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Smart home technology
Jennifer Castenson - Contributor, Forbes

Advertising's Next Frontier: Your Smart Home

HIDE! It’s you versus the digital world. Many people are trying to secure themselves from the more and more pervasive risks of cyberattacks. The number of major organizations that have been breached in the last few months is growing; just last week Marriott revealed more than 500 million accounts were compromised in an attack.

And, this comes at a time when there is a nearly endless list of new home technologies to be incorporated into new home construction – from doorbells to refrigerators—smart home technology is becoming ubiquitous.

Smart home technology is actually “alive” in the home, not only making things function on command, but also sensing your needs. In order to do that it thrives on - feeds on - streams of information. The web of home devices has intelligence: it knows your habits, your height, your weight, your location, your heartbeat, your moods...

And, with all that information, it’s almost certain what will happen next. That information is forging a path for marketers to enter your most private and personal space – to look at you through the bathroom mirror, to lie next to you in bed, to be behind the door of your refrigerator.

Transportation may also be living through the same evolution – driven by an business model that allows shared vehicles to be free, with the support of advertising capital. And, when autonomous vehicles have your captive attention, because you don’t have to be navigating the wheel, then your ride can be supported by brands X, Y and Z.

As David Roberts writes in a recent piece on Vox, “We will do just about anything, reveal just about anything, for cheaper sticker prices, especially for ‘free.’ So we have to at least consider the possibility that the future of transportation could be dominated by large fleets of shared, electric, autonomous vehicles funded by revenue from advertising — that our smart vehicles could become our next smartphones, tools to deliver our attention to advertisers.”

Now, when and how does it enter the home?

Scott Sullivan, UX director at LPK, the largest employee-owned brand design agency in the world, based in Cincinnati, Ohio, says this is a fairly dynamic situation. He groups smart home technology into two categories: active and passive, which further divide into input and output.

The active category of home technology remains hidden in the background until it is intentionally activated by someone in the home. If it is not specifically called on, it remains dormant. An example of an active input would be speaking to an audio-based assistant, like Google Home or Amazon Alexa, and the resulting output would be a response from the home assistant.

Then the passive category of home technology includes products that do not need interaction to perform a function, such as a Nest sensor. These types of technologies have a passive input, such as an always-on-sensor that captures information from motion detectors or other sensors. They also have a passive output, that include screen-based personal assistant devices such as the echo show.

“As of now, the media that’s in play for advertisers and marketers are both passive and active input, and passive output,” Sullivan says. “Active output will only work if the consumer is sitting around their house and is asking specifically to be shown an ad.”

So, imagine that your kids bring home a bunch of friends after school and the sensors in your home, in the walls, on the countertop or otherwise, pick up the presence of many people. Could the refrigerator push an ad to you for ordering pizza? Cyril Coste, digital transformation partner at DTX Advisory, envisions your calendar tied to your fridge. Your calendar knows you are hosting dinner, and is connected to the refrigerator and a delivery service nearby. I’m pretty sure I would love my refrigerator to suggest dinner plans to me if I was chaotically trying to host a group of friends!

Or, let’s look at it through a different lens, one that may reshape insurance models. If the sensors can tell that you are home often, which leads to a decreased risk of break in, would your home insurance premiums go down? Or even offer you different types of home insurance options that pop up on your smart phone, in your security log or in an audio play on your smart home personal assistant.

Advertising creates a business model for many things – supporting web sites, movies, social networks – and the content production is easy and fast. But, when is the right time and place? Will consumers follow the transportation and internet model in their homes?

Maybe. Maybe if it’s placed right. Maybe if it’s inconspicuous and well timed. And maybe if it’s in a video format, a medium that consumers have a higher level of tolerance for, according to Sullivan, and it will be limited to the “right” advertisers.

Some multifamily owners have been thinking about this model as well. There are dozens of ways that brands could pay for someone living in an apartment, whether it be from product samples and ad placements or from capturing the data from the way that people live, when and how they are interacting with various things in their homes. That type of data could be a goldmine for brands that would typically not have access to those intimate, real details of someone’s life.

“There are some product categories that are going to be able to take advantage of the ecosystem, and these are the ones that are already co-existing in that space,” Sullivan says. “The other side of that coin is that there's just not going to be a great fit for a lot of other sectors. The win-wins come from brands that are meeting needs in the narrow context of that environment.”

Tom Doctoroff, vice president of strategy for the International Advertising Association and chief culture insights officer at Prophet, a global brand and marketing agency, says that we are very far away from advertising entering the home.

“It probably won’t even be advertising, it will be experience and that experience will need to be increasingly personalized,” says Doctoroff.

That personalization will need to be created through a strong understanding of data, which Doctoroff says will need to be collected from the IoT devices in the home that are unified as a system, that help marketers understand consumer’s priorities and the perceived barriers.

He believes that there will need to be a uniform data standard so that brands can integrate seamlessly together, which will take a fundamental change in structure from disconnected product to integrated systems. New sales channels will be developed and brands will need to organize themselves to harvest the data. So, bottom line, brands will need to collaborate at a much higher level.

Another caveat to this is how it will be managed from a regulation standpoint. In Europe, the General Data Protection Regulation (GDPR) is starting to define some rules around smart home technology. Walt Zerbe, senior director of technology and standards at CEDIA, a member-based organization and the leading global authority in the $14 billion home technology industry, says that GDPR is coming to California where it will launch a protection act that would be more stringent than the original GDPR.

However, brands will most likely be regulated by consumer comfort and preferences. The bottom line is if they aren’t sensitive to consumer’s comfort level, they won’t have a long life.

“Ultimately this is an unbalanced advertising space,” Sullivan says. “While social media and more traditional advertising are generalized platforms, suitable for any brand, many brands will be excluded from the smart home game, while other brands will be able to take advantage of the contextual specialization of the platform, likely seeing more effectiveness there than the generalized platforms.”

So, maybe it will just be a cultural mindshift – if we share our information, our lives will be less expensive, but better?


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