Internet of Things: 3 key challenges facing brands and retailers

Brands and retailers are excited by the possibilities of the Internet of Things (IoT) to engage consumers with real added-value experiences, in the right place, at the right time.

However, they are nervous of mis-stepping and loosing crucial trust and credibility with their audiences and loyal fans.

This is especially so right now with structural challenges such as ad-blocking, which many blame on the uncontrolled implementation of tech solutions (automated and poorly targeted ad serving) that do not benefit the user.

>See also: How much do you really know about the Internet of Things? Take the quiz

Here are the three big challenges in executing effective IoT projects in the advertising and marketing space.

1. Advertising and marketing regulations – understanding and interpreting legacy rules.

There is a constant challenge when trying to apply existing rules to new tech and consumer marketing techniques. The regulators are desperately trying to keep up, but innovation will always move quicker than they can.

In essence, virtually all marketing communications and promotions will still fall within the remit of the ASA, who will continue to apply the CAP Code.

The key challenges will be ensuring transparency (in particular, making clear when contextual targeting or location based information is purely editorial and an organic piece of content, or when it is a marketing message), and continuing to ensure clear disclosures when a third party has paid or been paid to integrate or be associated with that content.

Another challenge is ensuring that consumer terms are clear – it might be a challenge to communicate all the relevant terms that apply to offers and promotions in fluid environments.

No doubt guidance will be issued from time to time on any potentially sticky areas, and this may clarify the way in which the existing rules apply, but you must have as solid understand of the core concepts in any event to be an effective partner.

2. Data protection – consent and transparency

There will be significant changes and increased scrutiny over the next two years and beyond as the new General Data Protection Regulation (GDPR) comes into force in the spring of 2018.

This revised law (which will likely apply irrespective of Brexit) provides for greater transparency surrounding the types of personal data collected and their uses, and greater controls over profiling of users.

In addition, the regulation also provides for greater control by the user of any data collected and crucially clearer and layered consent for collection and use.

These requirements of transparency and control will be backed up by new sanctions, including significant monetary penalties.

Crucially, the tech service providers and data processors will be directly responsible and liable now for data protection compliance. This is a big change for the tech industry.

3. Shifting roles and partnerships in the value chain

And finally, in relation to rights, IP and ongoing value participation, there is a huge opportunity for the landscape to shift and for all players to actively change their roles and the traditional rules of the game.

There will be many new platforms emerging – from the connected screen in the car or bathroom, to voice activated kitchen devices, to interactive out of home advertising boards. These will bring with them new formats and functionality.

>See also: How the Internet of Things is changing business models

Platform and technology partnerships will be the key to get projects off the ground in the short term to ensure functionality and marketplaces develop effectively for platform owner and brands alike, and to avoid technical solutions that have little commercial and audience value.

Whilst these development and funding models shift, different players – whether that be the brand, agency or platform – will have the opportunity to change the rules in terms of IP ownership and ongoing rights, and alter their place in the overall value chain.

All parties should consider their ability to negotiate their stake in this new world according to the value they bring, rather than accept the traditional roles.

Tech companies are no longer just suppliers or service providers – rather, they can position themselves more centrally to benefit from the long-term value generated.

So, to be an effective player in this ecosystem, organisations will need to understand the challenges and the drivers of the other players, and be ready to play a new game with a new set of rules.


Sourced from David Deakin, partner, Lewis Silkin

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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