Internet of Things and marketing

What is Internet of Things? The Internet of Things (IoT) represents a vision in which the Internet extends into the real world embracing everyday objects. Physical items are no longer disconnected from the virtual world, but can be controlled remotely and can act as physical access points to Internet services. In other words, the basic idea of the IoT is that virtually every physical thing in this world can also become a computer that is connected to the Internet. Radio-frequency identification (RFID) is often seen as a prerequisite for the Internet of Things. If all objects and people in daily life were equipped with radio tags, they could be identified and inventoried by computers. In fact, Internet of Things is rather an old idea. This term was first used in 1999 by Kevin Ashton, an assistant brand manager at Proctor & Gamble (P&G) at that time, who became interested in using RFID to help manage P&G's supply chain.

I came across a good presentation (from Tuck School of Business) on the Internet of Things and the evolving marketing function and below are few highlights from this presentation:

• Internet of Things: The question is not "whether" IoT will happen, but how fast and how pervasive it will be. Apparently, there are already more things on the internet than human beings on the planet. As I mentioned earlier, IoT is an old idea, but it is building momentum now due to penetration of smartphones and advances in wireless technology; increase in storage and computing power; etc. 
• Marketing challenges: Marketers operate in a challenging environment because of intense competition and empowered customers. Multiple tools and marketing approaches have emerged to face these challenges, but these tools are severely inadequate. For instance, the presentation talks about inadequacies in segmenting customers properly due to the erratic behaviors that we humans display in our every day life. 
• Using Internet of Things to improve marketing: There are already companies, such as Google, Amazon, Linkedin, facebook, etc, which generates and leverages user data to their advantage (Example: targeted advertising by Google and Amazon). These companies are all online companies and so the obvious question is whether offline companies can take such advantage?  Internet of Things and RFID tags comes to the rescue here. 
• • RFID tags could be used for increasing sales by putting a receiver into a shopping cart that could cross-sell and do target advertising. Apparently, Whole Foods is already piloting the implementation of a smart cart that leverages Microsoft's Kinect technology. The shopping cart uses a Kinect Sensor to sense where you are so it can roll along the aisles following you!. The cart which comes with a Windows 8 tablet can read off items of a shopping list and make recommendations using speech and voice recognition!
  • RFID tags are now being used to "like" a product (RFID tags are integrated with Facebook), post facebook status update, etc
  • Display advertising (offline ones) is being improved by identifying gender, age bracket of users who walk in front of a sign and targeting advertising that is relevant for that user segment.

In a nutshell, the Internet of Things brings a lot of opportunities to marketers. It is expected that in the future, retailers will combine both the digital and real world in their stores to increase store performance.