers and fade away as web apps provide users with everything they need in one place--their browsers. Products will transform into interfaces used to access one unified platform: the interconnected, IoT-enabled ecosystem known as the web.