2017/05/25 13:43

In the United States some 8 million households now have Echo, a cylindrical device that understands simple voice commands like "tell me today's weather” or "play the new Beyoncé album.”

A smaller number of homes have Internet-connected appliances like "smart” refrigerators and smart dishwashers. Some homes also sport Internet-connected lighting and smart thermostats like Google's Nest. Outside the home, public use of Internet of Things (IoT) — Internet-connected devices embedded into everyday objects,— is growing too as devices ranging from parking meters to checkout counters get Internet connections.

For the most part though, IoT is a burgeoning category that's more discussed than used. However, that is changing quickly. By 2020, IoT will be a $1.7 trillion global market as the number of IoT devices grows to 29.5 billion, up from 10.3 billion units and $655.8 billion in total size in 2014, according to researcher IDC. In Japan, the IoT market is expected to double between fiscal 2015 and fiscal 2019 to ¥715.9 billion, according to MM Research Institute.

In this first in a series of five articles on IoT, we are going to look at what IoT is and why it represents a huge business opportunity, not only for companies selling IoT devices, but also for advertisers to disseminate their messages via this new class of new devices that will change consumer behavior.

What is IoT Advertising?

For most of its history, the bulk of advertising has been premised on the idea of reaching a broad swath of the public with messages designed to build brand affinity. Since the Internet came along and the mobile revolution in particular though, marketers have been able to target their messages to consumers who are most likely to be receptive to them and at the most opportune times.

Like mobile, IoT intensifies this focus. The best time to pitch detergent, for instance, is when a consumer is doing laundry or running out of his current supply. Even before IoT devices like smart washers and dryers become the norm, Amazon has sought to exploit this market with Dash, Internet-connected single-button devices that lets consumers reorder Tide laundry detergent, Charmin toilet paper and Red Bull soft drinks, among other items.

So far, there have been few IoT advertising campaigns. GlassView has created some of the first, including a campaign with the Rush University medical center using video ads delivered on consumers' smart watches. One of the ads featured a young mother who was diagnosed with breast cancer, while another told the story of an orthopedics patient. The ads were 30-second teaser versions of each that instructed consumers to visit Rush's website to learn more. The spots boasted a click-through rate that was 98% above the industry average.

GlassView - Video advertising on wearables and IoT

In the future, the applications for IoT advertising are limitless. A consumer getting up to brush her teeth, for instance, might be served an ad for mouthwash or a reminder to order more toothpaste. A consumer returning from a run might see an ad on her refrigerator promising a free bottle of Gatorade for stopping by a nearby retail store. A dashboard interface might remind the driver to stop and pick up milk on the way home because his smart refrigerator notes the current supply is getting low.

A New Opportunity

Such advertising opportunities will depend upon consumer data that provides a new window into individual habits. For instance, laundry detergent manufacturers will know when a consumer is likely to need a refill and automakers will know more about consumers' daily travels, including the stores they pass on the way to and from work.

For consumers, the advantage of sharing their data is that IoT will remove many sources of friction from their lives and free up time that they formerly spent shopping. IoT devices like smart thermostats and smart dishwashers will also help them use less power and water, saving money.

While IoT offers a new window into consumer behavior and opportunities to send messaging at times when the might be most receptive, marketers must also consider the potential concerns around sharing personal consumer data. Keeping in mind both the challenges and opportunities, now is the time for marketers to learn about advertising on IoT, a new category of technology which will change our lives.

How? In the next article, we'll explore how advertising can work on IoT and how such advertising will be different from what we've previously seen.