Aurora Magazine

Promoting excellence in advertising

Fear and opportunity in the big data revolution

Published in Mar-Apr 2015

The writer on what can be expected from the Internet of Things.

Soon little will go unrecorded by the Internet of Things, a network much larger and faster growing than the internet of people, encompassing not just data flows among objects but between people and objects or sensors.” So wrote J. Walker Smith of the Futures Company in Market Leader in 2014.

Most data today is a record of our human behaviour – such as the things we search for and dwell on online, what we buy and where we are physically at any given time.

You experience Big Data every day when you visit websites. If you look at a holiday destination online you are served up with ads about airlines, hotels, holiday companies and travel insurance as you visit other websites. A combination of data about your online behaviour and powerful algorithms cause you to receive messages that are more likely to be relevant and timely. For advertisers the value is a customer who is more likely to be receptive to a commercial message. It is the biggest idea in advertising for decades.

The innovation revolution we currently experience is driven by frequent design improvements (by companies like Facebook and Google) that, over a period of time, cumulatively mean big changes in user experience. Successful tech companies understand that mass use is not enough; economic value is created by making their service a habit. Habit formation – or ‘hooking you in’ – is the driving idea behind their innovation, informed by data about what people find addictive or irresistible when they click online.

The Big Data revolution is partly driven by paranoia among big tech companies. They are afraid of being the next MySpace or Second Life or Friendster. These companies were tech titans but failed to innovate to keep people actively involved and so their users lost the habit – and were enticed elsewhere. In simple terms, MySpace used to have the user data and now Facebook has it and is working hard on habit-forming design to keep it. It is the difference between fabulous wealth and oblivion – all in the space of less than six years. This is the big tech backdrop that explains why there is so much pent up excitement about, and investment in the next phase data innovation – the so-called Internet of Things. You could sum it up as – Big Finance. Big Tech. Big Opportunity and Fear.

Increasingly, as J. Walker Smith explained, there are other forms of data becoming available that enable the invention of new services: data about our personal location (mainly revealed by our smartphones) is relatively new and sensors producing data embedded in other things such as cars, electronic equipment – in fact, pretty much anything you can imagine. Always losing your keys or bag? Put ‘a tile’ in it and search for it on your smartphone – as you get nearer, your phone tells you if you are getting close – which sounds fine – if a little mundane – unless of course the thing you have lost is your phone – but there is an online tool for tracking that down too. The volumes of data produced by things are potentially huge. So let’s break it down into types of data to work out where the innovations might emerge.

New ideas frequently come by putting together two familiar things to create something new. For example, the bicycle was combined with the internal combustion engine to create the motorbike. Uber (a poster child for the coming Internet of Things revolution) takes your personal location data on your smartphone and combines it with data about the location of a car to create a new taxi service. Customers use the Uber app on their smartphones to request rides, book a nearby driver for a good price and track their reserved vehicle’s location.

Is Uber a big idea? Or is it just an upgraded taxi service? Fast forward a few years and you can see some implications. Uber will have fresh data on some of the most valuable customers in the world – urban dwellers with high disposable incomes who take regular taxi rides, an audience that many others would like to reach. How will they make money from this data? You can be sure that this is a part of their long-term plan and there are people inside Uber thinking about it. And, given big tech paranoia, there will be companies thinking about buying Uber. Tech titans watch innovations hawkishly. When Facebook spotted that they were losing young users to WhatsApp they bought it for top dollar even though the company made no money. What was at stake was not revenue today, but control of customer data tomorrow.

In the near future we will experience more Internet of Things innovations via our smartphones. Increasingly new products or services will come bundled up with an app so that we can monitor or control it. The mobile is evolving from being a communications device into a kind of remote control device for our lives via the Internet. So the mobile is the red-hot innovation battleground at the moment. Just bought a cat and want to monitor how it roams?

I could imagine happy hours looking at fascinating infographics on my smartphone as Tigger heads out on hunting expeditions. I just made that last one up. But I expect someone somewhere is developing it with a plan to get rich from it. Cat owners might find it addictive. And habit is the name of the game. It means fresh customer data.

Yet there is a limit to how much we want to engage with or control these services through a screen. There is a battle for our attention and our attention is limited. The long-term promise of the Internet of Things is that it will produce data to make our lives simpler, without having to choose to activate anything. It will happen automatically. Imagine a sensor that alerts a web-based service that you are running out of a particular product and automatically puts the re-order in an online basket or simply re-orders it directly. Big idea? It could be a way of securing more consumer loyalty through a service innovation – in which case it is an answer to many marketing directors’ dreams. There is a pent up wave of innovations coming our way. You will have heard of cars that drive automatically. J. Walker Smith lays out others:

“Vending machines that make suggestions and remember preferences based on facial recognition systems and user databases, smart homes that automate functions and respond remotely to incoming signals and commands, continuous glucose monitors that sound alarms and shut off a diabetic’s insulin pump when his or her blood sugar drops too low, and smart toothbrushes that collect and display data on brushing habits, even wirelessly transmitting it to dentists.”

Is this utopia or dystopia? When it comes to data – who has it and how it’s used – these contrasting visions are never far apart. Cyber utopians are in full cry over the Internet of Things – and with good reason. But with data and the web there is always a dark side. Bad people will exploit weak links and use data against your best interests. Some of these people will be criminals and some governments. And that fear, of course, will trigger yet more innovation to make things safe and secure.

Julian Saunders works for Google as a freelance strategist and teaches through The Joined Up Company.