If you haven’t heard of the IoT (the Internet of Things), you will soon enough; consider these 3 facts on the topic:
- Gartner research estimates that by 2020, 21 billion things will be connected the Internet (up from 5 billion in 2016).
- In August, PCWorld cited reports that cars had begun to connect more users to the Internet than smartphones each month.
- The IoT is an industry that could be valued by some estimates at a mind-blowing $11.1 trillion dollars within a decade.
The Internet of Things is credited as being coined by Kevin Ashton in 1999, while working for P&G, who defined the IoT as “the infrastructure of the information society.” In other words, using technology such as RFID chips to make devices “smarter,” by allowing them to collect data from their environment via sensors such as temperature or proximity, and send that data to a network of other connected devices and databases.
In what ways will the Internet of Things transform the word?
As an innovative technology, IoT will naturally have big applications in marketing. Determining what people want or don’t want by is best done by studying their behavior, which is exactly what the IoT does best: measuring the many interactions of humans with devices in the world around them.
With the advent of the digital age, marketers were able to move from correlating market-wide purchase trends to geographic ads and surveys, to getting the full funnel picture, from the first impression all the way to an actual purchase. Tracking behavior has gone so far as to move the advertising model from charging each time an ad is shown to a consumer or even clicked, to charging only when a consumer’s intent becomes behavior. By measuring what people actually did, companies like Facebook grew to become the biggest in terms of market cap globally, by giving businesses the ability to run marketing campaigns not just hyper-tuned to people’s actual behavior, but even people who look like other people who have exhibited some specific behavior.
What could possibly be next?
While not quite mind reading, the treasure trove gleaming from inside the big data chest of the IoT represents the next big step in marketing. The Internet of Things offers a new dimension of information captured on consumer behavior that digital as we recognize it today (internet browsing devices) has been unable to obtain or at times consists of poor confidence levels (especially in the age of ad blocking/anonymity).
Studying how much energy a person consumes, fluctuations in energy usage during different times of the day and consumption of energy by device can build a new, behavior-based profile of whether a consumer is or is not frugally-minded, is an early bird or a night owl or whether they are an aspiring chef or pop culture obsessive. Google (now Alphabet) made a smart strategic decision to acquire Nest, likely in part for this reason – to ensure it would be well-positioned to capture and benefit from novel sources of data. When a person’s IoT-recorded behavior is combined with their digital web/app trail, the act of understanding who that person is and what their propensity for certain future behaviors is becomes that much more accurate, and that much more valuable.
Making Consumers and Businesses More Efficient
The Internet of Things also holds promise to help individuals and companies make more efficient decisions based on an analysis of their own behavior.
If garbage cans or a fridge held sensors, became smart about things like the weight or composition of their cargo and organized that information into trends, people could reduce food waste or work towards healthier diets. Or, take the aforementioned Nest, which promises to save consumers money on energy by studying their habits. IoT-connected lights (smarter and less annoying than motion detection) could turn off when people leave the room or dim in response to sufficient natural lighting.
Social gamification or accountability could also be applied to encourage consumer efficiency, which not only saves money, but also help in ways such as better protecting the environment and lessening strain on energy grids. For example, people could challenge themselves to become better community members and waste less. This promise stems from two opportunities:
- It’s very easy for people to ignore information they have habituated to, or to look past “just this one time.” It’s hard for people to recognize the impact of throwing one carton of spoiled milk out or neglecting to turn off the living room light when going to the bathroom. Yet, when people are confronted with the full story, it becomes harder to justify known, inefficient behavior. Consider, for example, the effect on consumer credit card payment behavior after the CARD Act was passed, which in part required credit card companies to provide an estimate on how long it would take to pay off an entire balance by just paying the minimum amount due, and how much interest they would pay.
- Perhaps even more important is the fact that making a device smart and able to be efficient itself makes it that much easier for consumers to become efficient. If a person doesn’t have to exert any more effort other than selecting an “eco” setting for their smart devices and they can save money doing it, then what’s to lose?
Similar to consumers, businesses can benefit from improving operating efficiencies of their employees, from anything reducing the amount paid for light or energy usage, to better analyzing the status of every individual bottleneck in an entire global supply chain.
Maintenance is also a big way in which businesses can benefit from the Internet of Things, such as using sensors to pinpoint issues with equipment (e.g. monitoring wear-and-tear for airliner jets or even beaming data on the status of key components in the drivetrain of automobiles in the field), in addition to improving compliance or reducing risks from outcomes such as catastrophes, delays or recalls. For example, using the IoT to tag luxury goods or pharmaceuticals with RFID chips can reduce implications of fraud, waste, write-offs and loss, while at the same time boosting consumer confidence. Naturally, the Internet of Things also lends itself well to the era of crunching big data for insight, which can lead to big savings in not only live product maintenance or supply chain logistics, but also initial manufacturing and future research and development.
Improving the general health of society can produce a massive multiplier effect in productivity and thus profits, which can be manifested in the fact that many companies have begun offering their employees gym memberships, standing or walking desks and nap rooms.
Tapping in to see what an internet-enabled fridge is packing could help analyze that consumer’s diet, health status or susceptibility to specific health risks. Tapping into smart toilets, toothbrushes or perhaps even coffee mugs could provide regular bio readings that medical providers could use to provide more efficient and proactive care.
The government stands to be the biggest agent capable of fully harnessing the benefits of the IoT era. Yes, the government having access to our data is scary. But consider how much more efficiently it (could) operate or help its citizenry if it could tap into aggregated, anonymous data from millions or billions of instruments streaming bits about traffic, weather, crime, health, energy and so on?
Considerations for a future with an ocean of Internet-connected devices
While the Internet of Things brings a lot of good possibilities, it’s important to be aware of the challenges that bringing billions more devices online will pose to society.
- Privacy – naturally, as the internet proliferates further and further into our lives, whisking away more and more data on each of us, privacy will only become a larger concern. It was easy to unplug a dial-up machine, easy to shut and walk away from a laptop and still easy to put a smartphone in airplane mode to shut the internet off from your data. But how easy will it be to unplug in the IoT era, or even be aware of when your personal data is being captured?
- Security – more data means more security risks posed by those who wish to do ill, as well as a vast new arsenal of potential devices to compel to cause harm. Jeep hackings and vulnerabilities in pacemakers may be nothing compared to what hackers will be able to do in the coming years, from either an individual or, even more concerning a networked device perspective. Furthermore, the IoT can be used to magnify the power of hackers, such as the recent Dyn cyber attack, who will become more capable than ever before, even to the point of taking entire countries offline.
- Energy consumption – while the technology that will power the Internet of Things continues to post advances in drawing less and less power to operate, miniscule energy required by billions of devices is in aggregate not minuscule. In order to support the IoT, our energy infrastructure will likely need a (sorely needed) major overhaul; yet without a strong renewables expansion, it’s possible that the energy need would cause a retrenchment into fossil fuels.
Overall, the Internet of Things represents a multi-trillion dollar opportunity to continue evolving the way our society at-large operates. Yet, proper consideration and mitigation of the risks this future poses are a must, in order to usher this new era in with the most positive results.
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