What your microwave knows about you: IOT data in marketing

As Gartner's hype cycle concept so eloquently captures, new technologies tend to go through a phase of inflated expectations before diving into the 'trough of disillusionment', which leads to a long slow climb up the 'slope of enlightenment' toward the 'plateau of productivity'.

For internet of things (IOT) technology, the peak of inflated expectations is long past, and we're starting up the slope. In marketing especially, aside from some one-offs, the technology has yet to accomplish much—let alone a revolution. 

Which is not to say that ubiquitous connected devices with sensors and the ability to report back on what they sense don't have potential. The data such devices produce may eventually turn out to be a valuable source of insight about products and the consumers who use them, an aid for marketers trying to nurture end-to-end customer experiences into existence.

But for now, use of such data in marketing is at a nascent stage, Aarti Bharadwaj, APAC practice lead for analytics at Essence, told Campaign Asia-Pacific. "We have heard of brands using this data in certain markets, from the perspective of getting consumer usage insights and identifying moments of receptivity for marketing communications," she said.

One such market is Japan, where Dentsu recently revealed details of a service that uses real-world data from connected home appliances to inform media planning for real clients. The service is certainly the first of its type in Japan, and if similar initiatives using live IOT data are underway elsewhere in the world, the companies in question are being quiet about it. 

Dubbed Domus Optima ('comfortable home' in Latin), the service involves data from about 400,000 Sharp air conditioners, air purifiers, microwave ovens, automatic cookers and washing machines. The users of these appliances opt-in to collection of usage data when they sign-in to a smartphone app, Cocoro+, that allows them to interact with their home appliances. The information collected includes timestamps and data about the appliance functions that the people put to use.

Dentsu is using the IOT data as a source of consumer-behaviour insights and to create target user segments for digital advertising, Shun Maekawa, general manager in the Platformer Data Division of Dentsu's Data Technology Center, told Campaign Asia-Pacific. In addition, Dentsu is using Cocoro members as a panel for surveys that delve into user habits and help verify advertising effectiveness, such as measuring brand lift after campaigns, he added. The company considers the offering to be in a beta phase. 

In one example project involving about 300,000 appliances, a major food manufacturer targeted microwave-oven users via their smartphones, with digital ads for heat-and-serve products that promised an 'authentic' cuisine experience, Urara Hirano, an associate analyst in the Data Technology Center's Contents Data Division, told Campaign. This effort yielded a click-through rate (CTR) 35% higher than a control group targeted through demographics alone, she said. 

In addition, the project revealed that users with higher CTRs tended to own larger, family-sized microwaves and tended to make use of a bread-warming function, whereas low-CTR users tended to use a function for thawing frozen food more often. All these data points could be valuable insights that inform future targeting and messaging strategies for the client, the company asserted. 

Domus Optima relies on Dentsu's Stadia, an existing platform that the company uses to analyse and act on TV-viewing data gathered from smart TVs. Stadia has been around for five years and has played a role in more than 500 campaigns, Maekawa said. In essence, the IOT data becomes another input into that system, which works with ad-delivery networks such as Google Display Network, DoubleClick, Criteo and Yahoo.

Essence's Bharadwaj noted that IOT-enabled devices may not yet be widespread enough to provide much in the way of useful insights. "While it provides good direction for planning for the future, it is not necessarily representative of the large population of users given the limited adoption of IOT technology," she said.

Dentsu's Maekawa agreed that the volume of IOT devices in consumer homes is small for now. But he added that it has been increasing steadily for five years. As the volume grows bigger, the potential impact of this solution for advertisers will become more powerful, he said.

WHAT IS IOT, ANYWAY? Google 'IOT' and you'll find people talking about an extremely wide variety of devices and applications that don't seem to share much in common. Sensors for tennis shoes get thrown in with beacons for location-based ads and smart sensors that get embedded into construction concrete. In fact, the term is being applied to such a range of gadgets and situations that it verges on being useless. For purists, the original definition of IOT included two defining characteristics. First, an IOT device exchanges the data it collects without human intervention. Second, the IOT-enabled thing is not primarily a computing device. In this vision, IOT means sensors plus communication ability embedded into objects with other primary functions—tennis rackets, dishwashers, shipping containers, medical implants, construction components—which then report back useful data about what they experience. Under this concept, a wearable like an Apple Watch or a Fitbit isn't truly an IOT device, because it has its own user interface. Apple's AirTags, and similar beacons that help you locate your lost stuff, are essentially IOT functionality placed into a standalone fob; rather than having an IOT-enabled car key, you physically attach IOT functions, in the form of the tag, to your car key. Smart-home devices such as smart light bulbs, connected thermostats and home-security devices are clearly IOT, because they don't become useful until connected to a system in which a controlling device makes use of the data they collect and issues commands.  When it comes to marketing, IOT has been used in a lot of gimmicky one-offs. But as the Dentsu example above illustrates, data about the usage of IOT-equipped devices should prove to be a valuable source of insights for not only the manufacturers of the devices (Sharp in the example) but also—assuming proper privacy protection measures—but also partners (the food manufacturer in the example).  IOT tech is also coming into play in the supply chain and in retail spaces in ways that touch on the purview of marketers. Here are just a couple of examples that point to the ability of the tech to help marketers gain insights about their customers—and use both those insights and the capabilities of the technology to build better customer experiences. Switzerland-based Coca-Cola Hellenic Bottling Company, one of the brand's largest bottlers, worked with technology company Atos to put 500,000 IOT-enabled coolers in place in stores. The partners eventually plan to have 1.6 million such coolers in operation across 28 countries. The company gets access to point-of-sale data, such as how many times each cooler is opened—a potential indicator of poor placement in the retail environment. The initiative pays dividends not only in insights into consumer behaviour but also in supply-chain efficiency, as sales reps can more easily assess stock levels and spot mechanical problems. The connected coolers also have the ability to reach out to the smartphones of consumers in their proximity with location-based offers.  Home Depot is one of a number of big retailers that use IOT as one part of a comprehensive inventory system. IOT beacons in Home Depot's massive physical stores allow the company to provide in-store directions that help its customers—especially its lucrative professional customers—easily find the items that they've placed in their online shopping carts or wishlists. The system can even plot the most efficient route through the store to pick up a list of needed items.