There’s a new $50 billion industry emerging around the edges of the Internet of Things. The way that we advertise and the way that consumers purchase goods is about to change dramatically. Perhaps most interesting, it is about to become much easier for each one of us to act on our envy of what we see around us.
The Internet of Things is currently more hyped than any other emerging technology topic, according to Gartner. It’s at the peak of promise, the top of possibilities, the solution to every problem… and about to start a nose-first dive right into the trough of disillusionment.
Don’t get me wrong. The smart money is on IoT, and rightly so. The number of Internet connected devices is expected to increase 20% in 2014 to more than 16 billion. The total market for IoT solutions will be an almost incomprehensible $7.1 trillion by 2020. With that kind of money in play, even the trough is going be a lucrative place to live for the next decade.
Much of this insane growth is going to be in the Industrial Internet, to use a term coined by GE. Think connected jet engines, locomotives, fork lifts, air conditioners, security cameras, and millions of other types of industrial devices, all producing volumes of data to be transmitted, stored, analyzed, and optimized.
The consumer market is not being left off the dance floor, though. By the end of 2014, 13 percent of consumers will own an internet-connected device, and 69 percent expect to purchase one within the next five years. If you include devices that will have passive connectivity to the network (RFID and NFC tags, for example), the number of consumer devices that will be participants in the Internet of Things in the very near future is mind-boggling. Trillions of consumer items from your tighty-whities, to your Mykita sunglasses, to your Panerai watch, to your Izze will all be uniquely identifiable by brand, production lot, and serial number.
Pay attention now, because that last sentence is the key to the huge opportunity in marketing and advertising that is emerging as a result of the rise of IoT.
As a lead-in to describing this industry shift, it’s relevant to point out that the Internet is very good at enabling vices. Lust… check. Sloth… ummm, yeah. Gluttony… early stages, but we’re trying really, really hard. Greed… had that figured out in the 90s. Wrath… read any anonymous comments lately? Pride… well, social media lets us gloat over our circle of friends non-stop.
Illustration Credit: the most awesome dahlig on deviant.
But what about envy? Envy, interestingly enough, is still a very inconvenient vice to satisfy via the Internet. Sure we can see the cool things that our friends own and amazing places that they go, but acting on our jealousy (e.g., making a purchase) is something else altogether. The ability to act on impulse based on envy of things that we see our friends and family owning in the non-virtual world still requires work on our part to identify, research, browse, shop, order, etc. That being said, 86 percent of consumers say that they are influenced by friends and family more than any other source for making purchases.
So here’s where the Venn diagram overlaps. This is how it all comes together:
- A fundamental feature the Internet of Things is unique identification of everything on the network, which really will be pretty much everything very soon.
- Our phones have sensors that enable us to detect and identify all of the objects around us.
- Our smart devices keep us connected to the Internet 100 percent of the time, which means that we can act on the things that we detect.
- We’re more influenced by our friends and families for making purchases than by any other source.
As an example, let’s say you’re at your aunt’s house one afternoon, and notice her model 4200 hydrogen-powered liquid-cooled mixer on the counter. It’s shiny and new, and you must have one. Pull out your phone, wave it near the blender, and Amazon confirms that it’s on its way. At dinner later that night, you’re impressed by the tableware: wave your phone, it’s shipped. Love the bag that the lady in front of you at Starbucks has on her shoulder? Wave, click, ship.
Given the high value that consumers place on the opinions, habits, and purchases of their non-virtual friends and families, it’s reasonable to expect that marketers and manufacturers would very quickly move to enable this kind of “real-world product placement” as the technology becomes pervasive. As part of the $500 billion worldwide advertising market, it’s also not hard to imagine displacement of existing advertising revenues towards a medium such as this. If you combine the market sizes of social media marketing, product placement, and popular forms of real-world advertising, you start zeroing in on a market size larger than $50 billion per year. Yowzers.
Product placement is probably the best analogy for what we’re talking about here, and that alone is already a $10 billion industry worldwide. Generally, product placement is focused on TV, film, and compelling personalities, while this new approach happens as part of the natural sales cycle and your daily habits. The concept of real-world product placement has low barriers, a short path to execution, and can be used by literally every product out there without even trying once passive detection (e.g. RFID/NFC tags) is everywhere.
It’s a fascinating way to reimagine product marketing. Everything, everywhere is for sale all of the time without lines, searches, or carts. It should be fun to watch the space mature, and it will most certainly be interesting to see the business opportunities shake out.
An added benefit, of course, is that it completes the Internet vice portfolio.