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The Value and Challenges of IoT Data for Marketers

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The Value and Challenges of IoT Data for Marketers

The Internet of Things describes any device that has a connection to the internet. It’s important to understand how is the IoT currently disrupting the digital marketing landscape and we can be benefited from this broad industry to design a digital transformation strategy.

IoT-data-for-marketers

Getting IoT data to boost audience targeting, engagement, and conversion rates has been the talk of the marketing community since the early 2010s. Yet, despite the tech’s rapid adoption across industries and sectors, the annual predictions that “this will be the year of the true IoT and marketing convergence” seem to largely remain in the category of probable future.

So is IoT all it's cracked up to be? If yes, what hampers the mass integration of this technology into marketing, and what can be done to help this?

The Potential of IoT in Marketing

It is a widespread belief that the untapped business potential of IoT is more or less endless. The steadily growing presence of fast accessible bandwidth, sensors, and smart interconnected devices in the everyday lives of consumers create ceaseless streams of big data to collect, process, and get value from in numerous ways.

For marketing and sales purposes, the value of this data can ideally manifest as one of the major drivers behind multiple areas, as outlined below.

1. In-depth, Holistic Audience Research and Analysis

The ongoing development and popularization of connected tech creates treasure troves of both historical and real-time data concerning customers’ daily actions, routines, locations, interests, and lifestyle choices.

Gaining access to that information and then processing it into highly systematized, detailed databases for further usage can potentially revolutionize the way marketing research is done.

The scope alone makes IoT a potential goldmine for marketers, providing a constant flow of relevant multidimensional data to feed into customer relationship management systems (CRMs) and customer data platforms (CDPs), analytical systems, data pools, and prediction models.

Adding both the historical and real-time, interconnected, personalized angles to the picture only makes it much more potent, further expanding the possibilities.

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2. Advanced Automation, Targeting, and Personalization

Gathering, clearing, classifying, and structuring a lot of data into massive systematized ledgers is exciting, but the real power is in the way it gets to be actually used.

Detailed statistics and mass audience segmentation are the obvious ones here, but the potential goes far beyond refining these decades-old methods. The true worth of what is gathered lies in the new approaches to marketing automation, supposedly resulting in never-before-seen levels of insight and control over comprehensive customer profiles and journeys.

So what can be achieved with a mix of artificial intelligence (AI), machine learning (ML), and data science applied to IoT data? In theory, unlimited options for testing, recommending, notifying, and otherwise personalizing customer experience—all against the backdrop of deeper and more accurate automated analysis and forecasting.

3. Event-based Advertising and Engagement Opportunities

Another facet of the commercial IoT is the growing breed of real-time touchpoints. Event-triggered and location-based interactions are possibly the most developed and visibly successful examples of this.

Among all industries, IoT in retail is especially booming. Recent and well-established cases include cashless tag-based Amazon Go stores; digital showrooms in furniture and fashion stores enabled by proximity sensors; smartphone-only on-site campaigns by makeup vendors, and so on.

Spreading fast and already bearing results, these real-time touchpoints are only here to stay—provided that their growing use won't be kneecapped by existing and new challenges.

IoT in Marketing: The Challenges (and What Can Be Done About Them)

Despite the fantastic promise of IoT-enabled, data-driven marketing, there are several challenges to address before it truly becomes a widespread success.

1. Data Privacy Issues

With great data comes great responsibility. When we’re talking about mass commercial access to customers’ personal information, the obvious concerns arise. The information itself can potentially be abused, sold, used for unsanctioned tracking, and so on.

In order to protect this information and define concrete rules regarding the ownership and privacy of user data, new extensive laws and regulations have been emerging around the world.

The line between personal and public domain has to be drawn somewhere, so these laws are admirable and obviously necessary. Yet they are still a work in progress, changing quickly.

Due to the lack of international standards, there are regional, sometimes contradictory, varieties of the laws. In addition to all that, steep penalties and fines are set for those failing to comply.

By extension, all of this creates often hostile environments for big data use in business, discouraging executives and marketers alike to delve into IoT data and its potential.

2. Data Security Issues

User data privacy is not the only thing the governments, investors, and the general public worry over. Just like the previous years, 2019 has seen massive breaches of security and data theft, including those made possible by insufficient safeguarding of IoT connections.

Due to poor model risk management, lackluster security of legacy networks and devices, external threats like machine phishing, and, once again, the lack of unified standards, IoT technology is especially prone to security violations.

With strict yet problematic new cybersecurity laws on top, the problem of safety is an obvious point of conflict where wide adoption is concerned.

3. Hard and Expensive Integration

As both a concept and technology, IoT doesn’t exist in a vacuum. For successful and profitable adoption, the technology needs to be integrated in existing systems.

Location-based interactions need hardware and software-based tagging in place. On the enterprise level, there’s the task to collect and process huge data streams from different sources.

Advanced data analytics demand time and investment in data science, machine learning algorithm development, hardware, storage—the list goes on. Big data, IoT data included, needs a maintainable infrastructure, and that doesn’t come cheap.

The issue of a talent gap also presents itself. Since IoT in marketing is both new and in demand, it needs a lot of experienced technicians, data scientists, and AI experts to ultimately bring in big sales. In many cases, the jobs and positions are already there, unlike qualified professionals to fill them.

Can These Challenges Be Overcome?

The overall outlook might seem grim, but there’s a bright side still. Data laws and regulations evolve and do get settled with time, and there are strong indications that a more global outlook on these policies is soon to emerge.

When talking IoT data specifically, it is also generally easier to stick to specific regional regulations due to the obvious physical and location-based aspect of this technology.

In terms of security, it’s important to remember that the B2B, military, and heavy industry sectors are huge driving forces behind the development and adoption of IoT around the globe. Where these forces are concerned, the question of security is of utmost priority, meaning heavy investment into cybersecurity and other safeguarding measures for the tech.

Smoothing, if not eradicating, these challenges is only a question of time then. Altogether, we can anticipate the strong backing by authorities, the introduction of unifying laws, and widespread security standardization.

The same can be said about the costs and lack of experienced specialists today. As time goes on, standardization, democratization, maturing tech professionals, and more sophisticated third-party solutions will solve most of these issues and signify the coming of IoT as a viable commercial technology.

Final Thoughts

Gaining in-depth insights into customers’ behaviors and using them to create effective, personalized, multichannel relationships is the holy grail of today’s digital marketing.

Despite some hiccups along the way, IoT technology will play a big part in achieving that goal. In combination with other momentous technologies of the generation—AI, ML, blockchain, AR/VR, and so on—the internet of things can and most positively will bring about the next era of reconceptualized customer acquisition, conversion, and retention.

It will just take us some time to get there.

Author: Veronika Vartanova

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