The Effects of IoT on Modern Marketing

Marketers who embrace IoT strategies today will have the infrastructure and skill set to capitalize on the amazing opportunities ahead.

by Mark Stevens

May 2016

The Internet of Things (IoT) is transforming how companies attract and engage customers. According to a recent study by the Economist Intelligence Unit, the majority of global senior marketing executives believe IoT will have the biggest impact on the marketing function by 2020 compared to other technology trends. And more than 80% believe they need to restructure their marketing operations today to be prepared for the opportunities and risks that lie ahead.


Marketers must think about the full spectrum of customer impact associated with IoT, from product design and promotion to usage and ongoing loyalty – extending past traditional marketing roles and into the data center.

Here are some key areas where IoT is impacting marketing today.

Product Design and Development: IoT provides the opportunity to integrate value-added services into any product offering. For example, your sprinkler checks the weather forecast before deciding to turn on. Your home scale delivers trend analysis on the progress of your weight loss, and perhaps also integrates with an analysis of food and beverage consumption over time. Your printer re-orders toner automatically. Your lamp senses motion in the house, and alerts the owner.

The key to success is matching increasing customer understanding with increasingly welcome and relevant communications and utility.”

IoT is resetting consumer expectations of convenience and value, and marketers are thus aggressively integrating smart services into the product design and development process. In particular, marketers are defining how a product will communicate to key stakeholders, and provide information-driven value to the ongoing user experience.

In the age of IoT, product development teams are asking, “How can we make this product smarter?” Marketers need to answer this question at the beginning of the product design process to ensure required capabilities are built into the product from the outset.

Advertising and Promotion: The proliferation of devices and sensors in homes, transportation, buildings, and public settings is taking data-driven marketing endeavors to new levels. Marketers can better understand the purchase journey across channels and thereby increase the relevance and context of messaging and offers.

For example, Bill is a golfer interested in purchasing a new driver. He goes online to read some product reviews and adds a couple of the top-rated models to his wish list. He then sees a map of the sporting goods retailers near him who have the clubs in stock and available for a demo. After reviewing a pricing comparison, Bill decides to drive to the closest location to try out the clubs. As he approaches the store, the golf demo station is notified and readies the two clubs. As Bill approaches the demo station inside the store, he receives a 10% off store coupon if he purchases either club today. Bill is happy that he will get the discount regardless of the club he chooses – one less variable in the complicated process of choosing a driver. And one less reason to visit the other retailers. He tries out the clubs, makes his selection, and completes the transaction on his phone. Delivering on this promise requires an understanding of an existing prospect’s purchase intent as well his physical actions as he crosses multiple channels to reach a buying decision.

Customer Engagement and Loyalty: Marketing is much more than attracting new customers. It is also about engaging customers and instilling ongoing adoption, user satisfaction, and increased loyalty. IoT is able to provide new insights into actual customer adoption and usage behavior not previously available. This includes immense amounts of usage data by location, frequency, use of features, and time of use. In turn, marketers are able to develop more effective loyalty programs by simplifying usage tracking and creating loyalty incentives based on usage habits. For example, a smart watch knows it is likely sitting in a drawer due to a lack of motion and light, so the watch company can promote a new, more relevant app to the watch owner to encourage usage and strengthen future adoption and upsell.

Usage data also allows for more proactive, faster service resolution. For example, a cellular network customer who experiences a string of dropped calls can be automatically credited for the service disruption. Tires can tell their owner when it is time to rotate or replace, and help schedule an appointment based on the owner’s calendar and proximity. In addition, in-depth usage data feeds directly back into the product development process by providing an understanding of precisely how and when a product or product feature is being used.

Preparing for the Transformation

So how do marketers lead this revolution and avoid the perils of falling behind?

Building new capabilities for IoT starts with building awareness of IoT within your organization, and ensuring an IoT lens is placed against future product design and development decisions.

Next, establish a data management platform that can integrate customer data with device and sensor-generated data. Ensure this data is protected and available real-time to your employees and customers. Establish competencies in data analysis and customer profile enrichment.

Thought LeaderStevens-headshot

Mark Stevens, Oracle Insight.

From a marketing perspective, focus on defining the data elements that really matter, and then develop algorithms to trigger hyper-targeted media buys or customer messages and actions. The vast amount of data and variables associated with IoT requires marketers to develop and trust defined algorithms in order to act consistently and precisely at the moment of opportunity.

Marketers must also be aware of the risks of misusing customer data. Similar to the “ad stalking” effect that consumers experience when advertising follows them across web properties, marketers must be cognizant of not overreaching on their use of personal data coming from IoT. Smart devices and sensors can know a whole lot about your whereabouts, activities, and even your state of well-being. The key to success is matching increasing customer understanding with increasingly welcome and relevant communications and utility.

IoT is clearly much bigger than just the next wave of marketing innovation. It has profound implications for how we provide more effective healthcare, streamline transportation, reduce government bureaucracy, and protect vital environmental resources. But IoT is equally critical to drive commerce and human innovation. Marketers must embrace IoT strategies today to remain relevant, or risk competing against companies who have built an IoT infrastructure and skill set to capitalize on the amazing opportunities ahead.

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