Unlocking the Potential of Smart Homes: Are tech-connected dwellings the next frontier for better marketing?

Perhaps someone owns Google’s Nest to control the temperature in their home from a smartphone; maybe they have Amazon’s Echo and use Alexa as their personal DJ; or perhaps they recently invested in Samsung’s Family Hub refrigerator—with the goal of always knowing what they do or don’t have at home when making impromptu grocery runs.

Each of these smart-home products—among many others—is revolutionizing how consumers interact with technology in everyday life. In fact, according to eMarketer, 87 percent say smart-home products make life easier and 72 percent agree they provide peace of mind.  This proliferation of intelligent devices is known as the Internet of Things (IoT). Wired Magazine defines “[it as revolving] around increased machine-to-machine communication; it’s built on cloud computing and networks of data-gathering sensors; it’s mobile, virtual and instantaneous connection; and they say it’s going to make everything in our lives from streetlights to seaports ‘smart.’”

Today, with consumers wholeheartedly embracing this phenomenon, it’s given rise to everything from smart fridges to smart lightbulbs, even smart toilets. This hyper-connected world creates the opportunity to aggregate a richness of data—based on consumer preferences and habits—that can ultimately lead to more personalized interactions between brands and consumers. Imagine for a moment that it’s 7 a.m. and a phone alarm sounds. A notification is received from the smart fridge that it’s running low on orange juice. The screen then prompts the owner to swipe for a comparison of brands from either the local grocer or superstore, and an order can be made instantly for in-store pick up (based on the best price found).

The example above represents the holy grail of marketing, which is blurring the lines between advertising and information while providing the right content at the right time to the right user.  Naturally, the inherent challenge with this scenario is to figure out how IoT devices work in tandem with each other. Some brands think smartphones should be the point of centralization, but Chinese manufacturer Hisense thinks it should be TVs, the epicenter of every living room.  At the 2016 Consumer Electronics Show (CES), the brand showcased its vision of a connected home. In the demo, smart products (fridge, thermostat, etc.) were shown connected through a hub, which is a small device shaped like a remote speaker that can be placed anywhere. When the laundry is finished, for example, users are notified via their TV. The hopeful progression then would be to eventually integrate an ad experience on that TV which highlights a preferred detergent or competitor brand when the laundry is done.

As bright as the future of IoT is, the industry is still some ways off from achieving the ideal scenario. While the technology is continuing to emerge and the opportunities are widespread, few specific stances by any particular brands have been taken regarding what that roll-out strategy looks like. Moreover, there is real concern around consumer attention becoming increasingly scarce. For marketers, it is easy to get caught up in the exciting new ways customers can be reached; however, the cornerstone of the new IoT world is data. With a greater understanding of consumer preferences and habits, these smart devices can establish a more personalized one-to-one connection between brands and consumers.

Programmatic media, in fact, is inching closer to just that. Vendors like TURN are using artificial intelligence technology to predict the wants and needs of consumers based on their user data and browsing behaviors to serve up the most appropriate ads. And some brands have even started dipping their toes into the possibilities, with a partnership between Amazon’s Echo and Fidelity Investments serving as one example. The investment company has integrated itself into Echo by allowing users to pose the question, “Alexa, ask Fidelity how [company name] is doing,” and subsequently receive the latest market update.  With artificial intelligence serving as Alexa’s foundation, her skills enhance over time. IoT similarly hinges on this very principle, adding value to consumers’ lives by proactively sharing relevant information. It effectively changes the advertising narrative from a push to pull experience that puts the control squarely in the hands of the consumer. Especially with the rise in ad blocking technology, users today expect to receive value when they choose to interact with brands, so brands must deliver accordingly.

Having said this, one of the biggest challenges that remains in the IoT realm, is that it is largely unregulated, as a set of governing principles does not yet exist. It presents a prime opportunity for hackers who according to a recent Tech Crunch article, “can use one insecure device to leapfrog their way into broader connected networks, allowing a single device to compromise sensitive data ranging from bank and health information to even access to broader corporate assets as the line between work and home continues to blur.” As ominous as this potential reality may seem, the tech industry does acknowledge that standards in IoT need to be established and is working toward solutions. Groups like the International Standards Organization and Institute of Electrical and Electronics Engineers Standards Association are working on a framework of security protocols as well as privacy and safety measures using advanced data encryption. These will be critical in assuring smart device customers that their privacy is protected, especially on the heels of Yahoo’s recent hacking issue.

Some brands like Microsoft are better equipped to deal with these scenarios. As one of the most sophisticated technology companies around, the brand has advanced security software at the core of its products. In December 2015, the organization hinted at its plan to incorporate Windows 10 along with digital assistant, Cortana, across its portfolio, enabling users to universally control the Windows-powered smart devices—from Xbox to desktops—via the speech interface. Looking ahead, it will be imperative for all advertisers, not just Microsoft, to strike the right balance between giving people timely and relevant information while also keeping their privacy protected.