Nov 6 2018 Simon Hall Blog Automation IoT is Changing Advertising: Here’s How to Get in the Game From connected cars and household appliances to what we wear, the Internet of Things (IoT) has fundamentally changed the way we live. These days, it’s expected that connected devices and technologies will unobtrusively, and sometimes stealthily, collect data on our vital functions, what we do, where we go, what we share, what we believe, what we buy, who we know, how we move and even what we eat. It may come as no surprise, then, that the majority of industries and market segments have found and are continuing to find ways to leverage that data to their advantage – into conversions, higher ROI, and ultimately profit. The advertising industry is no exception. Undoubtedly, IoT has that same predictable but revolutionary impact on advertising as it has had on manufacturing, automotive, and healthcare. For digital marketing and advertising, IoT can clearly help create new customer opportunities. But its potential runs much deeper, providing data and insights into new, unexplored markets and demographics, as well as how businesses research their target markets, the ways they reach them, and how they analyze and assess their efforts. First, What is IoT? The Internet of Things (IoT) is a concept that refers to how devices can store, analyze and share information over a network without the help of people or other computers – all made possible with a wide variety of devices that have computational and networking capabilities, including mobile phones, wearable and medical devices, vehicles and home appliances. The Internet of Things – that is, internet-connected – devices essentially serve as sensors that can send data through a network using the internet, Bluetooth, or other connected technologies. Thus they have the ability to collect, send and receive information that people can act on. And that list of devices is almost endless – and continually growing. A few real-world examples of IoT include: Controlling a home thermostat remotely using a mobile app DHL tracking vehicles and monitoring warehouses using environmental sensors to optimize their processes A smart toothbrush that encourages good brushing habits A health monitor that reports on a variety of biometrics and will contact your healthcare provider if needed While connectivity is nothing new, it’s become so ubiquitous that it has created new opportunities for building applications and services. That means, as with regular devices, the host of real world applications for IoT devices open up a plethora of new doors for digital advertising. IoT and the Intersection of Online Advertising IoT has already penetrated a lot of industries – including online advertising. That said, up until now, IoT has often been overlooked by most marketers. But that’s been changing as digital advertisers have started uncovering marketing opportunities around IoT. For example, Johnnie Walker has a Blue Label bottle with built-in electronic sensors that can tell if the bottle has been opened and where it is in the supply chain. Malibu, another drinks company, takes it a step further, using their “connected” bottles as a digital touchpoint to promote exclusive content. While these types of IoT applications to advertising are definitely impressive, what’s the practical direction for marketers to follow if they want to start taking advantage of IoT for their business? The truth is you don’t need to turn your products into IoT devices to benefit. While they might not make it to the front page of TechCrunch, there are actually plenty of real ways marketers can start using IoT for better online advertising. IoT Means More Data As previously mentioned, IoT makes it possible to track and access much more data about individuals. When approaching them as consumers, advertisers can consider each data point a touchpoint in the customer journey. The sheer volume of actionable data that can come from IoT devices is enormous – to the tune of five quintillion bytes of data every day. And the potential applications and uses of IoT data are endless for advertisers that know how to harness it. IoT data can reveal to advertisers who bought a product, where they bought it, and potentially what they did with it after purchase. Among other things, this information can be used for customer relationship management, as well as informing new product development. It can also be used to optimize ad marketing messages while potentially delivering them through new channels. Specifically, deep funnel insights derived from IoT data can tell businesses who has buying intent for certain products and when. IoT devices themselves can also tell advertisers a lot about the people that use them – someone who wears a fitness watch, for example, could be targeted with advertising for sportswear clothing. Someone who owns an irrigation controller could be targeted with advertising for a garden maintenance service. The possibilities are almost limitless. Real-time, Contextualized Personalization Suffice to say, people who carry and regularly use IoT devices are easily differentiated from the crowd – which in turn can generate significant opportunities to better target marketing messages to individuals both online and off. The reason? IoT devices provide important personal details that advertisers can use to better personalize their messages. One of the most basic examples is location-based ads, from data leveraged from users’ mobile phones and other devices. Google’s local search ads, for example, are already a widely used application of IoT in advertising, making it possible to target specific audiences within certain areas of a country or within a radius of a certain location. When people make local searches using their mobile devices, they’ll be subjected to relevant ads based on their current location. PPC advertisers can then target their ads to specific locations (usually their local store), and even optimize their ads by targeting keywords that illustrate user intent. But real-time, contextualized personalization doesn’t have to end there. Why not factor in information like time of day, or the person’s physical condition? The possibilities are endless. The key difference between personalization using IoT devices and other strategies is contextualization. It’s true that marketers don’t need to tap into someone’s fitness monitor to know that they’re health conscious – the fact that they purchased it in the first place could tell them that. Marketers can also tap into third party intent data from publishing networks to learn more about the specific health interests of a lead. So why rely on devices themselves to collect this information? The answer is better, individualized contextualization. Take these examples: Targeting a fitness enthusiast with an ad for a gym membership that’s nearby his office Promoting water and sports drinks from a nearby shop based on the hot weather and personal biometrics from someone’s smart watch Suggesting someone adds a grocery item to their shopping list based on what’s in their connected refrigerator None of those targeting strategies are possible with even the most advanced prospect research, online or off. But they can be when marketers harness the power of IoT. How these marketing messages are delivered is another important aspect of the potential for real-time, contextualized personalization. The advertising space changed when it became possible for online advertisers to market to people on their mobile devices instead of just their computers. Now it’s happening again with other IoT devices. Now, it’s possible for marketing messages to come from the IoT devices themselves. Your washing machine will tell you when you’re out of detergent and add it to your shopping list for you. Your car can suggest a nearby auto center when you’re due for an oil change. Amazon is already taking advantage of this as well, using smart home devices to suggest more of their products to consumers. Full Funnel Performance Insights IoT has other benefits for advertising, beyond better targeting opportunities. The wealth of data the IoT ecosystem provides also makes it possible to learn more about the impact of your advertising on consumer purchase behavior. This is especially important for businesses that advertise online to drive conversions offline. Businesses that sell exclusively online can rely heavily on metrics like click-through rate and onsite behavior to measure performance. But businesses that use local search ads (for example) to encourage in-store visits have a serious gap in sales funnel visibility. That’s where IoT can come in. What if you could deliver an ad to someone’s mobile device, and they go on to use contactless payment when they purchase in your store? This data would make it possible for advertisers to understand important behavior points like: If the lead converted into a customer What they purchased and when they converted How long after seeing the ad they converted And it’s not just location-based businesses that can benefit from offline data. Even an e-commerce store will want to better understand when, where, how frequently, and potentially why people choose to make purchases from retail stores instead of online. IoT also makes it possible to know when people research a product offline then ultimately purchase it online – all parts of an advertiser’s sales funnel that have significant blind spots without the help of IoT devices. Advertising performance today often relies too heavily on online behavior, mostly because they lack a scalable way to monitor performance outside of this digital space. IoT makes it possible to expand the web of understanding beyond this. As the number and kind of IoT devices continue to grow, so will this web of information. Devices that were previously never connected to the internet (fridges, TVs, thermostats, etc.) are now coming online, providing unique opportunities for different types of businesses to benefit. Advertisers can better track the impact of their TV commercials on online purchase behavior, for example. Or grocery stores can better understand their customers’ shopping needs using information from their smart fridge. It’s true that the practical applications for advertisers are still being discovered. But interconnectivity is expanding every year. And once a business can track performance of all their marketing touchpoints simultaneously, they’ll have full funnel performance insights to help improve critical components such as advertising messages, targeting strategies, customer retention and customer service, as well as many more benefits at their fingertips. Better Strategy Optimization As discussed earlier, IoT provides an enormous amount of new data that advertisers can use to better understand their complete sales funnel. But this data is only useful if you can follow four key steps: Collect and store vast amounts of ongoing consumer data Analyze that data at scale Derive ongoing insights to inform marketing decisions Make consistent changes to your strategy based on these insights. And it’s all easier said than done. The more data that comes in about your audience, the less likely you’ll have the capacity to handle it. But if you use the right technologies, it’s possible to fully harness the data IoT offers for better strategy optimization. It’s possible to use machine learning algorithms with big data to generate predictive analytics. Businesses do this all the time with third-party intent data, using these insights to drive automated changes to optimize their advertising campaigns. It’s possible to incorporate IoT data into this strategy as well, seriously impacting the scope of possibilities with predictive analytics. Predictive analytics use a combination of data mining, statistical modeling, machine learning and artificial intelligence to make predictions about future events. And real-time reporting makes it possible to identify actionable trends in data, allowing marketers to make decisions to optimize their strategies beforehand. Bid optimization capabilities are a key benefit of this technology for advertisers. By leveraging data insights provided by IoT devices and other big data sources, it’s possible to make small, ongoing PPC bid adjustments to optimize advertising campaigns. And because it’s automated, it will ensure you’re only bidding the necessary amount to get the ad visibility you need and drive the highest ROI. That means not wasting ad spend because you can’t drive the right insights at scale. These are things that are already possible with IoT data and the right technologies. But the future is bound to bring even more optimization capabilities as both predictive analytics and IoT grow. Consider the possibilities if predictive algorithms could add individual location data to their mix. Then advertisers can automate targeted ads toward individuals at a time and place that’s most relevant to them. Final Thoughts It’s well established that IoT has the potential to make advertising much more intrusive. But given consumer sentiment around ads today, it’s probably not the best way to be utilizing the technology. Nobody wants their Amazon Echo to start blurting out product suggestions based on conversations overheard in their living room. The real benefit of IoT for advertising is more and higher quality data, enabling advertisers to create granular insights and more relevant and better targeted ads that are more aligned with their customers’ needs. That said, those insights and unique personalization can only be realized if marketers have the time and resources to harness this data to its full potential – which means applying intelligent technologies that have the ability to separate, analyze, and create value from it that can be applied strategically to your short and long-term PPC strategies to maximize ROI, boost profits and create value for your campaigns. New IoT technologies are constantly generating raw, untapped data that can be leveraged in almost limitless ways. The data is already there. All you have to do is find the right technology to unlock its true potential.