A Marketer's Guide & Brand Safety

 
A Marketer's Guide & Brand Safety
ATrust,
  Marketer’s
        Transparency
              Guide
to
 & the
   Brand
       Internet
          Safetyof Things
A Marketer's Guide & Brand Safety
A Marketer’s
Guide to the
Internet of
Things

Published April 2018                                       Econsultancy London       Econsultancy New York       Econsultancy Singapore
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A Marketer's Guide & Brand Safety
Contents
       1. Introduction ............................................................... 5
                  1.1.            Executive Summary ..............................................................5
                  1.2.            About Econsultancy ............................................................. 6
                  1.3.            About the author .................................................................. 6

       2. Overview .....................................................................7
       3. What is the Internet of Things (IoT)? ....................... 8
       4. Internet of Things now and in the future .................. 9
       5. IoT in the context of major technology trends ......... 11
                  5.1.            Big Data ............................................................................... 11
                  5.2.            Cloud computing................................................................. 11
                  5.3.            Wearable technology .......................................................... 11
                  5.4.            Blockchain ........................................................................... 12
                  5.5.            New interfaces .................................................................... 12
                  5.6.            New interactions ................................................................. 12

       6. IoT for marketing and customer experience ............ 14
                  6.1.            Advertising and real-time marketing ................................. 14
                  6.2.            Customer data ..................................................................... 15
                  6.3.            Market research .................................................................. 15
                  6.4.            New customer experiences ................................................. 16
                  6.5.            Faster than real-time customer service ............................. 17
                  6.6.            CRM or PRM ....................................................................... 18
                  6.7.            Loyalty ................................................................................. 18
                  6.8.            Advocacy ............................................................................. 19
                  6.9.            More effective marketing.................................................... 19
                  6.10.           New revenue streams......................................................... 20

       7. The maturing IoT market ......................................... 21
                  7.1.            Giving trillions of objects a name ....................................... 21
                  7.2.            The internet of silos ............................................................ 21
                  7.3.            Connecting to the Internet ................................................ 22
                  7.4.            5G ....................................................................................... 22
                  7.5.            Powering IoT ...................................................................... 23
                  7.6.            Human interaction with IoT ............................................. 23

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      and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2018
A Marketer's Guide & Brand Safety
7.7.            Privacy and regulation ....................................................... 24
            7.8.            Security .............................................................................. 25
            7.9.            Costs ................................................................................... 26
            7.10.           Generating insight ............................................................. 26
            7.11.           Organisational issues ..........................................................27

 8. IoT for marketing .................................................... 28
            8.1.            Retail .................................................................................. 28
            8.2.            FMCG/CPG ........................................................................ 29
            8.3.            Financial Services .............................................................. 30
            8.4.            Utilities/Telecommunications .......................................... 30
            8.5.            Travel.................................................................................. 32
            8.6.            Manufacturing/Logistics ................................................... 32
            8.7.            Pharmaceutical and Healthcare ........................................ 33

 9. Benefits for consumers ............................................ 35
            9.1.            Reduce friction ....................................................................35
            9.2.            Provide entertainment ........................................................35
            9.3.            Personalised information and rewards ............................. 36
            9.4.            Recycling, authenticity and providence ............................ 36

 10. How to launch your IoT project .............................. 37
 11. Are marketers still going to have a job? .................. 40
 12. Conclusion ................................................................ 41
 13. Resources ................................................................. 42

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A Marketer's Guide & Brand Safety
1. Introduction
1.1.           Executive Summary
               The Internet of Things (IoT) refers to the embedding of sensors into objects so they can connect
               to each other and the environment via the internet. It promises a more seamless world where
               many decisions and actions are automated to make our lives better and easier, offering enhanced
               value and better service.

               It can sometimes feel that IoT is a fringe activity with a range of faddish products and promising
               startups. When we have heard about IoT, it has often been in the context of enterprise and limited
               to operational benefits such as improved logistics and maintenance. This is about to change with
               increasingly cheaper sensors, the miniaturisation of powerful batteries, the development of
               common protocols and the increased ease of connecting objects to the internet. We are on the
               cusp of a major shift in how we use products not just to generate data, but to offer greater levels of
               service and to generate new revenues. This applies to brands in all sectors, from FMCG/CPG
               brands seeking first-party data, to B2B brands wanting better exposure to how their products are
               actually used. There is a huge range of ways in which IoT applications can be used for marketing.

               Adding value to customers is key to the IoT opportunity. A key way to offer value is to reduce
               friction in consumers’ lives by using the sensors embedded in products to anticipate customer
               needs. Companies can also add value by recognising how a customer is using a product and
               providing opportunities for proactive advice, assistance and information. The data the sensors
               generate will swell big data to new levels and allow brands to understand customer relationships
               with products at a granular level. This opens up the idea of not just customer relationship
               marketing (CRM), but also product relationship marketing (PRM).

               IoT comes as part of a number of major technology trends such as big data, cloud computing,
               wearables and blockchain. It opens up new possibilities, offering new interfaces and customer
               interactions. As part of these developments, IoT is set to transform not just marketing, but society
               at large.

               As well as the opportunities, IoT also presents threats. There was a time when a company could
               quite tightly define its competitor set. With lowering technology costs and the ability to get
               products and services to market quickly, competition can come out of nowhere. IoT-enabled
               products are no exception and will open up new opportunities for companies to compete. All
               organisations now need an IoT strategy with an IoT marketing strategy to go alongside.

 The impact of IoT
 “IoT, fuelled by big data, the cloud and AI, will have an even bigger impact than the Industrial Revolution.”

                                                                                                               Gerd Leonhard, CEO at the Futures Agency

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               and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2018
A Marketer's Guide & Brand Safety
1.2.   About Econsultancy
       Econsultancy’s mission is to help its customers achieve excellence in digital business, marketing
       and ecommerce through research, training and events.

       Founded in 1999, Econsultancy has offices in New York, London and Singapore.

       Econsultancy is used by over 600,000 professionals every month. Subscribers get access to
       research, market data, best practice guides, case studies and elearning – all focused on helping
       individuals and enterprises get better at digital.

       The subscription is supported by digital transformation services including digital capability
       programs, training courses, skills assessments and audits. We train and develop thousands of
       professionals each year as well as running events and networking that bring the Econsultancy
       community together around the world.

       Subscribe to Econsultancy today to accelerate your journey to digital excellence.

       Call us to find out more:

             New York: +1 212 971 0630
             London: +44 207 269 1450
        Singapore: +65 6653 1911

1.3.   About the author
       Martin Talks is Founder of Digital Disruption School, the digital disruption training company. 1
       Digital Disruption School aims to demystify advanced technologies such as the Internet of Things
       and helps people and organisations develop fluency and effective strategies, products and services
       to take advantage of this exciting and fast developing opportunity. Prior to Digital Disruption
       School, he was founder of the strategic digital marketing agency Blue Barracuda and Global
       Digital Lead at Draftfcb (now called FCB).

       He is a consultant with Econsultancy and has written the Marketer’s Guide to Virtual Reality and
       the Marketer’s Guide to Wearable Technology. He also regularly speaks at events on digital
       communications and technology.

       When he is not using, advising on or creating technology, Martin ring-fences time away from
       screens. He founded the company Digital Detoxing (www.digitaldetoxing.com) that promotes a
       healthy balance between our online and offline worlds.

       Martin Talks
       +44 (0)7866 801580
       martin@matomico.com
       www.matomico.com
       @talksy

       1   www.digitaldisruptionschool.org

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       and retrieval system, without prior permission in writing from the publisher. Copyright © Econsultancy.com Ltd 2018
A Marketer's Guide & Brand Safety
2.   Overview
     This report will demystify the Internet of Things (IoT), provide an update on the current adoption
     of IoT and explain how organisations can use IoT in marketing.

     It will explain the role of IoT as part of the trend towards ubiquitous computing and the
     opportunities that gives marketers to acquire data, develop products and services and add value
     to customers. Above all, it will provide a framework for approaching IoT as a marketing
     professional.

     The report will:

      Help marketers establish an IoT point of view and opinion on how it might fit into their
       marketing plans.
      Provide an overall understanding of IoT and how it combines with other emerging technology
       trends.
      Make predictions on market size and the speed of adoption.
      Explore how and why IoT will transform the marketing of products and services and how it
       can be harnessed right now.
      Offer examples from different industries including retail, FMCG/CPG, financial services,
       utilities and telecommunications, travel, manufacturing and logistics, pharmaceutical and
       healthcare.
      Explain the breadth of opportunity afforded to brands, including revenues, brand extension,
       customer service and advertising.
      Discuss important considerations for designing a strategy.
      Propose a formula for IoT success.

     Econsultancy would like to thank the following people for their contribution to this report:
      Niall Murphy and Andy Hobsbawm, Co-founders, EVRYTHNG
      Josh Valman, CEO, RPD International
      Tom Wood, Managing Partner, Foolproof
      David Simmons, CTO and General Manager, Ping Asset Ltd
      Hans Nasemann, VP Major Appliances Asia Pacific, Electrolux
      Gerd Leonhard, CEO, The Futures Agency
      Mirko Giacco Michelangelo, Director of Commercial Operations and Digital, Vodafone
       Hungary
      James Chandler, Chief Marketing Officer, IAB UK

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A Marketer's Guide & Brand Safety
3.   What is the Internet of Things (IoT)?
     The Internet of Things (IoT) refers to the embedding of sensors into objects so they can connect
     to each other and the environment via the internet.

     IoT can be traced back to 1982 when, unwittingly, a brand became central to the emergence of the
     Internet of Things. The first internet-connected device was a modified Coke machine developed at
     Carnegie Mellon University. It could report its inventory and whether the drinks inside were
     cold.2 Since then IoT has greatly expanded. The number of things connected to the internet
     exceeded the number of people connected to the internet some time ago. According to IHS
     Markit, there will be 125 billion devices on the Internet of Things by 2025. 3

     Nowadays smart devices are readily available, smart cars are being tested on public roads and
     industry has incorporated smart warehousing and logistics for more efficiency. The Internet of
     Things goes beyond the connection of just objects. When connected to each other via wearable
     technology, we are an Internet of People.4 There is even an Internet of Cows, as dairy farmers
     connect their cattle to track milk production. 5 Perhaps the best way to describe this technology is
     the Internet of Everything.

     IoT can be seen as part of the field of ubiquitous computing which envisions a future where the
     term ‘computer’ is no longer relevant as technology is interwoven into everyday life in a
     frictionless way. Computing will be available any time, any place and anywhere. This new
     paradigm is also described as pervasive computing6, ambient intelligence or ‘everyware’.7

     IoT can offer a wide range of business value, including substantial operational cost savings and
     efficiencies. This report focuses on the opportunities more specifically associated with marketing.
     From a marketer’s point of view, IoT raises exciting new possibilities. It allows companies and
     brands to truly become part of the customer’s world, connecting with people and objects around
     them.

     Vodafone, for instance, focused on the enterprise sector up until 2017, but now it has entered the
     IoT consumer market with the launch of “V by Vodafone” enabling consumers to connect millions
     of home and leisure electronics products to the group’s dedicated global IoT network – the largest
     of its kind in the world. “IoT gives Vodafone the opportunity to enter a new market. We built
     upon the company’s extensive track record in developing and implementing machine-to-
     machine technologies for enterprise and created a consumer IoT proposition that deepens our
     direct relationship with consumers,” says Michelangelo Giacco, Director of Commercial
     Operations and Digital at Vodafone Hungary.

     Through IoT, brands can anticipate the customer’s needs even before the customer knows what
     they are. It is a world where the brand can deliver serendipity. Nevertheless, it may not be all
     good news for marketers. With the increasing capability of machines to anticipate and deliver
     against customer needs, without human intervention, will there still be a need for marketers?
     Along with many other professions, marketing will be subject to the huge impact of IoT on society
     and the workplace.

     2 https://www.cs.cmu.edu/~coke/history_long.txt
     3 https://technology.ihs.com/596542/number-of-connected-iot-devices-will-surge-to-125-billion-by-2030-
     ihs-markit-says
     4 https://econsultancy.com/reports/a-marketer-s-guide-to-wearable-technology
     5 http://www.bbc.co.uk/news/uk-scotland-scotland-business-26705812
     6 Hansmann, Uwe (2003). Pervasive Computing: The Mobile World. Springer. ISBN 3-540-00218-9.
     7 Greenfield, Adam (2006). Everyware: the dawning age of ubiquitous computing. New Riders. pp. 11–12.

     ISBN 0-321-38401-6.

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4.   Internet of Things now and in the future
     As might be expected, the predictions for the size of the IoT market fluctuate widely. This is partly
     due to different market definitions and partly because predicting any technological future is
     difficult. It is noticeable that the IoT predictions have been getting more bullish in recent years.
     Here are a few predictions to consider:

      In February 2017, Gartner said that 8.4 billion connected things would be in use in 2017, up
       31% from 2016.8
      According to IHS Markit, there were nearly 27 billion IoT devices in 2017 and they are
       estimating that number will rise to 125 billion in 2030. 9

     In terms of money:

      According to GrowthEnabler & MarketsandMarkets analysis, the global IoT market will grow
       from $157B in 2016 to $457B by 2020, attaining a Compound Annual Growth Rate (CAGR) of
       28.5%. They say the global IoT market share will be dominated by three sub-sectors; smart
       cities (26%), industrial IoT (24%) and connected health (20%). These sub-sectors are followed
       by smart homes (14%), connected cars (7%), smart utilities (4%) and wearables (3%). 10
      Bain predicts B2B IoT segments will generate more than $300B annually by 2020, with
       consumer applications generating $150B by 2020, with B2B applications being worth more
       than $300B.11

     For marketers, some of the most interesting predictions relate to customer experience. According
     to the Zebra Technologies Intelligent Enterprise Index published at the end of 2017, which was
     based on a survey of 908 IT decision-makers in global enterprises, 70% of enterprises are
     currently using data generated from IoT solutions to improve customer experiences. 12

     Figure 1: How are you or will you use the data generated from your IoT solution?

                                                                         Source: Zebra Technologies

     8 https://www.gartner.com/newsroom/id/3598917
     9 https://technology.ihs.com/596542/number-of-connected-iot-devices-will-surge-to-125-billion-by-2030-
     ihs-markit-says
     10 https://growthenabler.com/flipbook/pdf/IOT%20Report.pdf
     11 http://www.bain.com/publications/articles/choosing-the-right-platform-for-the-industrial-iot.aspx
     12 https://www.zebra.com/content/dam/zebra_new_ia/en-us/campaigns/brand-campaign/harvard-

     symposium/how-intelligent-enterprise-survey-index-en-us.pdf

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Other interesting statistics from this survey include:

 62% plan to deploy IoT initiatives company-wide in the future
 53% expect that data generated from their IoT solutions will assist in increasing revenues in
  the next year
 51% expect that data from IoT solutions will open up new markets in the next year
 42% of enterprises are spending an average of $3.1M annually on IoT

As a whole, IoT will have different rates of adoption depending on the sector and geography. It is
also important to note that it comes as a package with other powerful technologies, and in many
ways, the take-off of IoT will depend on the progress of these.

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5.     IoT in the context of major technology
       trends
       There are several parts to IoT including:

        Physical aspects of a product
        Smart components such as sensors, microprocessors and software
        Connectivity via ports, protocols and antennae
        Data clouds in which to store and analyse product usage data

       The principal technology behind IoT is the sensor. As sensor costs lower, they can be used in a
       huge variety of ways and places. They will soon be embedded almost everywhere from clothes to
       cars, roads to bridges, people to pets.

       IoT also comes as part of other technology trends such as big data, cloud computing, wearable
       technology, blockchain and voice technology.

5.1.   Big Data
       IoT generates huge amounts of data that can help us to understand how to make the customer
       experience more seamless. For instance, at a governmental level, more accurate and readily
       available data on how we use our urban environments could lead to better urban planning.
       Brands can develop better products and services if they know not just what a customer bought
       but, via sensors, how much the customer used the product and in what contexts.

       One platform addressing this issue in the context of office planning is Open Sensors.13 By
       analysing how an office space is really used, how often and by how many people, better decisions
       are made about future designs. Previously this was complex and time-consuming, but now it is
       much simpler and more accurate with the use of sensors and sensor management interfaces that
       track when sensors are active. This data can be combined with other useful information, such as
       weather and traffic data, to gather meaningful insights.

5.2.   Cloud computing
       Cloud computing allows data storage at any time, any place and anywhere, an ideal offering in the
       data rich environment of IoT. Another important attribute of cloud computing is that it allows
       the sharing of technology resources, which can be dynamically allocated on demand. This makes
       the economies of scale required by IoT possible.

       Edge computing is a way of gathering and analysing data near its source as opposed to doing this
       centrally. This will increasingly be necessary due the huge influx of data from IoT which will
       compel companies to find a better and cheaper way to process it. This approach requires
       leveraging resources that may not be continuously connected to a network such as laptops,
       smartphones, tablets and sensors.

5.3.   Wearable technology
       Wearable technology can be seen as part of IoT, or at least considerably overlapping with it. The
       implication of this is that we can, through wearables, be part of IoT. We can become a data point

       13   https://opensensors.io

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connected to the internet. This means that wearable technology can be used to create the right
               customer experience. A customer experience that is not tied to a single place, time or device, or
               even person. It is networked, actively or passively. For instance, someone sitting at their desk
               could still be beaming health-related data via their wearable. This creates new opportunities for
               brands.

5.4.           Blockchain
               The blockchain can be defined as a distributed ledger where sequential blocks of data are
               cryptographically secured. There are a few reasons it lends itself well to IoT:

                The sequential nature of blockchain means that blockchain systems can be used to track
                 sensor data measurements and prevent duplication
                There is enhanced security in blockchain due to there not being a single point of failure and
                 the need for consensus in the chain of blocks for any attempts to change records
                Smart contracts are one of the primary uses of blockchain. A smart contract is an automatic
                 digital agreement, so when the conditions of the contract are fulfilled then payment or asset
                 transfer automatically takes place. Over a blockchain, there are no middlemen to cause
                 bottlenecks.

5.5.           New interfaces
               Smartphones are currently the principal interfaces to IoT ecosystems. For instance, wearable
               devices usually track health activities via an app, while smart thermostats are controlled through
               a smartphone. New interfaces such as Amazon Alexa or Google Home are breaking this trend and
               providing new ways to connect to the Internet of Things and the world around us.

 The rise of voice
 “We are seeing a shift currently going on to voice interfaces like Alexa and Google Home, and it is perfectly
 possible that these will become a preferred interface to IoT. They are good bridges for interoperability of
 devices.”

                                                                   Hans Nasemann, VP Major Appliances Asia Pacific, Electrolux

               Long term, it is unlikely that any one interface will dominate our connectivity. As data
               connectivity becomes increasingly ubiquitous and processing power exponentially increases, all
               devices will be ‘computerised’ from watches to fridges, washing machines to cars, buildings to
               roads.

5.6.           New interactions
               A world of smart devices calls for new ways of interacting. Visual recognition is growing in
               momentum and importance as more products integrate smart cameras. Our focus on the visual
               seems to be growing stronger by the day in our image-driven, always-on culture. In particular,
               facial recognition is offering exciting new opportunities. For instance, Nest Cam IQ, which costs
               £299, differentiates between the faces of family members and strangers in the home. 14

               The combination of these trends combined with IoT will allow for a range of products and services
               to be developed by companies.

               14   https://nest.com/uk/cameras/nest-cam-iq-indoor/overview/

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“IoT takes us beyond communication and connectivity services: there are many more
opportunities by being part of bigger propositions and ecosystems,” says Michelangelo Giacco,
Director of Commercial Operations and Digital at Vodafone Hungary.

Some have described the new developments as the Fifth Industrial Revolution, causing major
economic and social disruption.

“IoT, fueled by big data, cloud and AI, will have an even bigger impact than the Industrial
Revolution. They are part of the mega shifts of datafication, automation, cognification. The
future is exponential, combinatorial, convergent,” says Gerd Leonhard, CEO at the Futures
Agency.

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6.            IoT for marketing and customer
              experience
              IoT provides real-time, contextualised data that can come from many touchpoints over time. This
              data can fuel a range of new exciting marketing and customer experiences. These include selling
              existing products and services more effectively and creating new products and services that
              generate new sources of revenues.

              There are also threats of new competitors emerging that could disrupt existing markets. Consider
              the disruptive impact of Amazon in the retail space, Uber in transport and Apple and Microsoft in
              healthcare. IoT is enabling this sort of disruption. Vast amounts of data can be harnessed from
              IoT devices, creating new valuable insights. With the increased interconnection of products,
              companies with large data and technology ecosystems will be well placed to offer enhanced value
              across a range of products and services. Increasingly, products and services will be chosen not just
              on the basis of what they alone offer, but how they operate within a wider digital ecosystem.

 The IoT opportunity
 “IoT will significantly change the way brands and consumer are interacting. For the first time, companies have
 the opportunity to be in touch 24/7 with their users. This creates tremendous chances to understand the
 consumer in a much better way and create meaningful, personalised interactions with them. The access to usage
 data will take out the guesswork from market research as direct, real-time insights from a large number of users
 will be available over time.”

                                                               Hans Nasemann, VP Major Appliances Asia Pacific at Electrolux

6.1.          Advertising and real-time marketing
              The Internet of Things offers new opportunities for advertisers, but who wants their wearable or
              their fridge to display an advert? The Internet Advertising Bureau (IAB) commissioned a report in
              December 2016 to assess consumer adoption of IoT in the United States. One of the interesting
              findings was that 65% of connected device owners were open to the idea of ads on their connected
              devices.15 The reality of the acceptability of such ads will of course depend on the nature of the ad
              and the context in which it is delivered.

              “People have become pretty good at working out the value exchange and this value will have to
              be very clear when the context is new. Hyper-targeting will be possible through IoT based on
              real-time behaviours, but the context still needs to be right,” says James Chandler, CMO of IAB
              UK.

              “No one will be happy to watch a pre-roll before they can pour a coffee, although people may be
              receptive to filling the time while they are waiting for the coffee to brew. Key to marketers’
              success with IoT advertising will be to rethink their creative strategies and not try to shoe-horn
              in old formats to a new context. IoT will stretch the creative minds of marketers in new ways
              and that is an exciting opportunity.”

              15   http://www.thedrum.com/news/2016/12/15/iab-62-connected-device-owners-are-open-advertising

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6.2.          Customer data
              In many industries, such as CPG and FMCG manufacturing it is hard to get hold of first-party
              data on customers. Smart products, those that include embedded sensors, can inform marketers
              about how the product is used, rather than how it may have been intended to be used, or indeed
              how customers might say they use it.

              This will generate new insights into the value proposition of products and allow marketers to
              position and communicate their products appropriately. This will include a greater level of
              customer segmentation and personalisation.

              Consider P&G’s Oral-B’s connected toothbrush.16 This device combines with a smartphone app to
              give advice on where and how often a consumer should brush their teeth. It is gamified to add to
              the behavioural impact of the device and the data can be shared with a user’s dentist. Through the
              smart toothbrush P&G can demonstrate the value consumers receive while at the same time
              generating a huge amount of data for improving its own marketing.

              More effective ways of segmenting customers can be introduced, such as by usage of a product. A
              heavier user is more likely to be vested in the product and more likely to spread positive word of
              mouth about the product.

              Insights about product distribution can be generated. For many products, the location of a
              product is very hard to determine. By building in location sensors, brands will get a much better
              understanding of their geographic appeal and effectiveness.

 Data-informed communication
 “IoT further changes marketing into a one-to-one discipline where we no longer think of customers by
 demographics or general segments, but as individuals in personal segments informed by data so we can
 communicate at the right time based upon the context of what the data is telling us right now.”

         Mirko Giacco Michelangelo, Director of Commercial Operations and Digital at Vodafone
                                                                                     Hungary.

6.3.          Market research
              Through IoT, marketers will be informed by additional, and in some cases more reliable,
              customer data. Rather than relying on surveys or focus groups that may be subject to imprecision,
              data from IoT devices will be accurate. For instance, scientists have developed a tooth-mounted
              sensor that monitors what you eat and drink in real time. Everything that a person eats or drinks
              can be recorded by the device, which measures just 2mm square. The device uses a miniature
              antenna connected to a sensor, which together are thin enough to look like a tattoo on the tooth.
              The sensor responds to different nutrients or chemicals, such as glucose, salt and alcohol, by
              swelling or reacting.17

              “If you’re under observation you create an observation bias. Human beings lie and we lie
              because we like to be normal and we’ll do whatever we can to be normal,” says Josh Valman of
              RPD International, “So we sell a system that allows you to put sensors into products, very, very
              small discreet sensors such as accelerometers, location or temperature sensors, so you remove
              the intensity of the observation.”

              Other sensors can tell brands not only where or when a customer may have interacted with their
              brand, but can go further and give data on how the customer was feeling at the time. Biometric

              16   http://uk.businessinsider.com/oral-b-genius-toothbrush-hints-at-future-connected-pg-products-2016-2
              17   https://www.thetimes.co.uk/article/sensors-in-teeth-can-spot-little-white-lies-nrb7s25xg

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measures can inform on heart rate, sweat and even track areas of brain activity. Consider air
       travel: it can be a stressful experience in many respects. By understanding where those stress
       points are, brands can seek to address them and offer an improved customer experience.

       It will be more possible than ever to map complete customer journeys. Most businesses struggle
       to understand customer journeys through online and mobile experiences, never mind what the
       interactions may have been offline. Through a combination of wearable tech and sensors, an
       entire user journey will be able to be mapped.

       Microsoft and Rolls-Royce are collaborating to support Rolls-Royce’s intelligent engines and offer
       'advanced operational intelligence to airlines.' Rolls-Royce integrates Microsoft Azure IoT Suite
       and its Cortana Intelligence Suite to gather information on flight operations, fuel usage and
       maintenance planning.18 Previously, Rolls-Royce has invested in jet engine sensors to produce
       real-time data, and report back on the condition of the engine and even maintain it remotely.

       Services like Google Now19 and Apple’s iBeacons20 are able to align user identities with location
       data to provide services that are useful, such as nearby events and shopping reminders when you
       pass a store. However, these have been relatively slow to adoption, except as part of apps like
       Shopkick that gives rewards when people walk into a store. 21 IoT will open a new world of
       opportunity in market research for brands.

6.4.   New customer experiences
       The most successful brands focus on the customer experience. IoT can deliver new customer
       experiences that extend the brand ecosystem. The classic example of this was Nike, which went
       from a simple shoe brand to a whole exercise ecosystem. At first, it did this with its Nike Fuelband
       which was able to track movement.22 Nike’s strategy has since changed and it has abandoned the
       Fuelband and refocused on its Nike+ Fuel Lab, which seeks to collaborate with other leading
       businesses rather than go it alone.23 Where Nike has led, others such as Adidas, Under Armour,
       Asics and New Balance, have followed.

       RPD International worked with Chivas Regal to develop a glass that can interact with others
       around an individual and the room. The glasses light up when clinked together and can be
       activated across a room in the event of a toast.

       18 https://azure.microsoft.com/en-gb/resources/videos/rolls-royce-and-microsoft-collaborate-to-create-
       new-digital-capabilities/
       19 https://www.google.com/landing/now
       20 https://developer.apple.com/ibeacon
       21 https://www.shopkick.com/
       22 http://www.nike.com/gb/en_gb/c/nikeplus-fuelb
       23 http://www.nikefuellab.com/

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Figure 2: RPD International/Chivas Regal Connected Glass

                                                            Source: Pernod Ricard/RPD International

       The purveyor of a product can become the supplier of a service through IoT. With its ability to
       deliver regular information to a customer via wearables, their smartphone or other device, IoT
       can enable a brand to take on a much wider role in a customer’s life.

       Mercedes Benz not only integrates with Nest to allow drivers to adjust their home heating from
       their car, but now also integrates with Amazon Alexa and Google Home devices.24 Mercedes
       owners can instruct their Google Home or Amazon Echo to remotely start or lock their vehicles, as
       well as send addresses to their in-car navigation system. They can also instruct their home device
       to turn off ovens or other electronic devices that may have been left on. Mercedes Benz stated that
       their aim is to create an intelligent ecosystem around cars and they are developing cutting-edge
       technology to make everyday life more convenient for their customers.

       New car services are also being generated through IoT deployments. BMW has launched a
       premium car sharing service called ReachNow, competing with Daimler’s Car2Go. 25 It offers the
       convenience of renting hundreds of BMW and MINI cars on demand and pay-as-you-go with no
       fuel or insurance costs.

6.5.   Faster than real-time customer service
       Through sensors, IoT can constantly monitor a product’s performance and surrounding
       conditions that might affect that performance. Should an upgrade be required or a problem exist,
       then the product itself could contact customer services. For instance, if a customer is pressing a
       button multiple times, it will be reasonable to conclude that the person is having difficulties using
       the device. Through IoT, the brand can be alerted and helpful information could be offered, such
       as a video or real-time chat. Further than that, it could directly install an upgrade or order a
       replacement part itself. This could all happen before the customer realises there are any issues,
       minimising customer dissatisfaction.

       Perhaps one the most exciting opportunities for a brand is the ability to generate instant insights.
       But this could be taken even further to include predictive insights. If this all sounds a bit too much
       like Minority Report, it need not be quite that sinister. Cars have long been likened to apps on
       wheels. Proving their move towards becoming sensors on wheels, Tesla can detect emerging

       24   https://www.theverge.com/2017/4/21/15385232/mercedes-benz-amazon-echo-alexa-google-home
       25   https://reachnow.com/en/

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issues in the car and send a message a week before the problem happens. 26 Tesla also remotely
       upgraded its cars that were impacted by Hurricane Irma enabling greater battery life. 27 Given the
       software-centric nature of smart products this could become an increasing aspect of brand
       services.

6.6.   CRM or PRM
       Many of us have given our possessions identities. Our cars may have names, for instance. IoT
       takes this concept to a whole new level. In effect, by giving products stronger identities it opens up
       the potential of better relationships. It can extend the concept of customer relationship marketing
       (CRM) to products. Through IoT, brand owners can process information about connected
       products to personalise them to each consumer.

       “In the same way as CRM allows brands to understand how they acquire or develop customers,
       how long they have them and how much revenue they generate, these principles can be applied
       to products. This is similar to CRM, but at the level of each individual product, rather than the
       customer. This is product relationship management (PRM),” says Andy Hobsbawm of
       EVRYTHNG.

       This way of thinking creates new possibilities for brands. Rather than thinking of a brand’s
       relationship with the product as just the moment of sale, brands can understand the life of the
       product, how it is used and the relationship a customer has with that product. Throughout that
       lifecycle, messages can be sent, experiences created and products managed in a contextual
       manner. There will also be more contextual opportunities to cross-sell and upsell based on
       product usage. Through its continued relationship with its product, a brand can consider many
       ways to deepen its relationship with a customer.

       An example of this is Pernod Ricard which is rolling out ‘fully-connected’ bottles with individual
       QR codes that will give users information on the brand, provenance and nutritional content via
       their smartphones.28

       For products such as consumables, it will be possible to understand the order cycle of a product.
       Rather than just relying on past purchase data to estimate when a customer is likely to run out of
       their existing products, brands will be able to understand exactly when a product is running out.
       This sort of technology is used to track medicine administration, but could be used to track the
       rate of consumption of a much wider product range.

       Overall, a product should no longer be seen as static. Through IoT, it can have a living digital layer
       adjusting to usage, surrounding environment and other factors.

6.7.   Loyalty
       Consumer Goods is a category that struggles to generate loyalty from shoppers. Decisions are
       easily swayed by better deals from brands selling similar products. This could change with IoT as
       it can hold people within a brand ecosystem. This could work well if, once a customer has bought
       into a product, it continues to generate ongoing value, such as health data. It could also link to
       other services and become part of a convenient lifestyle.

       For instance, wearable technology company Jawbone has struck a deal with American Express so
       not only will its product be able to track activity, but will also double as a form of contactless

       26 http://www.teslamotors.com
       27 https://www.recode.net/2017/9/19/16335054/elon-musk-software-hardware-upgrades-tesla-
       hurricane-irma-apple-ios11
       28 https://www.thedrinksbusiness.com/2017/02/pernod-ricard-to-roll-out-connected-smart-bottles-

       across-brands/

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payment.29 As these features become more embedded into products, they are likely to be seen as
       essential components, not just interchangeable nice-to-haves.

       Once a customer has started using a product with data benefits, it will be harder for that customer
       to switch product as they risk losing their historic data.

       “The more you interact with a product, the more of a direct digital relationship you have with
       the brand. That is a huge shift in how products work and puts the brands alongside retailers in
       their relationship with consumers,” explains Andy Hobsbawm of EVRYTHNG.

       More straightforwardly, brands can use wearable tech in their loyalty schemes. Starbucks has
       given its customers the ability to load their loyalty points onto a Microsoft Band and use them to
       buy coffee in-store.30 Walgreens has integrated wearables into its loyalty programme. Customers
       can join their FitBit, Withings or BodyMedia activity tracker to their loyalty scheme membership
       and earn points for the number of steps they walk. Members can earn 20 points for every mile
       they walk, run or cycle. It is part of Walgreens positioning itself as a company that promotes the
       health of its customers.31

6.8.   Advocacy
       For many brands advocacy is far more important than loyalty. Certainly, getting customers to
       speak well of a brand via word of mouth is a far more valuable endorsement than a brand singing
       its own praises in an advertising campaign. There are few more visible ways of customers showing
       their support for a brand than wearing the product. Wearables, as a subset of IoT, by their very
       nature, offer that opportunity as customers can literally wear the brand on their sleeve.

       Wearables also benefit greatly from word of mouth. Creating social opportunities for people
       through wearables means that people are more likely to continue to wear the technology. This is
       particularly the case for activity bands that give people the opportunity to measure their
       performance against their friends. This can play into the growing realisation that individual
       customers are a ‘channel’ as much as TV or a website. They too can convey messages about a
       brand and encourage other individuals to tell positive brand stories.

       RPD International worked with Bacardi to develop a new offering for experiences exclusive to
       their top customers and brand ambassadors. Grey Goose Vodka used IoT technology to help re-
       establish its sense of brand exclusivity. RPD International developed a piece of jewellery with an
       embedded NFC chip that stored data about a customer, such as their drink preferences and their
       favourite events. When entering a Bacardi-activated bar, they could scan their device and receive
       the night of their dreams, all automatically prepared. 32

6.9.   More effective marketing
       By now, customers are used to being followed by adverts as they move from site to site. Ads
       appear on their screens based on the websites they have visited. Too often they are irrelevant or
       include items customers have already purchased. If that messaging was based on whether an
       already purchased item was wearing out or had sustained damage, then that would be more
       relevant, more effective and better received. In this way, sensors could track the lifecycle of
       objects and message accordingly. This could be done in the same way as other programmatic
       media buying that already takes place. As well as being more effective, it could save advertisers
       considerable amounts of money on wasteful ads.

       29 https://econsultancy.com/blog/66338-amex-partners-with-jawbone-on-new-fitness-tracker
       30 http://www.microsoft.com/microsoft-band/en-us/partners/starbucks
       31 https://www.walgreens.com/steps/appmarket.jsp
       32 http://www.rpdintl.com/bacardi-grey-goose.html

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6.10.   New revenue streams
        In extending a brand’s range of offerings, there are new revenue opportunities. The Nike
        Fuelband originally sold for £150, for example. Activity trackers have now come down in value,
        and will continue to do so, but are still a significant market in terms of product sales.

        IoT not only offers the opportunity of creating new products, but of creating products as a service.
        We have seen a variety of buttons for people to press to order products:

         The VIP Pizza Magnet was created back in 2012 and allows a pizza order to be made merely by
          pressing a fridge magnet.33
         Evian did something similar with its Smart Drop whereby people can order water by pressing
          its fridge magnet.34
         EVRYTHNG took the pizza idea slightly more upmarket with the Savoy where you could press
          a button and receive a bottle of Dom Perignon. 35
         Peroni’s beer button, developed by RPD, is a device that attaches to a kitchen or bar wall and
          can be pressed to activate a 2-hour beer delivery in and around London.36

        Amazon Dash buttons have taken these types of IoT integrations to a whole new level. But it is not
        all fridge magnets and buttons.

        New business models are emerging such as paying per use in relation to cars through services
        such as Zipcar, Drivy and BMW’s DriveNow.

        Insurance companies such as Insure the Box reward good driving by discounted car insurance
        premiums. They track this by a box fitted in the car that tracks driving. 37

        33 http://www.redtomato.biz/magnet
        34 https://www.youtube.com/watch?v=-UQpYwXHRdM
        35 https://vimeo.com/108562945
        36 https://www.campaignlive.co.uk/article/peroni-ocado-trial-iot-purchases/1413423
        37 https://www.insurethebox.com

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7.            The maturing IoT market
              It is always a sign of a maturing market if politicians have caught up with the trend at least to
              some extent. The UK Government has established IoTUK, a programme of activities that seeks to
              advance the UK’s global leadership in IoT and increase the adoption of high quality IoT
              technologies and services throughout businesses and the public sector. 38 It has put £32m into this
              initiative, but of course this amount is dwarfed by the investment by private enterprises.

              How mature is the IoT market in terms of how it is dealing with some of the many challenges of
              connecting trillions of objects?

7.1.          Giving trillions of objects a name
              In order for trillions of objects to be connected, they need to be identifiable. Trillions of objects
              require trillions of IP (Internet Protocol) addresses. The adoption of IPv6 is crucial in the
              development of IoT. The previous IPv4 system had a limited network connectivity that was not
              capable of supporting the increasing number of IoT-connected devices. IPv6, on the other hand, is
              capable of handling 3.4x10^38 unique IP addresses. 39 IPv6 is in various stages of deployment on
              the internet and is vital to IoT’s future.

7.2.          The internet of silos
              For IoT to deliver on its full promise, the systems collecting data from all the IoT devices need to
              be compatible, or at the very least they must be able to communicate. Otherwise we will be left
              with an internet of silos where it will be difficult to create joined-up experiences. There are
              currently many proprietary technologies and this is likely to be the case going forward for some
              time, if not always. This is inevitable as the range of needs is broad and the value of the data huge.
              Companies, aware of the opportunities afforded by IoT, are rushing to enable the development of
              IoT solutions using their products and services. More than 3 million developers will be involved in
              IoT activities by 2019 - about double the number today - according to a forecast by ABI
              Research.40

              Some companies are trying to solve the issues of silos, such as EVRYTHNG. The company’s plan
              is ambitious: giving every single object in the world a unique web-addressable URL. In that way,
              EVRYTHNG aims to help consumer product manufacturers manage billions of intelligent online
              identities in the cloud for their products, deliver real-time interactive experiences and services to
              customers, and connect with the ecosystem of other applications and products in their digital
              lives.41

 The value in wearables
 “The key to unlocking the value in wearables, whether you’re a maker, a marketer or end-user, is to harness the
 lateral data flow between these connected things, other objects, and the broader arena of applications and
 devices people use to operate their digital lives.”

                                                                                                          Andy Hobsbawm, Co-Founder of EVRYTHNG

              Trying to solve the problems of the internet of silos is unlikely to be done by one company alone.
              The Open Connectivity Foundation has been established to create an open-source standard

              38 https://iotuk.org.uk/about-us/
              39 http://www.gtri.com/learned-stop-worrying-ipv4s-limitation-love-ipv6/
              40 https://www.abiresearch.com/press/iot-developers-to-total-3-million-in-2019-paving-t
              41 https://evrythng.com

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communications platform for all devices, operating systems and sector. 42 Currently, there are
       more than 300 member companies including Samsung Electronics, Intel, Microsoft, Qualcomm
       and Electrolux.

       There still remains a bewildering number of options at every layer of the IoT infrastructure. This
       needs to be simplified for a truly connected Internet of Things.

7.3.   Connecting to the Internet
       One of the most positive recent developments in terms of connecting goods to the internet has
       been the ability of smartphones to recognise QR codes. iOS 11 has enabled iPhone cameras to read
       these automatically. This could lead to the much derided QR code making a comeback in
       marketing strategies. This might go further with enhancing the humble barcode. There is an
       initiative by GS1, the standards organisation, to enable barcodes to become linkable for the first
       time, enabling users to link to them or create them on the web. This will reduce the need for
       multiple codes on pack.

        “The ubiquitous barcode representing a GS1 identifier has served brands and retailers well for
       decades, scanned over 5 billion times a day around the world at points of sale. With billions of
       iOS and Android smartphones now enabled to automatically read and scan NFC and QR codes,
       the time is now for the GS1 global standard to become internet-enabled, connecting trillions of
       consumer products to the web,” says Niall Murphy, co-founder at EVRYTHNG.

       “Millions of people already interact with proprietary smart codes from WeChat, Snapchat,
       Facebook, Amazon and others. A new standard for giving web addresses to products using GS1
       identifiers, which we hope to see completed by mid-year 2018, will extend the value of the
       standard barcode, open products up for smartphone interaction, and make product digitisation
       accessible to everyone globally.”

       “We are at an inflection point that can see the world’s consumer products connecting to the Web
       at massive scale. Consumers benefit with access to richer product information and digital
       services on every product. Brands, retailers and manufacturers are able to generate enormous
       efficiencies with data from and about their products throughout the lifecycle, and connect
       directly with their customers and consumers via their products.”

       But outside these simple applications, there exists an almost bewildering choice of connectivity
       options for electronics engineers and application developers working on products and systems for
       IoT. Many communication technologies are well-known such as WiFi, Bluetooth, ZigBee and
       2G/3G/4G cellular, but there are also several new emerging networking options such as Thread
       (as an alternative for home automation applications) and Whitespace TV technologies being
       implemented in major cities for wider area IoT-based use cases. Depending on the application,
       factors such as range, data requirements, security and power demands and battery life will dictate
       the choice of one or some form of combination of technologies. One of the best known wireless
       standards is ZigBee that offers low-power operation suitable in IoT applications. 43 There is even a
       ZigBee Alliance to promote the global adoption of the standard of approximately 400 members.

7.4.   5G
       To enable a hyper-connected environment leveraging IoT on a real-time and massive scale,
       ultimately many of the network technologies that we have today are not really fit for the future
       and we often need to use a mix of fixed and wireless network technologies to realise large IoT
       projects, let alone the ultra-connectivity we are seeing in the next decade. Enter 5G.

       42   https://openconnectivity.org/
       43   http://www.zigbee.org

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