Joe Hine: Good evening. My name is Joe Hine. I am a director at SI Partners. SI Partners are, for those of you do not know, a corporate finance and management consulting firm. We help entrepreneurs grow and realise value in their businesses across the media, marcoms and related industries. Thank you for coming tonight. Before I introduce our speakers, a quick introduction to Internet of Things. I think to me it's really just machines talking to machines often through the internet but not always through the internet, sometimes but not always autonomously - so without much human interaction.
Where did it come from? Purported to have started in the mid-1970s at Carnegie Mellon University in the US and the computer science graduates got bored of having to walk two floors down to the coke machine to see if there was any cold coke in there and so they wired the coke machine to their computers to enable them to actually see what was in there and how cold it was, how long it had been in there, so it was very sort of genesis if you like of machines talking to machines. It seems to have taken quite a long time - since the 1970s - to actually get where we are today, You know and focusing on a lot practices within sort of the industrial sphere, what we have not seen is much consumer application until yet and we have really got the Cambrian moment at the moment where you know with the battery life and the computing power, mobile phone technology is allowing us to actually see an explosion of the Internet of Things.
So, to give you a bit of context about the explosion that I talked about, currently today in terms of connected devices, CISCO are telling us there is 14 billion already connected devices in the world and that in five years' time that is going to multiply by about four to about 50 billion devices. I think 250 devices per second have been connected into it so this is big already and it is getting bigger. Similarly the market size according to IBC is currently about 650 billion and is going to 1.7 trillion by 2020. So kind of what are these things? We use to connect to the internet three things our: mobile phones, our tablets and our computers. The Internet of Things is going to allow us to connect our homes, our cars, our coffee cups are going to know what we drink, when we drink it, our dogs, our pets, the human body. There is a company called NC10, they have flexible chips that you stick to your skin and they can see what is going on with your biomechanics or you know your body and also measuring stuff for sports seeing how much hits are affecting people in American football. Watches and wearables bits are very, very prevalent today.
Cows; so there's a cow connected cow project where farmers have got chips on their cows and they are seeing what they are doing and when they are doing and what they are eating and then perhaps getting slightly more into the media world, we are looking at sort of connected retail and the fact that obviously your phones are so connected, not only to the mobile networks but actually within retail environments. People are trying to capture that data and understand where you are moving around and simply will time them offers depending on where you are browsing. And also connected cities; so you know there are companies out there at the moment that are looking at where the crowds are so they can tell you where the right coffee shop to go to, how big the queue's going to be in that certain coffee shop.
So it is a very connected world, it is going to be everything is going to be online as opposed to the very few things that we are used to. It is just a sort of a live example of you know, some of the big guys taking it very, very seriously. Google very recently announced about two months ago Brillo. Brillo's a new operating system they have launched. What they have done is taken android, which is the operating system they use for mobile phones (you will be very familiar with), and Nest which I am sure you will have heard of - they bought for £3.2 billion and they make Internet of Things thermostats and Internet of Things smoke alarms. And they created Brillo which is the operating system for your home, so they have got your internet on your desk top, they are trying to get the android platform and now they are trying to get the home platform as well and they are looking at cars as well, and they are not alone. Samsung and Apple are both doing this as are a plethora of other people, Vodafone, Who Are We to name only a couple more. So hopefully that gives you a bit of a, a bit of a background, a bit of flavour into Internet of Things and leading onto to what we are going to talk about now.
So I would like to introduce our panel. Firstly to Jeremy Ettinghausen. Jeremy is innovation director at BBH London and BBH Labs. David Boyd who is innovation director at Clear Channel. Jeremy Basset, marketing strategy and new ventures director at Unilever and Jason Cromack who is a big data entrepreneur who has sold a book, he has sold several big data businesses. And to the panel, starting with you Jeremy. If you could just explain briefly how IT is currently affecting your world?
Jeremy Ettinghausen: So, you should know that I am the guy who when I was shown the very first iPod said, 'nah it won't catch on'. So, frankly you are lucky to have me here! So I think, I mean I think the Internet of Things is one of those classic, we are overestimating its importance today and underestimating how important it is going to be in the future. I think that you know the promise of everything having senses and being able to talk to anything else whether it is another machine or a human or a network is an amazing potential, but we are only kind of at the beginning of the story and in terms of how it affects the world of agency advertising at the moment, I think it is kind of very little. Every year there is a new buzz word, a new thing, what is our strategy for second line, what is your strategy for augmented reality, what is your QR coded strategy and I am not sure whether we need an Internet of Things strategy today you know in June 2015.
What is true is that some of our clients have a need of an Internet of Things strategy. We work with Audi for example who are certainly thinking very hard about what happens when a car relays all sorts of information about itself to the owner of the car, back to Audi and into the world, and so the responsible agency who is trying to be as upstream as possible to realise that products and services that they create for a client also has a communication value will be thinking specifically about Internet of Things when it is relevant to a client's business.
Joe Hine: Thank you, David.
David Boyd: Yes, so in terms of Internet of Things the big question for me is are there real companies out there making money and good profits at the moment. I went to an Internet of Things hosted debate at the Science Museum just before Christmas and it had a great panel of CEOs, you know, blue chip consultancies and not one member of the panel could give a real concrete example of an industry or company making good revenue and good profit and that was one of the key things that I wanted to correct here. There are businesses out there making good money, it is just not the sexy ones and I work for Clear Channel who do advertising. We have got two aspects of the business which are really Internet of Things, but it is the sexy kind of media style. On the smart side all of the digital signage we have got around the world is a connected Internet of Things, it has an internet
connection, it knows where it is, it knows the time of the day and it is able to kind of customise the advertising based on that information and that is live now and is about a 14 billion dollar industry at the moment today, very profitable. The other side of the business, we launched a global network of paper advertising panels. This is just on paper with a very cheap tag, reaches 100,000,000 people a month and the pay back on that investment was about two months. So for me the Internet of Things is live, it is here, it is now, it is just a lot of people are looking in the wrong direction.
Jeremy Basset: Good evening. So I am from Unilever, soap and soup company down the road here and we have got 400 brands. We are present in 190 countries so we are always looking for new ways to connect and engage with our consumers and when we think about Internet of Things we think about how does it affect the experience when people go into store? So how does it affect when you go into Tesco for instance, how does it affect when you go into a local Mom and Pop shop in India for example?
We have got 3,000,000 ice cream cabinets around the world so we are always looking for new ways to bring those to life because they have got power, they are in prime real estate in terms of retail real estate, so how can we connect with people through that is another option for us, and then across our portfolio we break our business into four big chunks: personal care; foods; homecare; and refreshments and if you think about it in that context, we are looking at ways to engage with people in their bathroom, through personal care and their kitchen through our foods business and across their home through home cleaning, through our homecare business. So we are looking at the connected home, the connected covenants and the connected store when we think about IoT and for us we are definitely on that journey.
I think the speed of transformation has not been as fast as what we probably thought it would have been four years ago, but we are busy experimenting with a few things around the edges. Just two days ago we announced that we are putting beacon tech into 270 Tesco stores to test out new engagements there, so I think there are opportunities for us. There is definitely a potential as Jeremy said before but we are yet to realise it.
Jason Cromack: Yeah I am here as apparently the data geek! I was just saying to the guys earlier, up until recently I was just dealing with little data and now we have put big data in, it means we can multiply what we sell our companies for by ten times - which is great - so I think my perspective is going to probably look at the data side of it.
Obviously we are going to be creating through the Internet of Things a plethora of the data and it is really going to come down to how that data is being captured, it is going to be looking at the privacy around the data. People are becoming far more aware of their own value in the data that they are generating every day and they are just going to be generating so much more. It is going to be the brands and the organisations that can kind of engender trust between themselves and how they are using that data. Before we can even start to think we have now got all this data, it is going to give us a most amazing insight, but it is then how do we kind of throttle it and make sure that people do not go crazy with it and start sending out messages at any time, and wearables - I think everyone is worried about the watch -you know, you are going to keep getting message after message on your watch so it is all going to come down to how we as marketers use the data to make sure we are not kind of getting in the way and being irritating to the consumer.
Joe Hine: Brilliant. Thank you very much. So my first question was about how real IoT is and about are people actually making money for this at the moment. I think David, you have sort of almost partially answered that question. I do not know if you can elaborate any more on that or if anyone else would want to?
David Boyd: I actually want to pick up on that point about data and the beacon trials. So beacons - I hate them because they are too much of a buzz, too much in the media, but actually we have been running five pilots around the world, different teams trying different things and some markets said this is about notifications and push. This is a great way to send things out there and those have not gone anywhere, you know, It is the concern that brands I think rightly have about actually sending out a message and then your ability to really get something that is valued by the consumer is really challenging. I do not think we are ready for that yet but the one market that has done fantastically well
in Asia has done it all about data and there is not a single notification there, there is no consumer engagement but simply allowing brands to understand, you know, brands that often do not have a direct consumer relationship actually understand how consumers use their product or service is extremely powerful.
Jeremy Basset: Yes, when it comes to scaling the Internet of Things I think the biggest challenge so far and the reason why it perhaps has not had such a big impact that we might have expected five or so years ago, is we are still in that version of 1.0 of the Internet of Things and if you think about digital 1.0 you know it is basically migrating what we had offline/online. You had newsletters offline and you had websites online and now as we go into 2.0 you are starting to see the emergence of new business models and new holistic solutions around this which bring multiple enablers together to create something quite unique and different and valuating and I think, for me, the reason why Internet of Things has not gone as far as what we would have expected is not that consumers are not ready for it, it is that we have not pushed the technology far enough and so I think there is a responsibility back on to the industry to look really deeply at what are the consumer insights here, what is the potential of the technology and how can we bring these two things together because there is some quite amazing opportunities out there that I think are yet to be unearthed. But it is the fact that we are taking a 1.0 mind-set to this which is prohibiting and I think part of that and inside you know we have talked for a while about connected devices and I think that is very much a 1.0 thinking, but I think as we move forward we need to think about connected solutions because that will enable us to untuck the other things that come from connecting model pool devices, technologies people.
I think that linked to that is that quite often we, Internet of Things entrepreneurs, like all sorts of entrepreneurs, get technology to answer questions that have not been asked yet and I think on Kickstarter at the moment there are three different projects for kind of connected plates that kind of send you information about what you are eating as the food comes to the table and none of them have been back to success because nobody really wants that. People can see what is on their plate and some of the solutions that technologists are coming up with are frankly meaningless and make the technology itself look silly.
A cup that tells you what to drink or what is in the cup that you filled for yourself. There was the joke last week at the Apple conference when, you know, would everyone stand up after 45 minutes when their watch told them that they had been sitting down for too long and I think that is kind of what a lot of people's experience of the Internet of Things is so far - devices that nag you, tell you when to stand up, tell you when you have not met targets that have been set by a technology company, tell you when you know you have left your lights on and just another presence in your life adding noise into an already noisy existence and the best technology is things that simplify and strip out friction and I believe that Internet of Things technology can do that, but a lot of the executions we are seeing so far today just add to the noise as far as I am concerned.
Jason Cromack: One of the big bandwagons for me is making everything smart that kind of encapsulates that, so the smart fridge is the perfect example. I mean why anybody wants a smart fridge with the current technology, I really do not know and it has been driven by, you know, companies with silicone trying to get it out into more places. I think the reality of the Internet of Things and the opportunity can be in the dumb aspects of what is out there, so we have got enough silicone in our pocket, we have got enough computing power and the added value of that is we are willing to interact with it, we trust it, it knows who we are and that then, bring that smart technology that something that is done and bringing it to life through the cloud, through the internet. For me it is a big opportunity rather than making things smart.
Joe Hine: Jeremy, we touched on it briefly about, you know, how Internet of Things is affecting the marketing or the agency world you know, can you see that Internet of Things is going to, in the future, actually affect the value chain of the marketing. Do you think AC structure is going to change and who might be the winners?
Jeremy Basset: I think everything is quite enough influx without the Internet of Things that are complicating things even further and you know what has been happening over the last five years is that you know traditional - let us call them traditional creative agencies - are adding digital bells and whistles to their portfolio, digital agencies are making big brand films. One of the big predictive winners in Cannes next week is RGA for their Beats campaign. They were a digital products and services company and they are making tremendous brand adverts. I think that what I have noticed in the relatively short time I have been in advertising is that there is a much more collaborative environment to work in, people understand the value of collaboration and while a creative agency and an advertising agency who have known a client for a long time might have the deepest best understanding of that client's brand values, brand truth, brand story and can claim to be the custodian of that brand story.
I think that the environment is there to collaborate with all sorts of interesting people and what is great is that people want to collaborate with big brands. They understand that that is where there is an appetite to do something different, there is an appetite to do something new and there is sometimes money available, and there are lots of opportunities to do all sorts of interesting collaborations with you know one/two person companies based out of a coffee shop in Shoreditch for an advertising agency, so I think it is not so much that our business will devolve to the two guys working in a coffee shop but more that they will become partners on a piece of work that hopefully serves the client's best interest, you know, next week and next year.
Jeremy Basset: Thank you. Jeremy Basset so IoT presents a lot of opportunities for brands. How are brands looking at IoT and how could it be used to create brand loyalty?
Yes I think there are opportunities and challenges when it comes to brands, so the whole idea of machine to machine dialogue means that you probably should also be thinking about machine to machine advertising, which is an interesting idea.
I am not even sure how that works. It is a good way to issue a brief but I think that is the dynamic that we have to look at and we have to understand what the path to purchase is in a connected world but for us and what we are excited about when it comes to IoT is the opportunity to build a relationship with the individual consumer and to understand distinctly and holistically rather than the mass broadcast that we currently do at the moment because we have got a re-seller in-between our relationship with the end consumer.
So, for us it is really about how do we build relationships with the end user and how do we leverage that relationship to then offer a whole range of product services, solutions, experiences, etc. around that beyond our current portfolio. So I think it will be a huge unlock to relationships, but a huge unlock to new business models and that is what excites me and I think that is what excites the business around this.
I heard someone describing that as "at the moment IoT is b to g, business to geeks" what we were talking about before, it needs to be "b to c, business to consumers" and that has got some way to go.
Jeremy Ettinghausen: I think linked to that and linked to the question about agencies is that there are so many more touch points where brand and a consumer can talk to each other or where their interests and their lives intersect and I think that agencies and brands are realising that products and services are a thing that they can and should be offering, and it is not just about creation of communications material but offering products and services that might be powered by the Internet of Things that also can deliver communication between the brand and the consumer, but also branded messaging and branded thinking.
Yes, I was going to say actually I can see, I do not really see IT being a conflict with agencies, I see agencies embracing it and actually being the ones who are innovating and coming up with the products themselves for their clients, I certainly see that kind of the way forward.
Jeremy Ettinghausen: I am the guy who puts "no" in "innovation" so we'll think about that.
Joe Hine: Thank you. So Jason, I want to move on to data. You know so much of Internet of Things is going to be about data and the data that these devices create about us as individuals. You know, and there is juxtaposition there between the opportunity of the data providers and the privacy concerns that will come around.
Jason Cromack: Yes, I think I have spent the last kind of six months kind of trawling around looking at businesses that we could, or I could, potentially invest in and work with and one of the things that scares me the most is I keep coming up against entrepreneurs who are kind of creating these new products, and when you start to drill down and have a chat with them about, you know, the data it is going to create and the privacy concerns and they start to glaze over, quite rightly because it is really quite dull and boring stuff, you know, that we leave the lawyers to kind of deal with, but, you know, it is really important that they have to be thinking, you know, what are they going to be doing with that data? Do they really need to be collecting all of that data so if one of the buzz words is kind of data minimisation, you know, really think, and you really should not be kind of storing data because you think one day you know it might be worth keeping it and using it. So there is this thing that everyone is looking at now which is kind of security or privacy by design, so getting organisations to start thinking about the whole privacy issues around the consumer, the system, right at the early stages of the design phase and I guess the big worry that all the regulators have out there at the moment is there is all these start-ups creating all these products that are not incredibly secure, that can be easily hacked and they have some really sensitive data in them about those individuals.
So I think there is that area that everyone is concerned about and need to address, but there is also the other concern or not concern, but the opportunity that, you know, this data is kind of like at the moment, it is very raw, it does not really mean an awful lot, unless I guess you are that brand person who has created it.
Where it really becomes meaningful is when you can start sharing it and exchanging it between brands and, you know, certainly on health data you know there is a huge opportunity out there that if you were to share your data, a bit like I will use the analogy of blood donor, you know, we all say opt in to becoming a blood donor if you are prepared to do that, if you are prepared to opt in to share your data for certain purposes then again, it has huge value and there is massive benefit out of it so I think there is going to be a big swing around how we as individuals start to view our data. It is already happening, we are already seeing the value in that. The Internet of Things is just going to mean we are going to be creating even more data, capturing more data, it is going to be in silos all over the place, we are going to rapidly lose control so it is how do we kind of bring it all together, take advantage of it and kind of really benefit individuals. I think also you know the data scientists, obviously the new kind of rock stars of the agency world who are going to kind of change the world and so on, they do have a great opportunity and are we allowed to say wearables of IoT?
Jason Cromack: I think, you know, the thing about wearables is you know they are going to,. There is a great opportunity there to be really, I guess, helpful, not kind of invasive and I met a firm the other day who are looking at with the wearables device, if you do not get out of your seat in 45 minutes or if you missed a certain training programme, it actually starts to adapt your training programme based on how you are performing. So it does not say you missed an hour's run, you know, kick your arse, it basically says right tomorrow you are going to have to do an hour and five minutes and so on and it looks at your dietary programme so it is trying to really help using that data, but it is using analysis from loads of other people in terms of how we can improve and make those programmes. So there is going to be a lot of data we can use basically to analyse and improve our lives.
I think that is where data becomes really interesting. I love using Ways and its one of those things where it is networked objects - in this case, cars - and the more people who use it, the more useful it is for everyone because the more data gets accumulated, you know its anonymous you know it is my car, it is not me but that is an example of how you know the data capture, the sharing of, the pooling of data creates something that is actually really rewarding and rich for individuals to use.
Jeremy Ettinghausen:Ways is a great example. I installed Ways, loved it used it for a while and then read a book about privacy and security, got a bit freaked out, de-installed it and after about two weeks I was doing a long journey and I was like I need Ways for this journey because you knew whether or not you were going to hit a road block and that overcomes the privacy concern. If you get real value for something people are willing to accept it so I think privacy in the long run is overcomeable, particularly for the new generation. I think for the older generation maybe it is something that will be put up with but for the millennials it is probably fine. The thing we need to do is get the legals sorted in advance - so we had a big data mobile pilot that was due to launch this week. I cannot say what it was but it was pulled at the last minute because the supplier had not done their homework on privacy and suddenly it is like actually we need to go back to all of our consumers and get different terms and conditions and their promise that it was all sorted.
Joe Hine: Thank you. David I have a question for you, you know one of these holy grails for out of home advertising is about bridging the gap between, you know, outdoor advertising and the consumer very much in the way that Jeremy is leading to in brand. In what way can IoT or connected devices help that big bridge?
David Boyd: The kind of things that we are looking at is transactional so it makes all of the advertising and the outdoor space suddenly transactional. The thing is it does not mean that people are going to be going round consuming, buying up posters all the time - that is just not going to happen -but it creates the possibility and potentially for a few people there is some transactional revenue there but it is not in the majority. One of the key things is when you ask consumers what they want, they will tell you vouchers and discounts is number one that is 70% / 80% of people and then when you run the pilots we find that three times more people engage with a brand advertising, they actually want to watch the video, they want to play the game compared to the number of people who download the voucher so it is a bit like you said before Jeremy we are really at the kind of 1.0 stage of these things, actually really understanding what people want is going to take a bit of time.
Joe Hine: Thank you and gentlemen I think this is a question for all of you. What really excites you about the IoT? I will start with you Jason.
Jason Cromack: I guess because I am so biased on what I am working on at the moment I think it is stepping up the health opportunities that are out there and available. So, you know some of these sensors that we are using - I do not know if any of you have got kind of kids who play rugby, if any of you are old enough to have kids sorry! One of the things we have been looking at is, you know, sensors that they can just put behind their ear so that, you know, if they get concussed they might not even realise they have been concussed, but you can actually recognise it and you can link it up to a device and you can actually start to monitor those kind of things, you know.
So I think from my point of view certainly those are the kind of things that you can really start to get into those kind of early warning systems, you know, the health benefits that can come out of that are huge but again it just comes down to that is really sensitive data because, you know, you go and see the doctor and they keep a personal record and they do not share that information and suddenly you are sharing that data. So I think there is a great opportunity but it has to be kind of managed, manage the risk around it.
Joe Hine: Thank you. Anyone else?
Jeremy Basset: From a Unilever perspective in 2009 we set an ambition which was to double our business while halving our environmental impact and we are halfway on that journey. We are on track with most of those things except with delivering the environmental impact that we set out, except we have not yet been able to change consumer behaviour. So we have stripped out waste from our factories, we have stripped out, we are sourcing basically all of our ingredients from sustainable sources now, but we have still yet to change the consumer behaviour. So when we talk about the connected world, for me, what that means is that we can have a direct relationship with people and with the devices and the home that they live within and we can therefore help them better monitor the environmental impact that they have so that we can help them live within a more sustainable context, and I think for me that is really exciting and I think, you know, an enabler to get there are the relationships. Another enabler are the new businesses and the new business model and the new systems and solutions that will come about because of this, but as an end goal I think that is what really excites me.
Jeremy Ettinghausen: Nothing excites me. Seriously for me 'excites' is the wrong thing. I think the Internet of Things is dull and should be dull. I think the Internet of Things is about the components of your car talking to each other or the parcel that gets delivered to your door and you are able to see when it arrives. It is those kind of background frictionless kind of things that go on that you do not really care about and you do not want to care about. It is what the Internet of Things will be really good at - I do not think smart. The wearables, the fridges are the reality.
David Boyd: So I am exactly the opposite. I am really excited and I am going to bring it back to the connected fridge. There is a short story by Haruki Murakami where he talks about how hard it is to be an artist when it is three in the morning and there is nothing in the fridge. You know, if his fridge knew that it was empty and it stocked itself then he might produce more great art and I think the potential of these things to remove friction from our lives potentially gives us, you know, that Clay Shirky thing of cognitive surplus; what can we be doing with our lives if our cars are driving us from A to B without any human interaction? Could we be creating some great art, some fantastic new businesses, some big ideas while we are not worrying about our fridge being empty, our cars getting lost and all those things - little points of friction in our lives - and so I kind of think that the thing about all good technologies is that it should be about kind of boosting human potential and if Internet of Things is going to be the kind of big and successful bit of technology that I think we all believe it will be, the ultimate goal of it must be to kind of boost our potential as humans and that is why it and all other technology should be exciting.
Joe Hine: Thank you very much. Hopefully that has given you a bit of insight into IoT and particularly how it would affect the media marketing of the technology world. I think what we have heard is that it is at a very early stage and it is quite exciting (or not), but we should all have jobs at the end of the day.
If you would like to join me in thanking our panel for this evening.