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How the Internet of Things is Revolutionizing Branding

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How the Internet of Things is Revolutionizing Branding

The internet of things (IoT) – physical objects capable of gathering and sharing data – is poised to revolutionize branding. In a world of interconnectivity, digital strategy becomes brand strategy and vice versa. And personalization will go beyond a marketing buzzword and become a necessity when engaging with customers. Big data is not just a fad, it is the trend for all future interaction. In this episode, our experts discuss how the evolution of IoT will impact brands in the future. Chris, Bo, and Donovan cover the following topics:

Enjoy the episode! If you have feedback for our team or a question about IoT, shoot us a note.

Read the Transcript

*This transcript has been edited and formatted for readability.

Chris Wilks: Today, on the Solving for B° podcast, we're going to be discussing the internet of things and what its evolution could mean for your brand. To help me break down this topic, I'm joined by president and CEO, Bo Bothe and VP of software development here at BrandExtract, Donovan Buck. Thanks for joining us today, guys. As we started preparing for this episode, it was brought to my attention that Donovan is uniquely qualified to discuss this very topic since he is an invited expert on the Ecma TC53 standards body. Before we dive too deep into the topic, Donovan, can you tell us a little bit about your involvement with Ecma? Maybe tell us a little bit about what that group is doing.

Donovan Buck: Ecma is the European Computer Manufacturers Association. They're a standards body. They're probably best known for such hits as JavaScript. They're the organization that's responsible for standardizing the JavaScript language. That's through TC39. TC53 is another group that's responsible for standardizing programming interfaces in JavaScript, specifically for embeddable devices, otherwise known as IoT.

What is the internet of things?

Chris: Thanks for sharing that with us. Now, the internet of things. What is it? What does it mean for those listeners who may not be initiated?

Donovan: You're going to get a different answer depending on who you ask. But my take on it is that something that fits in the universe of internet of things has the ability to sense something about its environment, connect to the internet, either directly or maybe through a Bluetooth relay or something like that, and upload data to something in the cloud or on the user's own devices. What that thing is, is a pretty broad universe.

Chris: What are some examples of those things?

Donovan: Well, the example everyone likes to use is the Nest™ because it's successful, it's practical, it doesn't seem silly in any way. It does a good job and it's not obtrusive. It actually makes your life a little better. You spend less time at the thermostat and you save a little money. So, that would be a really good example. That's the one that people like to point to.

Chris: Yeah, I've noticed they have refrigerators that are connected to the internet. And at first I thought it was kind of silly, but then you start thinking, if they can monitor when your milk is going to go bad and when this vegetable that you bought has gone bad and it can automatically order groceries for you, and things like that, it's like, "Okay, I could see how that makes my life easier." I'm of the thought that your mobile device was the first thing of the internet of things. Is that accurate?

Donovan: In my book, I don't count it as an internet of things device. That's essentially a small computer that you're carrying in your pocket. And for me, the internet of things tend to be things that run on smaller microcontrollers, don't have a full-blown operating system, or have dedicated software. They do one thing and do that one thing really well, but are not necessarily something that you're going to update and use throughout your life the way we do a smartphone.

Bo Bothe: But to a layperson, it's all of these devices talking to each other via the internet. Sharing knowledge, sharing information, sharing data about what's going on. The Nest™ is a great example, although frustrating at times because now the air conditioner over the summer, as we've turned it down, is going to run at a different time. And it senses whether or not we pass in front of it, depending upon its settings, ok it will tell me something on my smartphone.

All of those things are kind of getting jumbled into each other. We did a lot of work with TI, (Texas Instruments), earlier, an analog chips versus DSP chips. And the chips that can send something versus the chips that actually process the data. Usually, if it's hot enough, the dryer turns off. Those are really simple things. But now that dryer talks to the internet and can tell you whether your laundry is done or whether it's time to go change it. There are really pretty interesting things that have been going on for 15 - 20 years that were really behind the scenes, but maybe in the last seven to eight years have become more noticeable.

What are the implications of the internet of things on branding?

Chris: What we really want to get to at the heart of this episode here today is to analyze the implications of the internet of things on branding. How does the internet of things change brand loyalty? What are the things you have to consider as someone who owns a brand? What are some of the things you have to consider that maybe you didn't have to consider before in the era of the internet of things?

Bo: Right. The frustration that is my home right now. I've got a Nest, I've got some Apple products, I've got Sonos, I've got Alexa. And all of them can work together, but they don't all work together in concert. There's something I have to do to make those work a little bit better. And I think from a standard standpoint, it's almost like VHS and Beta. What's going to win out?

Donovan and his group may end up having some say in that over time. But as we invest, as consumers invest in different things, some of our frustration may not come from whether or not the product works. It may come from whether or not the product interacts with things as well. And I think that's a big difference in the way that consumers behave and consider the brands that they work with.

What are the IoT implications for B2B vs. B2C companies?

Chris: We talked about how there are implications for B2C companies, but there are also implications for B2B companies. Can we talk about some of the things we see as the differences between B2C versus B2B?

Donovan: Well, obviously the data that you're collecting. There's a big difference between collecting a company's data on their operations versus connecting someone's personal data, an individual person, and the responsibility that goes with that. And I understand that the data that corporations track to monitor their operations is important to them and they don't want to lose it. But I also think that the whole perception, by the larger population, of IoTs can be greatly impacted by severe data breaches. And the realization that, "Oh, someone can peek in on my baby monitor, what's going on in my kid's room." That's kind of scary stuff.

Bo: Which then affects trust. You've got all this in the media now with Apple and Facebook and even very trusted brands that we thought were secure. The credit monitoring, Equifax, and those kinds of things. You combine that with all of these small microprocessors out there processing one thing. But the internet of things means all of those things tied together – sharing information, which is, to your first question, for B2B brands, the operations of a rig floor and who's safest and who's not? And this is starting to get into AI, but automating those rig floors and how smart are they and who steps over a boundary more than another person and how does that affect their pay or their job or whether or not operations go on. But that also starts to affect tracking someone's behavior. You can learn a lot about where they go and what they do and what they pick up and how long they sit and all that kind of stuff. That really starts to change the conversation about how we track each other.

Donovan: One thing that we don't give a lot of consideration to is that there are things that you might have, a fitness tracker or something like that that you think are fairly benign. But clever people find clever ways to extract additional information from those. One of the most impressive examples I've ever seen was someone who had worked with the IMU, the component in your phone that can tell how your phone is oriented. And then a high-cycle clock and it was timing the vibrations. And they could tell what kind of car the owner was driving based on the vibrations of the engine. It's just mind-blowing stuff that you wouldn't think you're exposing but you are.

Chris: It seems like there's a lack of clarity. And, Bo, you mentioned Facebook, the Citi's Bank of the world and Equifax, is there a lack of clarity of what they're collecting and what they're sharing? This IMU thing that you just mentioned, they can pull that. If I have my cellphone and let's say Apple released that data to Toyota, and Toyota knows I drive a 4Runner, so they know now to sell me a 4Runner, because I am more inclined to buy another 4Runner when it comes time. So, just not having that clarity and not giving away a little bit of your privacy is interesting as we wade deeper into the internet of things. It seems almost inevitable that we're going to have some sort of standard or some sort of privacy policy to protect us. Maybe similar to what the GDPR is.

Donovan: When you get down to it, looking at GDPR, any company that's collecting this kind of data from any of these devices is covered under GDPR because that's potentially personally identifiable information. So, there are laws in the EU governing this data.

Chris: Out of curiosity, does that apply to your refrigerator and your Nest?

Donovan: Well, sure. If the data is being pushed to a cloud some host or server in the cloud, and someone's storing that information and they can, at a later time, associate that data with you as an individual, then yes, it is all covered.

Will data and interconnectivity become more valuable for companies than the products themselves?

Chris: As these devices become more prevalent and they become able to do more things, the conversation has kind of shifted over to, "Okay, we're talking about data collection." From a brand standpoint, at what point does your Nest or your refrigerator become the secondary part of your business?

What I'm trying to get to is the refrigerator, yes, it's a commodity. It's something we can use and it's useful. But then as a company, you're acquiring all this data and as we know, you can use that for internal purposes. But some companies will sell your data and make money off of that. Are we going to reach a point where the data is more important than the thing you're actually selling?

Bo: We're already there. I think there are two components to this that we, as consumers, and brands that we work with need to get their heads around, which is their data and their information are way more valuable than the product they sell. We're in a time where, and I say this all the time, everything's a commodity. It is very difficult to define a brand position around a technology because those technologies are changing so quickly now that it's hard for you to have a strategic advantage for a long enough period of time to milk it and charge a premium.

And so you combine that with the current state of things. The example I love to talk about is I have the Sam's app. And with four kids, I kind of have to shop at Sam's for some basic items. But my Sam's app allows me to scan everything as I go. I don't have to wait in line. Well, that's really convenient, right? It's nice for Heather and me as we shop. And so I tell Alexa every morning on Saturdays especially, "Hey, Alexa, I need milk. Put milk on the shopping list."  And it pushes to my to-do list app that she'll have her phone out and she'll go through the list while I'm scanning things and we're going through the store.

Back to the "we're already there," the data that Sam's is collecting about my buying habits and the way that they push things through their app to me is way more valuable to them – if they sell that data, and I've allowed them to do it, to others – than the actual milk I'm buying. The milk is just the driver to get me in to show them my behaviors. I think that we are already living in that era and we're all seeing it, the phone's listening. All of a sudden I say, "Hey, look, I'm thinking about going to Disney." And all of a sudden, ads pop up on all my channels about going to Disney. Wow, creepy. I'm allowing that. I can go turn those settings off, but it's kind of hard to do. And, well, that's kind of helpful to me that it's going to push something in front of me.

What are the potential pitfalls of the internet of things for businesses and consumer privacy?

Chris:  I watched a documentary recently about these massive amounts of data. And it's interesting because we all have had that moment where we're like, "Hey, my phone's listening to me." And in some cases, that might be true. But I think what's happening is with all this data that we are sharing with these connected devices ... they're doing a much better job of being able to predict your behavior.

Bo: But the benefit there, I mean it's scary and beneficial. They may push me a 20% discount and it pushes me to buy, which is the same thing we've always done in marketing. "Here's the coupon for that thing you might think you need. Here's the discount, and here's the sale on the car by the end of the month." Everything's been timed. I think the difference today is that used to be based on stereotype. And it's becoming more and more actually based on your behavior, your individual behavior, where it'll start to be able to understand Heather's voice and my voice and what I want in my device and her device. We're pretty close to that. I don't know if Donovan can speak to it from a technical standpoint, but it's starting to seem that way.

Donovan: We absolutely are there. They can definitely determine who's talking. There's no question there. All this is awful and awesome at the same time.

Bo: Yeah. I mean Brave New World. I mean, that's the thing when you pull it up to brand, I am more apt to shop at Sam's then Costco because I have that app and because they are pushing deals to me and I'm getting more and more in that universe to where the switching cost to me, the mental switching cost to me is higher. Even though the milk and eggs at Costco are slightly cheaper than the milk and eggs at Sam's, the convenience starts to be commerce for me.

Should more businesses embrace the internet of things as a branding strategy?

Chris: So this speaks to a brand affinity. Even though Costco is a little bit cheaper, Sam's as a brand is making your life easier, understanding you better, more integrated into your life. Obviously it's on purpose, but is that a branding strategy that companies should consider? And is it for everybody?

Bo: It is a strategy everybody should consider. Someone may not have the volume to invest in the technology in its current state. But for sure, I think all companies and organizations and brands should be looking at how can your product provide you with beneficial information about your customer in a respectful, legal way so that you can improve your product and the service behind it by using this data and information? I mean, that's really all it is. Now, the other side of it is they are trying to get me to buy something, but when haven't they tried to get me to buy something?

Chris: It's just a more sophisticated way of doing so, or more effective. I mean, one of the things that stands out to me is this feels like some sort of evolution in more traditional marketing channels. Or maybe it's the same. The channel is the same, but it's the way we target. It's the ability we have to target or the resources we have.

Bo: This is no different than what we've always done as marketers. It's just supercharged.

How does the internet of things affect consumer trust?

Chris: What do we think, from a privacy/ethical standpoint, do we have to be explicit about what we're doing with your data? Isn't it the right thing to do to be forthcoming about that kind of stuff?

Donovan: Absolutely. And if you want to ensure long-term trust with your consumers, you want to make sure that you don't do things that undermine their privacy. So, you do have a responsibility. One thing that's happening is the barrier to entry into these internet of things is getting lower. The devices are getting easier to develop, easier to use, and more powerful. So, you're going to have people who are stepping up to the plate who maybe haven't played this game before and they don't know how to make things secure. They don't know how to protect data properly. Yeah, we have an obligation to guide our clients to make sure they do things the right way.

Bo: I think, Donovan, that's the best way to say it. I think in general, it's always been your responsibility. You shouldn't make promises you can't keep. And sometimes the promises you make aren't stated promises. The expectation is privacy. The expectation is we are going to have a business relationship, even in the B2B sense, and you're not going to share my information with everybody. You're not going to tell people about my strategy or our buying habits or how much money we spend on things or the price you charge me. Those are normal business things. And as trust erodes, brand confidence erodes. And you can see that in the stock market. Some of these brands that have given up trust, their stock price takes a hit. And that's based on consumption. The consumer speaks.

Donovan: I do see things happening in the other way though. If you go and read the terms of some of these social media agreements that you go into when you open an account. You read that and they're not protecting your data. They're like, "This is our data now." But a lot of people just don't care. There's a certain percentage of people who want the experience and they're willing to give up their data and not give it a second thought.

Bo: But what is currency? I mean, at this point you start to think about currency becomes the data. I'm willing, to Donovan's point, I'm willing to trade some of my privacy. To trade some of my information so that I can have a better experience or so that I can get a discount or so that I can get access to something I wouldn't otherwise have access to.

And then there's just general laziness. I think the system is set up to make it difficult for us to really understand what we're giving up. And when social media hit that tipping point, you're either there or you're not. So, at what point do you go, "You know what? I read it. I don't agree with the 5,000 word paragraph with way too many words about how they're going to use my data. So, I'm off of this social channel." Well, can I be off that social channel? Am I able to do that? And you speak about internet of things, it's the same kind of thing. If I can't efficiently run my home anymore as others are because I'm not able to use these devices because I have to trade security, basically I go off the grid. I think there's going to come a point where you almost can't function without it because the world has moved forward. It's almost like functioning without a mobile phone today.

Donovan: One thing that GDPR has done really well is they specified that companies have to clearly and concisely communicate what they're going to do with your data versus hide it in a 5,000 word legal document that nobody ever reads. With something like that in place, it can help people be informed, to do it in plain language.

Bo: I think from a legal standpoint, you're going to start to see a pushback. There's a great podcast about rules and referees and officials in the world and how that's being degraded. And I think what's going to end up happening is the onus of this has been pushed to the consumer. The onus of, I chose to buy this device, so everything that comes with it, I am responsible for reading the legalese. I'm responsible for clicking the box. I'm responsible for setting it up. And I think with GDPR and other things, the world's starting to push back to say, "Why should I be responsible for you protecting my data and my information?" And I think that's what you're seeing right now is that pushback.

What impact can data and the internet of things have on business growth and brand equity?

Chris: It's an interesting time that we're in because, Donovan, you mentioned when these companies get your data, they're like. "This is my data now." Well, if it's your data then it should be incumbent upon you to protect it, right? If you're going to claim ownership. To me, that adds up.

One more thing I want to ask about, because throughout this we're talking about data and how the internet of things is allowing brands to collect more and more and more of it. And then from there, they'll be able to connect a lot of dots as well. But is there a point where those who have the data win and everybody else loses? I think, Bo, you kind of touched on it. Eventually, you're going to have to be this way to operate from a consumer standpoint. But from a business standpoint, Bo you mentioned data is one of the most important commodities there is out there. Is there a time where it's so important that if you don't have it, you lose as a business?

Bo: Well, I'll give an example that's a little old, but I think we can tie it to today in the use of information. A client of ours that we had recommended and built a giant list of emails that clients had opted in. And we'd spent a year and a half building this program for them and they had determined that the program needed to go away. It was profitable and making money, but it wasn't their business. And we said, "Wait a minute. There are two things here. One, we've got a very engaged list of 10,000 users that you were speaking with twice a week that have opted in, have asked for this information and are engaged." And we were cleaning up their list every week. Painstakingly, their team was doing that.

Fast forward a year and a half later, they're in talks with private equity and the conversation goes, "Well, if you guys had maintained this list that would have made you way more valuable because you would have had something that not many organizations like yours have at this point." Fast forward to today, Nest is probably more valuable because of all the behavior information that they have. Not just the fact that they're selling their product, not just the fact that they can resell the data for marketing, but that they understand the way that humans interact to changes in temperature. How do you monetize that and then how do you value that from a goodwill standpoint on a balance sheet?

Those are the kind of things that I think brands need to be thinking about right now. And that's the point of branding is to increase the value of your organization or the perceived value of your organization. That's a big component of this is that data and information. Back to your main point of should brands be worried about having this information and how does that impact them over time? Not just the negative of security data, the complications and costs and expense it takes to do that, but also the fact that you have all this information that not can only be used for good or evil, but you can actually use to benefit the value of your entity.

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