If there was an award for the buzzword(s) of the year, I would hazard that ‘smart city’ would already be a strong contender for 2015’s gong. However, as with smart city’s illustrious predecessors such as ‘big data’, ‘cloud’ and ‘social’, there is an underlying serious technical and social change that is worth discussing. For marketers, the most interesting development is related to the immense lakes of data that could be collected from a smart city.
The very term ‘smart city’ can mean different things to different people and organisations, but there is one common denominator: the installation of devices in the fabric of a city blanketed with WiFi. In principle, these devices will speak to each other, collect data and will operate services such as traffic lights. The end goal is a tech-utopia where urban planning, infrastructure and services all operate at maximum efficiency.
A natural by-product of a smart city is a cache of data on every inhabitant, or in marketing terms, potential customer. The data would reveal the routine, preferences, shopping habits and general behaviour of every person. When this is married with existing data sets, such as social media profiles or online purchases, the result is a veritable gold-mine of information. The fun doesn’t stop there, with devices covering a city, conceivably, messages could be delivered to customers pretty much anywhere, at any time and via any medium that has a display.
Of course, such a mind-boggling array of marketing opportunities opens the door to a lot of strategic and ethical questions. First, who owns the data? At the moment, there’s no clear answer, but it is easy to imagine a world where municipal authorities or private companies that install smart city devices seek to recoup their expense by selling on the information they collect.
Second, what about privacy concerns? With so much personal information flying around the challenge for marketers will be where to draw the line on targeted advertising. It will be feasible to create incredibly targeted campaigns that works on the implied preferences or predicted behaviour of individuals. For example, data could reveal a person who lingers outside a clothes shop window looking at products, but does not purchase. Ads for the same or similar products displayed in the window could be later targeted at this person on their laptop at a time when they are known to make the majority of their online purchases. This is a fairly benign example, however, the capacity for highly targeted ads to make consumers feel like their privacy has been violated is a real concern. It’ll be incumbent on marketers to quickly learn where this line is or risk a serious consumer backlash.
Third, how secure would data in a smart city be? On the face of it this may not seem to be a major concern for marketers or brands, however, trust is essential in this type of environment. If citizens of a smart city don’t feel like their information is safe from hackers or they constantly receive unsolicited approaches from brands, they will get alienated quickly. Consequently, brands will need to exercise some self-restraint in how they target customers. This could include strictly adhering to any ‘opt-out’ system that operates or limiting the number of messages each person receives.
On a more positive note, perhaps the most exciting opportunity for brands and marketers is in relation to finally fully bridging the gap between the offline and online retail worlds. Successfully attributing a marketing initiative directly to a sale has long been the bane of everyone associated with the advertising industry. Marketers can work with data scientists to build models that use the information from devices in a smart city and marry them with their online behaviour.
Smart cities have the capacity to completely change how marketing operates within an urban area. Although the sector is in its infancy, a cursory review of how much money countries like India, China and the UAE are investing means that it will rapidly develop. Smart marketers will start considering possible strategies now as, hand in hand with the great opportunity, are a number of tough challenges.
By Simon Farthing, Head of Consultancy at Profusion.
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