If CES 2015 has a theme – at least, one relevant to marketers – it’s the way the Internet of Things (IoT) phenomena opens up new data channels.
Whereas 2014’s event focused on the surface – Wow! A texting washing machine! – interest this year has revolved around the way these devices and appliances might one day connect not just with each other, but with affiliate brands and their agencies.
Of course, IoT is still nascent and penetration of connected devices varies. On the one hand, connected TVs – which Digital TV Research predicts will constitute 47% of US TVs by 2020 – present a clear and present advertising opportunity. Marketers are also feeling out wearables – fitness tracker Fitbit, for instance, has a page dedicated to brand partnerships. But consumer penetration of connected washing machines, stoves, refrigerators and other common household appliances is much less.
Still, this isn’t preventing brands and agencies from considering what to do if wearables and the connected home become commonplace in 10 or even five years.
Doug Ray, global president of Carat, recalled a Wednesday conversation with a CPG client.
“She’s here to understand and bring back innovation opportunities, which will guide her plan for the year,” he said. “The way the product leverages technology is where I see interesting opportunities.” For instance, could a wearable remind someone it’s time to apply sunscreen?
It’s a nifty use case, but the marketing and advertising opportunities are still theoretical. Part of the problem is that no one knows what the data infrastructure supporting IoT will look like, mostly because that infrastructure doesn’t yet exist. And pondering what such a thing might look like brings to light a cluster of challenges, from the technological to what’s socially acceptable.
For Hugh Jedwill, CPG giant Kimberly-Clark’s digital innovation lab lead, the problem is too many technological platforms, which makes it difficult to know which ones brands should embrace.
There are already a handful of home communications protocols like Z-Wave and ZigBee. There are also a multitude of operating systems. For instance, Samsung’s newest smart TVs use Tizen, an operating system designed to power TVs as well as other appliances and home devices. In the meantime, Sony, Sharp and Phillips will use Google’s Android.
Speaking of Google, the tech giant has its own home automation hub it acquired last November on behalf of Nest, called Revolv. And last June, Apple unveiled the HomeKit SDK, designed to let various appliances communicate with each other.
How would a Samsung washing machine link up with a Sony television connected to Apple TV?
“The big question is: You’ve got manufacturers building connected devices, but how good are they at connecting to things?” said Pranav Pandit, director and senior partner at Neo@Ogilvy Chicago.
Sheldon Monteiro, CTO at SapientNitro, agreed that in the short term, connectivity will likely be app-based. But that doesn’t preclude the need for these various appliances to eventually speak a common language in order to fully connect.
“The problem is while you’re trying to do that, there’s a conflicting force: they’re all trying to differentiate,” Monteiro said. “Samsung is trying to make a washing machine that’s better than LG’s washing machine. And LG is trying to do the same thing.”
Because of these immediate goals, appliance manufacturers aren’t incented to cooperate with each other to develop connectivity standards. Google, which acquired the smart thermostat Nest early last year, has an integration program called Works with Nest. Partners include the Jawbone wearable, Mercedes and Whirlpool.
“A smart home that brings true benefits across the home will need to involve more than one brand, and we recognize that,” said Ben Artis, strategic partnership lead for Whirlpool Corporation. “We have a lot of products and brands, but there are some products we don’t make, and for that reason we want to identify other trusted brands in the home with a consumer-first mentality.” In partnering with Nest, Whirlpool laundry machines can, for instance, run longer and at lower temperatures to save energy when nobody is home.
But what about connecting with competing brands?
“I can’t speak to partnerships that aren’t public, but I can say we’re open to exploring all opportunities in the connected home space,” Artis said.
Even assuming perfect connectivity, what’s the opportunity for marketers? Mobile tech firm TapSense showcased a proof-of-concept ad network designed to place marketing messages on the Apple Watch. (TapSense did not work with Apple on this project.) It’s still unclear how receptive consumers will be when they’re inundated with messaging on their home appliances or wearables.
“With IoT, it’s a lot closer and more personal,” Jedwill said. “And the more personal it becomes, the harder it is to push an ad through it.”
Or the marketing opportunity could manifest as a data play. Panasonic, at its booth, previewed a refrigerator that gives recipes based on the food that’s in it. Just as Kraft uses its KraftRecipes site to draw data from its customers, this could potentially provide a valuable fountain of information.
But do appliance and wearable manufacturers have the means to partner with marketers?
Carat’s Ray doesn’t get the sense that they do at the moment. He points to Google, which was extremely challenging to partner with five years ago.
“They’ve had to evolve over time to figure out how to create the right partnerships with marketers,” he said. The companies developing IoT devices will likely go through a similar process.
“Samsung, as an example, has predominately been a technology and hardware manufacturer – and software to an extent,” Ray said. “They haven’t been in the business of being a media company to help advertisers monetize.”
And are they even interested in getting into that business? Apple, for instance, isn’t exactly known for supplying its brand partners with a significant amount of user data.
Whirlpool’s Artis was mum when asked about advertising partnerships. “If the partnership brings true consumer benefit, it’s something we’re exploring,” he said. “The other thing I want to point out is that the integrations that take place are all consumer-driven, not just from an insights perspective but from an opt-in perspective. Whatever that integration might be, it would be something the consumer would knowingly choose to opt into.”
While there are brand partnerships among wearable manufacturers, Tony Bailey, SVP of technology at DigitasLBi, noted reluctance to share data with advertisers. “They’re smart to hold onto that and keep them at arms length,” he said.
He noted some wearables manufacturers – generally ones that have reached scale with their app and have about several million active users a month – have integrated into advertiser data-management platforms so partners can target audiences of, say, 18-24-year-old women who have set improved fitness goals.
“It makes them start thinking like an ad exchange,” Bailey said.
Which brings us to another issue: Consumer and government acceptance. Rick Erwin, president of consumer insights and technology at Experian Marketing Services, wonders if IoT might serve as a tipping point in terms of how consumers, and the government, look at the way data is leveraged by businesses.
If that’s the case, he predicts that those with a stake in connected appliances and wearables will need to codify their own regulations and best practices around data, just as the ad industry has done.
Bailey also is wary of data compliance and security implications that will arise as IoT heats up. Wearable startups – especially in the health care space – have a lot of personal information. Refrigerators can now identify what foods you like to eat. Thermostats know when you’re no longer home.
“That’s a big question mark: How is this stuff being stored? What happens to all the data?” Bailey said.
