Marketing executives have always understood it’s important to make connections count. But as the Internet of Things evolves from concept to reality, the idea is taking on a new meaning. Cisco Systems estimates that 500 billion devices and objects will be connected through the Internet by 2030.
The “Internet of Things,” or IoT, is the network of electronic things, including computing devices, Internet-connected machines, sensors and more — plus the connected people who use them.
Already, wearables such as Fitbits and Apple Watches are everywhere, connected homes and cars are commonplace, and other smart-home devices are moving into the mainstream. For marketers, this provides a level of data and insight that allows far more personalized and contextual insight about behavior, patterns, consumer preferences and more.
“The possibilities for the Internet of Things are fairly endless,” says Craig McNeil, a managing director at business and IT consulting firm Accenture. He says that the company’s research shows that more than 95 percent of its clients expect to implement the Internet of Things in a major way within the next three years — though only about 7 percent currently have a strategy in place.
Over the next few years, the Internet of Things promises to rewire business processes, consumer interactions and a lot more.
It fundamentally changes marketing to a real-time model that’s more personal and contextual—but it also revamps entire business models. Digital 2.0 companies like Uber, ZipCar, Airbnb and OpenTable couldn’t exist without smartphones, apps, geolocation data and other data streaming through the Internet of Things.
Yet the journey has just begun. Retailers are migrating toward tagged items and smart shelves using beacons, RFID and other sensors. The updates enable consumers to view product information and flash promotions directly on their phones, while the retailers collect information about how people move around their stores.
Within a few years, retailers will ditch POS terminals and move beyond today’s mobile checkout systems. Consumers will fill shopping carts with RFID tagged items, exit the store with their items, and then receive a receipt via e-mail. The financial transaction will take place automatically.
Thanks to the Internet of Things, the ability to collect massive amounts of data and use it in new and profoundly different ways also enters the picture.
For example, in a connected world, it’s possible to introduce pay-for-use consumption and usage models. Already, ZipCar makes micro-rentals possible for those who need a car for only a trip or a couple of hours, and Metromile lets consumers pay insurance by the mile, rather than a flat monthly fee. Similar pay-for-use business models now extend to everything from jet engines to medical equipment.
What’s more, data collected by home automation systems—such as Google’s Nest—could prove extraordinarily valuable for cities, utilities and others as they attempt to manage resources more effectively. In the future, smart traffic grids with connected cars could lead to less traffic, fewer collisions, reduced fuel consumption and less air pollution.
Digital disruption is the new normal
“Digital technology eliminates barriers and friction that exist in the physical world,” says Irene Ng, a professor of marketing and service systems at The University of Warwick in the U.K. In fact, the ability to monitor consumption and charge for content in entirely new ways, redefines a growing array of products, services and industries—from movies and music to advertising and sales.
Ng says that in addition to introducing opportunities for new products and services, technology — and massive amounts of data — allow forward-thinking entrepreneurs and executives to rethink and reinvent a business, or an entire industry. Navigating this space requires fresh thinking and different approaches. In many cases, it’s all about combining data points — readings from sensors, social streams, geolocation data and other sources — to create what amounts to a 1+1=3 equation.
So, about that connected toaster?
Consumers may find it totally cool to design images for toast using a smartphone. Meantime, the resulting data would help food companies understand how people approach breakfast, design new products and market to consumers more effectively. Capgemini Consulting vice president Tony Fross says that value creation is the endgame. As he puts it: “The Internet of Things changes everything.”