Are Wearables the Next Ad Frontier?

Inplace #2

ADOTAS — If the key to advertising is all about understanding the pulse of customers, the rapid evolution of the wearable mobile market is surely to raise the bar. Walking through this year’s CES and Mobile World Congress events, wearable computing was front-and-center, and if your initial reactions were like mine, you first were awestruck with the direction it is taking, and then wondered how best to monetize this new technology genre.

The potential impact is huge with IDC estimating the global market for wearables to surge to 111.9 million units – an annual growth rate of nearly 80%. This significant upside is providing an increase in conversations we are having with brands, marketers and developers on how best to harness the future impact of wearables, and ultimately, crack the monetization code.

The bottom line is wearable mobile devices are begging you to uncover what game-changing possibilities and advertising potential lie ahead. Although wearables share similarities with its smartphone sibling, they are truly distinct and provide a new and exciting medium for marketers to target loyal consumers with personalized, interactive, seamless and immersive brand experiences.

There are endless possibilities and infinite unknowns for mobile advertising as advertisers explore tailoring ads for a new crop of devices aligned to its respective distinctive features. Consumers living in today’s connected world will lead the way and compel advertisers to reimagine the purview of brand engagement, user targeting and advertising at large.

There is massive opportunity in the burgeoning sector as IDC expects the market to triple sales in 2014 from last year’s figures, which demands a new way of thinking and an alternative approach to how we once addressed desktop and mobile ads. In doing so, there are four significant factors that need to play out before advertising can really take hold on wearables.

  • Form Factor: While the initial phase of wearables are simple, low-price point devices, e.g. Jawbone UP, Nike+ FuelBand and Fitbit, without the digital real estate to utilize more traditional digital ad formats, the opportunities offered shouldn’t be discounted. For example, their complimentary apps provide a springboard for potential monetization options, such as corresponding partnerships to be served up as rewards for achieving certain tasks or native ads tied into the overall user experience. But other more sophisticated, next generation category devices such as eye-led wearables, like Google Glass, and smart watches, such as the Samsung Galaxy Gear, offer even more opportunity. While Google has been vocal about ads staying off Glass, as demand increases and adoption of pursues, there will be plenty of conversation around monetization and ads serving as prime vehicles for revenue.
  • Operating System: Opportunity breeds competition so expect another front for the operating system battle to take off. With no clear winner leading the way currently, expect the wearable OS market to stay fragmented as more players enter the market. As mobile innovators like Apple and Google duke it out in the smartphone arena, the recent news of Amazon releasing a phone and the Firefox OS making strides in emerging markets should carry over into this segment. Additionally, startups like Pebble has been gaining traction by developing their own Pebble OS that allows them to be nimble, manageable and converse with your smartphone OS. Before a solid ad strategy can be devised, developers will be looking for a bit more cohesion and insight into what the top OS is, to maximize reach and therefore, the best return on investment. Developing across multiple OSs can be challenged on resources and capital, like the smartphone market many coupled their development strategies to follow the OS that made a big impact, and in turn, followed the money.  Expect there to be more standing on the sidelines as marketers and brands have-a-wait-and-see approach to follow where OS gains are made.
  • Engagement: Finally, the breakthrough engagement factor of wearables should also be considered. If the mouse click was the engagement factor for the desktop and touch for smartphones, will speech be the new click or swipe for the wearable category? As the technology matures, where and how interactions and engagement take place will be key drivers. Will it be a blink, a nod or a swipe? Having an idea of this will lead to an entirely new category of advertising.  The best context in which to deliver ads to the consumer will also serve as a key consideration. Location & physical based context and augmented reality could really fuel this ad category. As this sector grows, other new form factors will come into play and marketers will need to cater to form and context in order to be successful.

We are now on the cusp of the mainstream potential and appeal of the wearable smart device. There are still many variables that need to be played out, but the savvy marketer is planning ahead for the next opportunity. There will be plenty of failure before we find the right path, but one thing is for sure: The future is bright.