Don’t turn your attention away from the Internet of Things just yet. Contributor Wesley Young contends that the data provided by connected devices could help smaller players better compete with the big guys.
In an age of artificial intelligence (AI), the Internet of Things (IoT) may seem like (October 12, 2017)’s news, but, of all the technologies currently developing, it has the greatest potential for near-term changes that affect local search.
While it remains murky how AI will benefit agencies, IoT is reaching a critical point in adoption and maturing to a stage where it provides actionable data. Or, as Brian Buntz with the Internet of Things Institute stated, “The IoT is about to shift into ludicrous mode.”
The growth of the IoT is spurred by decreasing costs of hardware, such as sensors, together with the ease and availability of wireless connectivity. IoT devices already outnumber smartphones by about four times, and growth is expected to accelerate further with Cisco estimates topping 50 billion devices by 2020. The amount of data generated by these devices is enormous.
Annual global IP traffic already exceeds 1 zettabyte of data and will double by 2019, Cisco forecasts. What is a zettabyte? It’s 1 billion terabytes. Or 1,000 exabytes. One exabyte amounts to 36,000 years of HD video, the company says. And Cisco adds, if a small (or a tall, for you Starbucks drinkers) coffee represented 1GB, a zettabyte would equate to a volume of coffee the size of the Great Wall of China. That’s a lot of data.
Back in 2014, Cisco’s CEO pegged the IoT as a $19 trillion market opportunity that will almost certainly change the way consumers do pretty much everything, from working to driving to shopping to exercising, and many other things.
And a subset of IoT, the location of things market — which enables connected devices to monitor and communicate their geographic location — is expected to reach $72 billion by 2025, according to Grand View Research. With location being the heart of local search, IoT will impact local search and search marketing in profound ways. But it goes beyond location.
According to Goldman Sachs, there are five main IoT verticals of adoption: wearables, connected cars, connected homes, connected cities and industrial internet. The first three are those most relevant to search, as they are related to consumer intent and behavior.
The SMB scale issue
Servicing local businesses with small budgets has always been a challenge for agencies. It’s too much work for too little money. It’s also expensive for SMBs who don’t enjoy the scale that larger businesses benefit from when purchasing search advertising or other marketing services. Both of which lead to the high churn rates at agencies that service SMBs.
Even though search boasts the ability to know the intent of users through keyword searches and display relevant advertising in response, it still has inefficiencies that are magnified for SMBs. Understanding user intent is largely dependent on how accurately the user can express his or her needs in typical keywords.
Let me illustrate with a personal example. I recently replaced an electric cooktop in my kitchen with a gas one. But the electric cooktop used a unique 50 amp plug. Instead of hiring an electrician, I wanted to see if there was an adapter that would convert that 50 amp socket into one that would fit the standard 15 amp plug that my gas cooktop used.
I must have conducted a dozen searches of varying terms describing what I wanted. I was repeatedly served search ads of products that seemed to be what I was looking for. But all the products advertised did just the opposite — converted a 15 amp socket for a 50 amp plug — an issue I discovered was common to RV hookups. I finally found a product conveniently called a gas range adapter. It seems obvious now, but, since I didn’t know the name for it, I wasted a lot of time, and more importantly, clicks on irrelevant search ads.
Consumers with experiences like mine may be why so many SMBs stop buying SEM services. But if search engines and advertisers had had more data about me and about my recent offline behavior, this problem might have been avoided, and I could have been served up information that was relevant to my needs.
Better data — which IoT can deliver — will both improve the consumer experience and result in better returns from marketing for SMBs. With better ROI, SMBs can better justify spending money on hiring agencies, and agencies can spend more time doing the job right. Data will also produce better results with automated processes like programmatic ad buying, reducing time and cost for agencies.
What kind of data are we talking about?
Current data use in targeting and retargeting is just the tip of the iceberg compared to how IoT will change the landscape. It appears nothing is off-limits when it comes to connectivity. Connected products being developed include mascara, contact lenses and ink for tattoos.
Simple applications would already be improvements over former or current uses. For example, location information can be enhanced by real-time data from wearables such as clothing, shoes or smart watches that indicate speed, and thus, whether the user is passing by in a vehicle or walking down the street. And, if the user is walking, it could indicate whether the person is walking for exercise, at a pace to get to a destination or at one that would indicate window shopping. Multiple location devices on a consumer are also more likely to interact with on-site location devices such as beacons and WiFi and help improve location accuracy.
Another area of significant growth for IoT is health care. Devices like contact lenses, implants, wearables or tattoo-like connected ink can track sweat composition and body chemistry, measure blood flow and glucose levels, or even determine whether you’ve taken medication. Lack of adherence to medical prescriptions is estimated to cause 125,000 deaths and at least 10 percent of hospitalizations, making such devices arguably medically necessary.
Home connected devices — including lights, appliances, thermostats, vacuums, pillows, TVs, lawnmowers, video cams, voice assistants, scales and security systems — capture behavioral data in the home as never before.
But the potential lies in the way data from multiple devices may be integrated to tell a deeper story. Envision knowing the sleep habits of a consumer such as:
- how soundly they sleep.
- what body triggers occur before they wake up.
- how many times they get up at night and turn on the lights.
- whether they turn the TV on.
- how that sleep varies based on the temperature of the room.
- whether the chip-tagged cat climbing onto the bed triggers minor allergies that wake the homeowner.
The potential for insight into consumer behavior and responding with timely information is limited only by imagination. Yet the impending impact is already something agencies and SMBs can plan for. Below I take a look at six ways IoT will boost the ROI of search marketing for SMBs, making it a much broader and viable option.
6 ways that IoT will make local search scalable for SMBs
1.Boost search ads through improved targeting
Good data will make targeting the right person at the right time more accurate. Multiple GPS-connected devices per person provide additional location data for tracking users with greater accuracy and additional IoT data will provide deeper insight into needs and behavior.
For example, your wearable knows you just worked out and are hot and thirsty, based on your sweat readings. Your car knows there is a 7-Eleven two blocks ahead on your right where you can swing in quickly. And your phone can read you a notification on a 99-cent deal for a large cold slushy drink at that location which is good for 10 minutes. You pull in, and the coupon is location-triggered and automatically applied to your credit card when you pay.
2. Customer data becomes the new competitive edge
Large buyers of marketing services gain a competitive edge in scale by spreading costs over a large volume of interactions or leads. That lowers cost per lead. Smaller local businesses often don’t have that luxury, but good IoT data that improves the conversion of leads means that you can get more customers even when buying fewer leads. So the cost per customer goes down.
Ultimately, having the right customer data — rather than scale — is the new competitive edge.
3. Identify real-world offline behavior that drives online action
Knowing more about a person’s habits or preferences isn’t just about being able to target them directly. That data, when aggregated for many other individuals, reveals trends and predictability for targeting strategies. SEL’s sister publication, Marketing Land, recently published an interview with PlaceIQ CEO Duncan McCall, who explained that offline data on user location and behavior is a better indicator of intent than online signals.
In other words, knowing real-life choices, actions and behavior predicts online decisions better than clicks, search history and page views. Presumably, this is because the offline behavior is a deeper and more complete picture of the real world, at least until we live in a Matrix-like AR universe.
And that type of data is exactly what IoT devices collect and measure. The data can provide some surprising audience insights. Data from targeting platform NinthDecimal revealed that fast-food patrons were not the best targets for a quick-service restaurant campaign. Rather, DIY enthusiasts, moviegoers and leisure travelers were better targets.
4. Boost data sharing and overcome privacy concerns with services consumers want
There’s a great concern, especially with companies that have business in Europe, over evolving privacy laws. Europe’s GDPR (General Data Protection Regulation), which takes effect in May 2018, limits use of a person’s data unless express consent is given.
The way to overcome that limitation is to provide a product or service that the user values more than the information he or she is releasing. For example, a company called Mimo makes onesies for infants that measure breathing, sleep movements and other sensitive data. But concerned parents gladly turn that information over to the company in return for protection against SIDS or improved sleep routines.
Roomba, the maker of robotic vacuums, uses maps of your home to improve the overall user experience. The inside of your house seems like something most wouldn’t want to share, but consumers routinely choose convenience over privacy. If data sharing will make your vacuum perform better and get your house cleaner, many users will agree to it. Data might be shared with Amazon or Apple to link the device to your Echo or to Siri. It may link to any of a number of smart home devices made by Google (Nest), Samsung (appliances) or a flooring company or a retailer that carries Roomba-friendly furniture.
However, the GDPR prohibits making provision of a service conditional upon release of data if that data is not necessary to the service. While not law in the US, there certainly are discussions over similar privacy concerns. Yet again, providing related benefits in return for the data can solicit “freely given consent.”
For example, I recently installed a Honeywell WiFi connected thermostat in my home. Honeywell has since emailed me to offer a software upgrade that will optimize my thermostat settings to help save me money and states that customers save $71-$117 a year on their energy bills by enrolling in the program. I get customized reports with insights into my energy use, comparison to similar homes and tips to help track and improve energy efficiency. I’m sure those “tips” will include some referrals to vendors such as insulation companies, solar energy vendors and HVAC contractors. But I’ll likely opt in to save a few bucks.
5. Level the playing field in access to big data
One of the complaints about privacy regulations is that they favor the big players that have sufficient leverage to get consumers to consent to handing over their data. Not many opt out of using Google Maps because they don’t want to share their location data, whereas smaller lesser used apps are easier to say “No” to.
Apple is also limiting ad tracking and frustrating ad buyers, but since its revenue is not advertising-dependent, it doesn’t really care. Those restrictions hurt advertiser conversions, make retargeting less effective and reduce reach. Meanwhile, Google is beginning to block “annoying” ads in its Chrome browser, further demonstrating that decisions made by a few big players can have a lot of impact.
The explosion of IoT devices means a lot more players in the data supply chain that provide quality first-party data and widen the narrow funnel controlled by a few major players. With data being the new competitive edge, that’s a great thing for ad buyers.
For example, in my Honeywell thermostat example, ad buyers can target users directly through Honeywell’s communications to its customers, or Honeywell can use its customer data to match and target users within other third-party media outlets such as Facebook or Bing.
6. Overcome ad blocking
Ad blocking occurs because users are tired of being served ad content they don’t want. However, there are repeated studies that show users are receptive to targeted or relevant advertising.
Verve shared a study called “The Rise of Mobile Prodigies” at LSA’s Place Conference that demonstrated that young consumers want ads to be tailored to their interests, hobbies, habits and location. Forty-six percent of them even saved ads they found innovative to revisit at a later time.
InMarket shared a case study at the same event showing a 2.3x lift in purchase intent, as well as 100 percent positive social media reaction to ads they created for ProYo, a protein-rich ice cream product.
Consumers are receptive to advertising when the content and timing are right. IoT data will drive relevant content at the right moment to consumers, reducing the aversion to receiving ads. The end goal is to change the perception of ads from slick sales pitches to helpful information for making decisions at the time when consumers are researching a purchase.
IoT has gotten somewhat lost in the conversation dominated by AI and personal assistants. Yet what some have predicted as the “third wave of the internet” after the fixed internet and mobile devices is cresting towards huge volumes of devices and accompanying data.
It may seem ironic that big data is the solution for scaling small business needs, but it’s the automation, efficiency and effectiveness at small tasks that will make it cost-effective for SMBs. They will still need providers to help them determine the use cases that benefit their businesses and to match products and services with business needs. But those who can leverage the new depth of data will have a marked competitive edge in building profitable small business marketing models.
Some opinions expressed in this article may be those of a guest author and not necessarily Marketing Land. Staff authors are listed here.