1TheFor many, the Internet of Things (IoT) is considered the next major revolution in IT that has the potential to significantly influence, if not dissolve and reorganize, the structures of whole industries, value chains, and the rules of competition.

The Internet of Things leads both to an increase in relevant data sources and contexts that must be considered in communications and to new digital end devices that companies can use to get in touch with their customers. Certainly, these upheavals are affecting the digital dialogue marketing, since IoT describes the networking of so-called smart or intelligent objects or products.

The term "smart" refers to products which, in addition to physical components (such as e.g. a motor), also have intelligent components (such as sensors, processors, software systems or data storage devices), as well as components that provide a network, which means data exchange of the product with one or more other smart products or IT systems.

A distinction can be made between B2C products such as fitness trackers, smartwatches or connected cars and B2B applications such as networked industrial robots or agricultural machines, but the expectations are globally high. Fortinet, for instance, predicts that by 2020 as many as 25 to 50 billion new IP-enabled IoT devices will be online and McKinsey forecasts an economic impact of value added and efficiency gains that accumulates to 11.1 trillion dollars per year through the Internet of Things from 2025 onwards, referring however primarily to the use of B2B. Accenture’s predictions are going into the same direction, as those of many others.

From a marketing point of view

The B2C products are from a marketing point of view relevant because of two perspectives: Networked devices generate data and provide new contexts and open new communication channels. Better understanding of the customer can be gained from usage data, enabling a more precise approach in communication. Marketers are no longer "just" learning what products a customer buys, but also whether they use them, how they use them, what they do when they use them, how often or in what contexts, and if in combination with other products.

The fitness products market is right now one of the B2C areas in which IoT is the most advanced. Wearables, which track performance data – such as running kilometers, speed, calories consumed, etc. -  are already offered by many sports article manufacturers and gain increasingly in popularity among sports and fitness enthusiasts.

What becomes clear with the current development is that there are aplenty new potentials for digital dialogue marketing, as "smart" consumer products are increasingly generating data that can be used for a growing number of users. Businesses no longer just know what products a customer buys, but for instance how and in what contexts the person uses these products, too. The ability to use this information to optimize not only products, but also marketing and service communications is becoming an essential part of competitiveness. In addition, new communication channels are opening through networked end devices. Smartwatches and other wearables, connected cars, smart homes, networked household appliances, etc. offer great potential for not only gathering data, but also communicating with the customer. Even though this is not yet possible with many networked end devices, it’s time to start conceptualizing application scenarios.

In the B2B sector, service communication can benefit from the Internet of Things, too. For example, the continuous monitoring of machines can detect deterioration and point out that an inspection is needed at a specific time. Or the reordering of consumables can be requested, depending on the production capacity, etc.

Highest demands on data protection and data security

Whether healthcare data from medical devices in the B2C, or business-relevant data on manufacturing processes in B2B, many data collected in the Internet of Things are highly sensitive, making great demand on data protection and data security. With each data-producing device, a further source as well as a further transmission path is created, on which data must be protected against misuse.

That’s why some have reservations when considering the Internet of Things as they fear data misuse and loss of control. It is therefore an important prerequisite for companies to create both (legally) secure technical processes for the collection, storage and processing of data from the Internet of Things, and to win the trust of private and business customers whose data marketers want to use.

Dr William H. Saito, Special Advisor to the Cabinet, Government of Japan, explained during the INTERPOL World 2017 Congress earlier this month, that ‘executives would surely be able to utilize security as an effective tool to enhance the corporate value of their organizations, rather than seeing it as a cost center or a liability, if the concept of ‘security by design’, giving sufficient consideration to convenience, would be applied.

Aside from that, Mr Saito said: “Developers of IoT devices need to create a security monitoring and update paradigm for their products, including products long past their physical warranty dates, to keep them patched and up-to-date automatically and transparently”, reminding that “in today’s world safety and security must be built in with all known and unknown use cases in mind.”

New end devices, new channels

Indeed, whether smartwatches, smart glasses, connected cars or the infamous internet-capable refrigerator, all networked devices that communicate with the customer can theoretically also be used to spread marketing messages – and cyberthreats

Here, it is up to the device manufacturers and their partners to develop application scenarios for marketing and service communication, to define software and communication standards, as well as to produce corresponding end devices. Although all this seems still a long way off and wishful thinking, many devices, such as e.g. networked household appliances, have the potential to open new communication channels.

Some already integrate existing communication channels, like social media or email, making it important to monitor their developments, possibly even influence them, and at the very least conceptually deal with application scenarios at an early stage: The Apple Watch, for example, enables the reception of emails and push messages from apps and is therefore a relevant device for location-based marketing in real-time, and via the onboard computer of a connected car not only traffic information or entertainment content could be accessed, but it can also serve as a channel for marketing and service communication.

Let’s stay curious about the future Internet of Things, as it is certainly an important trend that will shape the marketing of tomorrow.

By Daniela La Marca