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The Internet of Things Promises to Fundamentally Change How We Live, Work and Play - A conversation with Dirk van Den Poel, PhD Professor, Department of Marketing, Ghent University, Belgium The Internet of Things (IoT) – the next wave of technology that will automatically integrate smart devices at home, at work and on-the-go over the Internet Protocol without human intervention – promises to fundamentally change how we live, work and play. Rapid progress is being made to allow devices made by different companies to interoperate and create entirely new categories of services… and even new industries. At the root of the IoT movement is the instant and continuous creation of vast amounts of data that will have to be constantly monitored and analyzed to deliver new, highly tailored services. IoT will provide marketers and product developers with an unprecedented opportunity to access insights into human behaviors that will transform the relationships between consumers and vendors. In this Q&A, Dirk Van den Poel, PhD, a professor in the Department of Marketing at Belgium’s Ghent University, provides insight into how IoT is evolving, the data it will generate, and what needs to be done in order to analyze that data and turn it into meaningful, actionable information.
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THE FUTURE TRUST
Q&A
The Internet of Things Promises to Fundamentally Change How We Live, Work and Play
A Conversation with Dirk Van den Poel PhD Professor, Department of Marketing, Ghent University, Belgium
2THE FUTURE TRUST technicolor
A Conversation with Dirk Van den Poel PhD Professor, Department of Marketing, Ghent University, Belgium
The Internet of Things (IoT) – the next wave of technology that will automatically integrate smart devices at home, at work and on-the-go over the Internet Protocol without human intervention – promises to fundamentally change how we live, work and play. Rapid progress is being made to allow devices made by different companies to interoperate and create entirely new categories of services… and even new industries.
At the root of the IoT movement is the instant and continuous creation of vast amounts of data that will have to be constantly monitored and analyzed to deliver new, highly tailored services. IoT will provide marketers and product developers with an unprecedented opportunity to access insights into human behaviors that will transform the relationships between consumers and vendors.
In this Q&A, Dirk Van den Poel, PhD, a professor in the Department of Marketing at Belgium’s Ghent University, provides insight into how IoT is evolving, the data it will generate, and what needs to be done in order to analyze that data and turn it into meaningful, actionable information.
Q: What impact do you think the Internet of Things will have on marketing analytics?
Dirk: IoT really changes everything about marketing analytics. It provides marketers with a direct and open window into the actual behavior of consumers. In the past, we were always relying – to a large extent – on human input. You interviewed people and you got one-on-one answers from a random sample from 100, 200, or 300 customers.
We achieved some very important breakthroughs with the introduction of data capturing systems – such as barcode scanners and point-of-sale systems. These technologies allowed us to record data automatically, and it gave us much deeper insight into retail behaviors. You could say that these data capture innovations – which yielded very high quality data – were the precursors to the Internet of Things.
A Conversation with Dirk Van den Poel PhD Professor, Department of Marketing, Ghent University, Belgium
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While it is true that these automatic data capturing processes were not instantly connected to the world via the Internet, at least we could get hold of the data after a week, two weeks or a month. This made it possible for all key players in an organization to look at all the transactions so that we could do various analyses based on a common set of high-quality data.
The Internet of Things is the next step in this process. You now have all these different devices that not only capture the data, but also transmit the data immediately to a cloud of one sort or another. Moreover, IoT also allows us to capture not just purchasing behavior, but also usage patterns of products or services. This introduces a whole new quality of data as well as a real-time aspect.
Q: IoT is in its early days, but how would you characterize the position of IoT and how do you see it evolving?
Dirk: I agree that IoT is in its very early stages of course, but it is evolving rapidly. In 2013, analysts at Gartner described the “Internet of Things” development as entering the peak of inflated expectations. I tend to agree with that view. This is illustrated when you consider recent developments – like Google buying Nest for $3.2 Billion…a mind boggling sum.
It’s clear Google wasn’t buying sensors that merely check the temperature of a house. There was much more to this transaction, including the fact that the NEST thermostat provides a test bed for what can happen when a home-based device interacts with a cloud platform – like the one hosted by Google.
So there is clearly a hype cycle going on here at the moment. That said, there is no doubt in my mind that IoT will be transformed and find permanent and very useful applications. I am quite confident of that. This is especially true for those of us in marketing.
As marketers, we want to have more data that is collected in an objective way. The only way to do that is to have sensors all over the place that automatically capture this data.
Q: It is certainly clear that IoT will generate a lot more data -- and a lot more complex data. But is more data…better data? Now that we have this massive amount of data, how are we to make better sense of it, to make better decisions?
Dirk: Although I agree that more data is not always better, the vast amount of data made available by IoT methodologies provides a volume of information across a range of activities that can now be analyzed in the context of a statistically significant sample. It makes it possible to draw valid conclusions on more issues of observation than ever before.
Let me give you a clear example of a place where it really matters.
One of the key applications that we’re always involved with in business academia revolves around what we call “market basket analysis.” It is the analysis of what consumers put in their shopping cart when they shop at the supermarket.
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A Conversation with Dirk Van den Poel PhD Professor, Department of Marketing, Ghent University, Belgium One of the key things we seek to analyze is which key products
are jointly purchased. So, let’s say a general product, like coffee makes up, one percent of your basket. Let’s also think about how often bananas are purchased – maybe one per 1,000 baskets when people shop.
As marketers, we might ask: What is the joint possibility of these two occurring in the same basket?
If they are independent processes, you actually have to multiply the two probabilities. So you multiply .01 (or one percent) times .001 (the number of actual instances), and you end up with very, very small numbers. So for this particular analysis you really need to see lots of data before you can start observing the two being purchased together…and then understand if any correlation exists in a meaningful way.
IoT will make it possible to understand many more of these seemingly independent relationships.
Q: In your view, what will IoT mean to the economy going forward, and how it will affect and change the way we work and live and play?
Dirk: In my view, it is the analytics that will drive economic value. We will be able to engage in much more sophisticated descriptive, predictive and prescriptive analytics.
With better descriptive analytics, we will have a stronger grasp of specific situations. The improvements in data sets and analytical modeling that will be enabled by IoT will make it possible to more accurately anticipate events and outcomes. As a result of these stronger analytical capabilities, we will be able to leverage IoT to take the correct actions and secure the best outcomes.
This has huge ramifications in every industry – from retail, to healthcare to manufacturing.
There is an immense need to produce accurate predictions. And then you need to come up with the best decisions for taking action. This IoT business is much bigger than most of us actually realize at the moment. It’s going to be pervasive. Every single sector will be touched by this.
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