Smartwatches, Wearables & Internet of Things – New Terminal Devices, New Touchpoints, New Connections
Published on 14 July 2016 | Author Stefan von Lieven0
The Internet of Things – the linking of smart products is tipped off as the next big revolution in information technology. A revolution which has the potential to significantly influence – if not dissolve and rearrange – the structures of whole industries, supply chains and competition rules. These changes also affect the digital direct marketing, as the Internet of Things leads to an increase in relevant data sources and contexts which need to be taken into account in the communication, as well as to new terminal devices via which companies can contact customers.
The Internet of Things describes the network of so-called smart objects or products. Smart products are products which in addition to physical components (e.g. a motor) also contain intelligent components (e.g. sensors, processors, software systems or data storage) as well as components which allow a linking, i.e. a data exchange, of the product with one or more other smart products or generally IT systems. We can distinguish between B2C products such as fitness trackers, smartwatches or connected cars and B2B applications such as networked industrial robots or agricultural machines. Bitcom and Deloitte estimate that by 2010 approximately 100 million networked consumer products will be employed in Germany (smartphones and tables not counted). 17% of Germans already owned a wearable device e.g., a smartwatch or wristband in 2015 (PriceWaterhouseCoopers). McKinsey even forecasts a global economic impact (value and efficiency gains) of 11.1 billion dollars per year from 2015 through the Internet of Things. However, he primarily refers to the B2B context. Accenture goes even further and is talking of 10 billion dollars from 2013, 592 billion of which in Germany.
Internet of Things in Marketing
From a marketing point of view, B2C products are particularly relevant from two perspectives. Firstly, networked devices generate data and deliver new contexts of use. Secondly, many terminal devices open up new communication channels or opportunities.
In B2B, user data can help to gain a better customer understanding which can then be used for a more precise communication approach. Marketers do not only learn which products a customer purchases, but also whether he actually uses them, how he uses them, what he does when using them, when he uses them, how frequently or in what context and in combination with which other products.
The fitness product market belongs to the B2B sectors where connectivity is most advanced. Wearables which track performance data (miles run, speed, calories used etc.) are available from many sporting goods manufacturers and are becoming increasingly popular with sports and fitness fanatics. Here are some examples to use the captured data in marketing:
- By means of the miles run you can estimate when the running shoes (which are possibly connected themselves and provide the necessary data) are worn off and a new purchase is imminent.
- High performance sportsmen and women can be offered special dietary supplements.
- People who run long distances may have an interest in taking part in a running event, e.g. a marathon.
- Athletic performance can be linked to incentives (1% discount per 10 miles run) and integrated in suitable campaigns (another 20 miles and you can save 10% in our latest fitness collection).
- The tracking of running geo-data allows marketing messages with geographical reference (after the run, quickly pop into our branch on XY street).
- Training schedules or dietary tips matching the performance data are practical services and can be enriched with commercial messages.
However, not only in B2B you can open new potentials for marketing communication via the internet of things. In B2B, service communication can be a real benefit. For example, the continuous monitoring of machines can detect wear and tear and suggest an inspection on time. Or a repeat order of wear parts can be enquired independently from the production performance.
Highest Demands on Data Privacy and Data Security
Whether health data of medical devices in B2C or business-relevant data about manufacturing processes in B2B, many data captured in the Internet of Things is highly sensitive. This sets special demands on data privacy and data security. With each data-producing device, a new source as well as a new transmission path is created where data must be protected from misuse. According to a current study by eco and YouGov, many Germans have reservations about the Internet of Things because they are afraid of data misuse and lack of control. It is therefore becoming an essential pre-condition for companies to create (legally) secure technical processes to capture, store and process data from the Internet of Things as well as to gain the trust of private and business customers whose data is to be used.
New Terminal Devices, New Channels
Smartwatches, smartglasses, digital signage, connected cars or the infamous internet-enabled refrigerator are all networked terminal devices which communicate with customers and can theoretically be used to distribute marketing messages.
It is up to the terminal device producers and their partners to develop deployment scenarios for the marketing and service communication, to establish software and communication standards and manufacture the corresponding terminal devices. For some terminal device categories this may only be wishful thinking or even just a pipe dream, but many terminal devices e. g., fitness devices or networked household appliances, have the potential to open up new communication channels. Some already integrate existing communication channels, such as social media or above all, email. Companies should therefore follow the developments, possibly even influence them and look at deployment scenarios in advance at least on a conceptual level.
Two terminal device categories which already stand out as interesting from a marketing angle, are smartwatches and connected cars. The Apple watch, for example, enables the reception of emails and push messages from apps and is therefore a relevant terminal device particularly for location-based marketing in real time. Via an on-board computer of a connected car, you can e.g., retrieve traffic or entertainment information, but it can also serve as a channel for marketing and service communication.
The Internet of Things, especially in the B2C sector, opens up new potential for digital direct marketing. Consumer products such as fitness trackers or smart homes increasingly generate data from which a better customer understanding can be gained. Companies do not only learn more about what types of products a customer buys, but also e.g., how and in what contexts these products are used. The capacity to use this information for the optimisation of not only products but also the marketing and service communication is becoming an integral part of competitiveness. Furthermore, networked terminal devices open up new communication channels. Smartwatches and other wearables, connected cars, smart homes, networked household appliances etc. offer a huge potential not only to capture data but also to communicate with customers. Even if this is not possible yet with many other terminal devices, it is recommended that possible deployment scenarios on a conceptual level are anticipated.
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Accenture & Computerwoche: Internet of Things beschleunigt Wirtschaftswachstum
Bitkom & Deloitte: Consumer Electronics 2015
McKinsey: The Internet of Things: Mapping the Value Beyond the Hype
PriceWaterhouseCoopers: Wearables kurz vor dem Durchbruch
YouGov & eco: Internet der Dinge