Internet of Things – Risk and Opportunity

communication-1439187_960_720It’s difficult to work in business today without coming across the terms “Big data” and “Internet of Things.” Five years ago McKinsey & Company called big data the next frontier for innovation. The next year, the New York Times upped the ante by declaring this the Age of Big Data. Indeed, we interact today in a system of commerce that is increasingly shaped by big data, and while the rise in this data can be attributed to many sources, perhaps the most profound of these is what has become known as the Internet of Things.

For the uninitiated, big data describes large, complex data sets that are collected from the multitude of technologies we use every day. Typically, the rise in big data is traced to the overall increase in internet usage through computers or smart phones. Every time we visit a website, make an online order, or send an email, that activity is recorded and organized into these large data sets. In recent years the number of internet-connected devices has diversified. Now, everything from household appliances to televisions to our vehicles is network connected through what has broadly been called, an Internet of Things, or IOT.

If big data once primarily originated through our interactions with intangible websites, it’s now increasingly coming from our interactions with tangible objects. For consumers, this data can be packaged and presented in a multitude of ways that profess to add value. For example, pacemakers  that wirelessly connect to online monitoring systems can reduce doctor’s visits and provide faster feedback when problems arise. Egg trays that send a text when you’re running low on eggs add efficiencies to grocery shopping. The span of industries that make up these “smart devices” is truly limitless.

For businesses, the IOT is game-changing. Just as big data helps consumers make more educated decisions, it can also give producers a better understanding of trends in usage. The days of focus groups telling producers what they want is passé. Now, companies can uncover that on their own through this 24/7 system of feedback. Industries aren’t just working more efficiently with the IOT, they are completely transforming.

Take the car insurance industry, which has long used indirect measurements such as general trends within the population to create a risk profile and corresponding policy price for customers. The system is inherently inefficient as these are, at best, educated guesses as to how a person drives. The advent of insurance telematics, which allows insurers to personalize a rate based on the direct measurement of big data that is taken from a customer’s car, promises to change that. Not only would this benefit good drivers who have been paying too much, but it would make the whole industry more efficient.

Just as the IOT has presented businesses with the opportunity to understand consumers in new ways, it also gives communications firms the opportunity to more precisely tailor their messages to consumers.

This big data revolution in communications is occurring in several ways. One is the increase in sophistication of Customer Relationship Management (CRM) systems. When these systems are coupled with programs trained to mine through the mounds of big data that companies are able to compile, companies can approximate individualized messages. Just as insurers no longer have to guess about how to price their rates, communications professionals working with big data no longer have to guess about which message will resonate the most with a general audience because they are capable of giving each consumer their own message.

The technology behind the IOT continues to develop at breakneck speeds, and it’s crucial that communications professionals understand this growing trend. IOT-connected products are already a big industry, with the world’s largest businesses investing heavily in developing them, and consumers increasingly expecting the added features of these smart devices. It’s crucial that clients know and understand this opportunity. As their products and services develop around this trend, communications professionals must also tailor messages that will resonate with the hungry investors and expectant consumers alike.

Of course, along with new opportunities come new concerns. In this case, those concerns center around privacy. Big data gives companies and communications professionals unparalleled access to consumers’ lives. Naturally, consumers will be leery of such access, and legislation and industry standards will continue to evolve to address their privacy issues. Businesses would do well to develop and consistently revise privacy policies cognizant of these standards. Savvy communications professionals will prioritize privacy concerns in their messages to consumers. The fallout from high-profile cyber attacks against Target, Linkedin, and Yahoo, among others, proves that consumers take internet privacy extremely seriously. Any developments in IOT will by necessity be taken with an abundance of caution.

These concerns aside, the development of the IOT most certainly signals a wealth of opportunities for the communications industry. If harnessed correctly and responsibly, it can be used as a powerful tool to connect businesses and consumers in ways never before imagined.

By Jake Thornburgh

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