The internet of things: Opportunities and risks for connected brands

Consider a world, not so very far away. The washing machine repair man arrives to fix the washing machine, but you didn’t call him out. Milk is delivered to your fridge, but you don’t remember ordering it. This isn’t a sign your memory is fading; it’s a vision of a connected, networked future. By no means is your phone the only smart item in the room—and remember your TV is listening in.

A world where all your electrical items are connected and responsive is no longer a futuristic scenario from a 1980s sci-fi film, but a viable phenomena called the internet of things (IoT). In simple terms, this is connecting items which were previously not connected, using embedded technology to sense or interact with their environment (and each other). It’s not a new idea: many retailers already track inventory with RFID tags, manufacturers use industrial automation and utilities that involve sophisticated monitoring and control systems, and there is a growing trend in smart personal devices, with new smartwatches unveiled by Huawei and LG in March. But the huge growth in networked devices means IoT could be a huge opportunity.

A recent Gartner survey found more than 40 per cent of organisations expect IoT to have a significant impact over the next three years. The same study concluded that there would be 4.9 billion connected “things” by the end of 2015—and 25 billion connected “things” by 2020.

As with many new digital trends, defining what the IoT really encompasses is tricky. And IoT as a name can’t even be universally agreed on, with some preferring to call it the “Internet of Everything”, and Microsoft coining its own phrase, ‘The Internet of Your Things’.

Some of the products on the market now include health apps that help calculate weight loss, smart TVs connecting you to the internet, or light bulbs which can dim and brighten in parallel with a film watched at home. The media has poured over other future innovations such as smart fridges that can order food for you, intelligent air conditioners, and smart garage doors opening for smart cars.

For marketers and brands, this huge expansion in connected devices really represents a huge opportunity to get better understanding of consumers. Users with connected devices in theory have more points of contact with the brand, and will give away more data in exchange for the chance to connect two items that previously did not work together. The more understanding brands can get of a consumer’s behaviour, the better they are able to produce targeted products, marketing and deals. This can inevitably lead to more innovation in customer relations and services, and produce new ways to deliver additional options to a brand’s user base. To this end, the IoT can be seen more like an outcome than a thing in itself—a deeper understanding of the consumers in an increasingly digitised age.

“The biggest, most powerful thing about the proliferation of all these things is really the data capability and the information and insight we’re able to get about the users,” says Adam Anger, general manager, Asia-Pacific, at Microsoft Advertising.

The knack for brands will be knowing which data they need and how to collect it. As one expert, who asked not to be named, puts it: “There are many companies that are still struggling with old-world data, let alone new-world data.” An understanding that more data doesn’t always equal better data is essential to avoid the industry jumping on a ‘data bandwagon’.

“You might say that data is the new oil,” suggests Matthew Smith, global lead for market development at Cisco’s Internet of Things business unit. 

“Data has always been there, it’s always been collected, but until you do something with it—until you refine it—it doesn’t become knowledge. And until you process it, it doesn’t become wisdom, and then actionable intelligence.

“So analytics is going to be key in this game — data science will be a key element of the internet of everything; you need someone to tie it all together and make sense of the land mass.”

Collecting data won’t be the only challenge for brands and marketers. Increasingly personal data will be shared via connected devices, making privacy and security key watchwords in an IoT world.

“The big issue about IoT is security of data,” says Craig Mason, head of creative technology at Ogilvy. “If you can show consumers we’re not trying to spy on them, we’re trying to provide a service that is more personalised and more relevant, then I think people will buy into it more.”

And with that trust comes transparency about what data is being collected and where. Some of that will be down to the user—most experts agree there needs to be a shift in the way consumers think about their own data use. Reading terms and conditions, for example, and understanding that you are exchanging a little bit of information about yourself, in exchange for a service or product.

When that transparency is neglected, it can cause huge PR damage. Samsung recently had to make an embarrassing admission to owners of the retailer’s smart TV sets to be careful what they discussed in front of the television. When the voice activation feature on the set is active, the TV would ‘listen’ to what is being said and may potentially share what they hear with Samsung or third parties, the company said. Samsung then met further problems weeks later when it also admitted some of the smart TVs were uploading their owners’ voices to the internet in an unencrypted form. Privacy campaigners compared the sets to the telescreens portrayed in George Orwell’s 1984—almost certainly not the image Samsung was going for.

Learning to relate to consumers in a smart age will create new challenges for companies. Good data used sensibly, with respect for the consumer, will rarely meet with criticism. Handling consumers in a smart age will mean walking a careful line between being creepy, and being useful.

“As an industry, we need to learn to tread carefully,” says Mason. “It’s important we don’t scare them, and blast them with adverts at every opportunity—we have to be smarter than that. Whatever you’re creating, whatever you’re promoting, it has to be something that is useful for the users.”

Jerry Smith, regional president at OgilvyOne, echoes that sentiment. “The real danger is that we over-touch the consumer,” he says . “It’s going to feel like we’re stalking them. If we’re not careful we might start trying to deliver them utility they didn’t want.”

And there lies the dilemma. Do consumers actually want devices that all connect? Perhaps the whole IoT is a craze dreamed up by brands and marketers solely to capture huge new amounts of data. So far, the potential for interconnected products doesn’t seem to have caught widespread imagination. A number of factors—costs, poor connectivity, lack of trust, lack of interes—have led to lacklustre sales in many markets. Market research firm Canalys says only 720,000 watches powered by Google’s Android Wear were shipped in 2014, despite huge publicity for various launches. That contrasts starkly with the 69.3 million iPhones sold in just the three months to December. The fact that the battery of a smartwatch can run down in a single day is just another factor going against the new technology when conventional watch batteries can last for many years.

But proponents of IoT are keen to point out that for digital natives, higher levels of engagement with devices will not be daunting, but expected. Smart technology allows users to take greater control of their own digital ecosystem. And in Asia, where many markets skipped the PC/desktop era and went straight to mobile, smartphones are prolific and other smart devices gaining popularity. 

The increased connectivity is also set to lead a wave of product innovation. Fairly ubiquitous digital products will be given another dimension in the smart era—assuming the popularity for connected devices does indeed take off—and will have another ground to compete on for customers.

“It won’t just be how cold it is, how fast it spins, how big the screen is, but what can it do to add value for you,” Smith says. “Electronic goods manufacturers are going to look at giving value and utility to help create the next level of differentiation.”

Although we could well be on the cusp of a new wave of smart product innovation, experts Campaign has consulted broadly agree that the ‘internet of things’ is not really about ‘things’. Instead of the connection being between a brand and a thing, the smart era enables brands use that thing to make a connection with a person. The actual device will become less and less important in the relationship between consumer and retailer. Instead, the trend will be for ever-increasing amounts of online profiles and personalities—akin to Apple ID—which can be applied across all devices. That will mean the same ‘personality’ can be found on different devices and the online experience can be continuous.

“What’s happening now is these different things—your things—are getting connected in a way that provides a connection between a brand or a company and the user themselves,” Anger says. “What’s interesting from a brand perspective is that the proliferation of these different things is basically just new connection points between the consumers and the brand.”

Given ever increasing expectations from consumers, brands need to be alive to the customer service implications. The IoT could dramatically reduce the time users spend talking to customer services if they can notify the brand themselves when it’s fixed, and effectively automate the customer services process.

“I wouldn’t be surprised if several years down the road, our kids’ generation is surprised if a washing machine isn’t able to notify the supplier if it’s broken,” says Anger. “That seems an obvious opportunity to improve customer service and streamline a lot of the efficiencies of how brands deliver service to their customers.”

Equally, the more customers rely on apps and devices, the more problems arise if there are problems. A health app failing to detect a health issue, for example, could potentially have serious consequences.

Given the projected rise in smart devices, it seems premature to dismiss IoT as a marketers’ fad. But for it to gain mass consumer attention, the technology advances need to make sense from a user point of view, and overexcited marketers need to avoid overwhelming the customer. Technology shouldn’t be a solution in search of a problem.

As Jerry Smith sums up: “What we’ve got at the moment is very smart people coming up with the next thing, and then trying to find some consumers who might want it.”

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COMMENT Standardised framework key to maximising IoT potential

Benjamin Ng, head, TV marketing dept, Home Entertainment & Sound Marketing Division, Sony Southeast Asia

In recent years, wearable tech like point-of-view action cameras, health-and-fitness trackers and augmented-reality head-mounted optical displays have risen in popularity, with everyone remarking how their lives are much more convenient through the use of such innovative products. And this year’s Consumer Electronics Show (CES) in Las Vegas further cemented the prevalence of Internet of Things (IoT), with almost every other brand showcasing the interconnectivity between its products — be it in the home or when they are on the road.

Sony announced that its latest range of Bravia TVs will be adopting the open-platform Android TV operating system, allowing users to enjoy content and apps that they are already familiar with via their smartphones and tablets but on a larger screen.

With the Android TV OS, customers can use voice commands to search for YouTube content, launch apps, or even search the web via Google, saving them time spent browsing. The use of second-screen apps on a smartphone or a tablet provides an interactive element to your TV-watching experience, providing additional information to the current scene, or where one can buy the dress the main character is wearing. And in true IoT fashion, consumers can even use their smartwatch as a remote control for the TV set.

From a manufacturer’s perspective, adopting an open-platform OS not only allows for the streamlining of our design and development processes, it also frees up more resources for us as a company to develop unique technologies like One-Flick Entertainment for our customers, shaping and improving the overall experience.

The interoperability and integration of user interfaces across different devices for seamless communications across those various devices is what prohibits IoT from becoming more pervasive in everyone’s lives. This is why Sony has joined the AllSeen Alliance, to push for the same open-source code framework to be employed across all electronics manufacturers for the advancement of IoT.