After years of hype, the Internet of Things (IoT) is upon us, and marketers are exploring its possibilities. Earlier this week, Gartner revealed the results of an industry survey that found IoT will impact 43 percent of businesses this year, a 50 percent increase over 2015.
Brands seem driven to adopt IoT to meet the demand for connectivity, and more importantly to access the reams of information it can provide. Adweek spoke with a range of major companies about their use of IoT data, and they said marketers have a rare opportunity to strengthen relationships with users while improving products.
"Having data is cool, but integrating it into a business solution is critical," said Christopher O'Connor, IBM's general manager of Internet of Things. "The entire value of IoT comes when you enter it into solutions."
Whirlpool, which partnered with IBM Watson in January, is using IoT for connectivity among home appliances. Since those appliances are all linked, the data can be organized and interpreted as a single data set—as opposed to separate sets of data for each appliance—and store it in the IBM cloud. The company uses that information to get a better understanding of how its products are being used, what problems are popping up and why, and how it can solve those problems quickly, O'Connor said.
Whirlpool is one of the more consumer-facing brands leveraging info from IoT. Many of the brands using IoT data manufacture heavy-duty machinery in factories. Kone, a maker of elevators and escalators, is another IBM partner, as is Pratt & Whitney, an aerospace manufacturer. Both companies use IoT data in highly complex ways. Kone wants to package elevators as services rather than machines. Pratt & Whitney takes data from jet engines so it can maximize their performance.
Industrial brands are leading the IoT pack for a couple of reasons: They don't have to deal with consumers opting in or opting out, and their products are so costly that understanding precise operations can save significant time, money and possibly lives.
"Heavy equipment is high-value and very expensive," said Kirsten Billhardt, marketing director for Dell's Internet of Things department. "If those go down, the consequences are significant."
The same can be said of race cars. Dell's IoT partner, Richard Childress Racing, uses IoT data to optimize Nascar vehicle performance. Sensors provide near real-time information on almost all aspects of the cars, from the actions of drivers to the way weather affects the tires.
"The data helps crews make better strategy decisions during races," said Billhardt. "It's the idea of getting more data more quickly analyzed so as to get a competitive edge in making decisions and confirming precisely what has happened [in various situations]. Was every bolt tightened to the exact level it was supposed to be?"
How retail brands are using IoT data
Though industrial brands lead the way when it comes to IoT data and its potential uses, there's growing experimentation in the retail space. The health and fitness sector has also long been a hotbed for IoT ventures. But some approaches brands are taking are more creative than those of the heavy-duty manufacturers.
For instance, Under Armour leverages Adobe Marketing Cloud to create a globally connected platform by compiling customers' health and fitness data. This enables users to track and analyze their own data in order to set and measure fitness goals. Starwood Hotels and Resorts Worldwide's use of Adobe Marketing Cloud allows guests to unlock their hotel doors with their smartphones and receive personalized content in their rooms. And Sony Playstation's partnership with Adobe lets Sony personalize game recommendations. These very different uses of IoT share a common goal: to give customers a feeling of preferential treatment based on what's known about them. Ultimately, this can keep consumers from jumping ship to rival brands.
A recent study by Adobe and eConsultancy Group found that 31 percent of companies across industries already embrace IoT. The top three motivations for using it are customer experience (79 percent), insights (66 percent) and loyalty (53 percent).
Loni Stark, senior director of strategy and product marketing for Adobe Experience Manager, said these findings underscore that marketers' successful use of IoT data comes "not only by collecting and using insights from Internet of Things in a silo, but also connecting to the rest of the customer journey across website, mobile apps and in-person interactions."
Will privacy concerns stand in the way?
The possibilities for brands using data from IoT seem endless, particularly with the ubiquity of smartphones.
"With our smartphones, we have turned into real-world versions of Web traffic," said Jeff Malmad, managing director, head of Mindshare America's Mobile and Life+ division. "The smartphone is the gateway drug to IoT [and] what will drive most early marketing from an activation standpoint."
The key word is "early." Ultimately, the world of IoT is still incredibly young, and many consumers still have privacy concerns and are therefore wary of sharing personal data.
Tim Barker, CEO of DataSift, noted that according to TRUSTe's 2015 Consumer Confidence Privacy Index, "More than 90 percent of American consumers report worrying about their privacy online, and 42 percent are 'more worried about their online privacy than one year ago.'"
If consumers don't want to hand over their data, that's a dead end for IoT. But consumers are showing they're increasingly ready to be part of a connected world.
"Big forces like the sharing economy and open innovation are driving IoT," said Russ Klein, CEO of the American Marketing Association. "But there are still things that have to continue to happen for IoT to really be real. And everyone is trying to figure it out because there is nothing so seismic or game changing out there. The percentage of things that can be connected now is only about 1 percent of all the potential connectivity out there."