As explained perfectly by global consultancy firm Deloitte, data-driven marketing is the magic work in the industry right now.
With brands increasingly looking for new and innovative ways to create engaging experiences for consumers, data collection provides valuable insights to provide the opportunity to do so.
In fact, as customers are fickle and unpredictable, real-time data sources provide the ultimate relevance and value to drive consumer engagement. Therefore, it is no surprise that this idea of data collection to provide personalised experiences has been embedded into everyday consumer products in order to constantly drive value. These interconnected, data collecting products are often referred to as the Internet of Things (IoT), but what are the opportunities and implications of such products for brand marketers and consumers?
What is the Internet of Things?
In 2017, Business Insider estimated that 6.6 billion connected IoT devices were being used across the world, with the prediction that this figure will increase to 22.5 billion by the year 2021. Furthermore, McKinsey Global Institute states that if businesses get the interconnected link between the offline and online worlds, $11.1 trillion in economic value can be generated by the year 2025. With figures such as these headlining corporate research, it’s clear to see why such technology has attracted enormous attention in recent years.
But what exactly is IoT? Ernst and Young describes the Internet of Things as the combination of connectivity with products, sensors and people to allow for a greater connection between product and consumer. Not to mention, advancements in machine learning and artificial intelligence technology allows devices to react and respond to consumer behaviours in real time. Evidently, this connection opens up greater opportunities for the marketing and advertising industry to better understand how consumers use particular products in order to continually provide value and phenomenal consumer experiences. Further, these experiences help consumers distinguish between competing brands and can aid in driving consumer loyalty in an increasingly competitive market.
IoT Products and The Opportunity for Digital Marketing
From consumer products to industrial technology, IoT has been increasingly used to provide everyday value to those who use them. Most recently, an article written for the Wall Street Journal discusses the potential benefits for brands marketing to motor vehicle drivers as in-car connectivity becomes increasingly popular.
Brands like Tesla are well known for their connectivity capabilities, offering their consumer’s on-the-go applications to check live traffic updates and petrol prices. However, this trend has set to be progressing rapidly with Hyundai currently planning to launch a data-driven program, in which real-time insights will be provided to insurance companies to facilitate discounts for consumers. However, the implications of such technology go much further than this. Imagine the opportunity for marketers to use location-based strategies to offer their goods and services. From restaurant and fast food establishments providing in-car notifications regarding special offers as drivers going to the store, the applications of in-car connectivity and digital marketing are far and wide.
However, automotive manufacturers are not the only industry taking advantage of the opportunities available to them. Everyday appliances such as televisions and fridges are constantly innovating ways to influence additional consumer purchases. Whether it be fridges that provide notifications when milk is running low or connected televisions providing recommendations for movies, the IoT is providing numerous opportunities for brands to interact and influence consumer behaviour through the collection of data.
Concerns with Data Collection for Digital Marketing
As marketers look to constantly up the ante against competitors and drive value and relevance, data has become a fundamental aspect of digital marketing. However, as more and more data is collected from numerous sources, the complexity in relation to its management is increased, leading to concerns about data security and privacy. In fact, while the IoT provides lucrative marketing opportunities for brands, it is these consumers concerns that can impact adoption and therefore obstruct the marketing potential IoT provides.
Consumers are incredibly savvy and increasingly protective in relation to data security and privacy. In fact, Facebook’s data scandal earlier this year sent stocks plummeting and resulted in a $60 billion loss just one week after the story was published therefore reflecting the reduced consumer confidence regarding the protection against their personal data. Furthermore, Thomson Reuters recently reported that Google is even facing their own lawsuits currently after it was publicised that the global organisations was still tracking their Android and iPhone consumer’s location, despite location history settings being disabled by individuals.
Whilst earlier statistics suggests that the consumption of IoT devices is strong and steady, frequent data scandals and the slow communication from brands who have been involved weakens consumer trust and can result in the boycott or the opting-out of such services. In fact, an E-Consultancy article notes that while many automotive manufacturers consider in-car connectivity, there is still a lack of trust in relation to privacy and data which has led to the enforcement of data regulations such as the GDPR and could, therefore, restrict the development of in-car data-driven marketing before the car even leaves the dealership.
In order to combat such concerns and make products both valuable for consumers and brand marketers, data security and privacy strategies need to be seriously considered. Deloitte describes data security as the processes referring to data transfer, storage and the anonymisation and pseudonymisation of data to de-identify specific individuals. With strong data security systems in place, data privacy can be ensured, therefore increasing consumer confidence that their personal information will not be compromised.
The continuous production of IoT devices is providing exciting opportunities for both marketers and consumers. On one hand, while marketers can access real-time insights and data to better understand how their consumer use their product in order to drive further value. In turn, consumers have access to more individualised products that holistically suit their needs and preferences. However, while the opportunities for the Internet of Things is convincing, data privacy and regulation processes need to be properly addressed by brands in order to strengthen consumer trust and avoid the unwarranted use and tracking of personal data that can be invasive.
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