ADOTAS – Soon, WiFi chips will be found in common everyday objects like personal satellite radio players, speakers, clocks, and watches, not to mention smartphones and laptops. Google’s acquisition of smart thermostat company Nest for $3.2 billion in cash signals the rise of the connected home phenomenon, and this trend will soon create a data-centric way of sizing up people’s offline preferences and behaviors.
According to new research issued by IDC, a trend is emerging on the consumer side called ‘The Internet of Things,’ a concept that describes how more and more devices are becoming Internet-enabled. For marketers, this trend will yield a treasure trove of personalized data that may be the key to delivering highly impactful advertisements to consumers.
Think about the rise in popularity of wearable gadgets like Google Glass, GlassUp and fitness trackers like the FitBit Force and the Nike Fuel Band that track a person’s physical activities and eating habits on the cloud. If these products provided an option for consumers to make their data available to third-party marketers, brands would be able to create custom profiles of a user’s gym visits and food/beverage preferences, and deliver highly targeted ads for the 24 Hour Fitness or organic eatery down the street, or mobile coupons for Whole Foods.
“Having a screen that a consumer can interact with does not necessarily make a device a distinct marketing channel,” wrote Christopher Hansen (pictured), president of Netmining. “These devices are huge first-party data stores for marketers and the manufacturers. Think about this: Nest is not just a company that makes thermostats; it is a data company as well.”
Yes, the future of advertising is all about data, data, data. According to IDC, by 2020, the Internet of Things trend will begin in the home and generate 30 billion autonomously connected end points and $8.9 trillion in revenues. The firm predicts that in 2014 we will see new partnerships among IT vendors, service providers, and semiconductor vendors that will address this market. Again, China will be a key player: The average Chinese home in 2030 will have 40–50 intelligent devices/sensors, generating 200TB of data annually.
“Let’s stop looking for ways to shove advertising in consumers’ faces simply because there is a rise in connected devices,” Hansen added. “Let’s look at how we can build a better picture of the consumer as an individual, based on all the signals in his house. There may be ad opportunities, but it won’t come in the form of banners or text ads, and it will likely be a different execution for every vertical.”
Aside from the growing international market potential, I just read in The Next Web that the rise of Internet-enabled devices will create an idealistic world of connected electronics, bridging cloud computing, data and APIs to glue it all together. As we connect more and more devices to the Internet, we are assembling an unprecedented number of data points for marketers to unearth down the road. Brands will be able to glean incredibly intimate data from connected devices (a scale that knows you’re on a diet, for example) and then find the right technologies to highlight relevant brands to the right consumers. The difficulty will be connecting all these data sets and then overcoming consumer privacy considerations to make them actionable.