The Internet Of Things: When Products Become Marketing Channels

Alex Jones

The internet of things has been heralded as the next great online revolution since the term was coined over 15 years ago, but until recently it has been seen mainly as an operational, supply-chain concern. Now, however, its importance to marketers is becoming clearer.

Experts see the data coming from the internet of things extending the boundaries of marketing’s operations, while simultaneously increasing the depth of marketers’ understanding of their customers’ behaviour. But, at the same time, the coming revolution will re-emphasise familiar issues surrounding data capture and analysis.

Beyond The Supply Chain

“Five years ago we were talking about machine-to-machine communications,” explained Matt Hatton, founder and CEO of Machina Research, which specialises in M2M, IoT, and big data. “We were talking about efficiency savings and reducing the cost of doing business, and it was all something being done by the IT department.

“With the internet of things, we’re talking about something transformational, something that will permeate through the business. So it’s not just the tech guys talking to the CFO; the additional complexity means it’s now appearing on the CMO’s desk. It’s not just supply chain management any more.”

For Matt Guest, head of digital strategy consulting at Deloitte EMEA, the key change brought about by the internet of things will be the increase in the amount of data that will become available to marketers. That, he believes, will take marketing in two new directions.

“The internet of things allows you to change the role of marketing,” he said. “Rather than just changing superficial things, marketers can gain a greater level of insight into messaging. It will allow them to tune their messages according to how customers actually use the product.”

He gives the example of collecting data about the way somebody uses their oven. That can show how they cook and, in turn, could indicate that a different product might suit them better.

Better Data, Better Products

But Guest also sees IoT data making marketing crucial to new product development.

“Marketing strategy becomes part of the thinking about the product system and how it works,” he said. “Physical products will become channels, so without marketing being part of the conversation, you’d have a much riskier business model.”

Deloitte’s “Tech Trends 2016 – Innovating in the Digital Era” report gives the example of construction machinery company Caterpillar, which is collecting data from its mining machinery in the field with the aim of developing a better understanding of how it could be made to perform more efficiently, but also predicting how specific pieces of equipment will perform in different environments and on different jobs.

Wrapping Services Around Products

Alex Jones, business design director at Fjord, design and innovation unit within Accenture Interactive, is also watching the relationship between products and consumers change. He sees the future as being characterised by brands wrapping services around products.

“Connected devices are ubiquitous, but the IoT is also about the ability to shift data up into the cloud and crunch it to deliver real-time services.

“In every product there’s a service waiting to happen. When you look at the toolbox that’s now available, you can start to wrap a service round a product that makes it much more attractive to use. For example, a toothbrush could be tied to dietary advice. It becomes a service that’s interested in my health.”

Hatton agrees. “Tracking products will create opportunities for understanding consumer behaviour, or for selling more products and services on top,” he said. “This allows for a lot of innovation in business models. It’s a move from selling hardware to selling services. Take Zipcar, for example.”

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