Tuesday, 21 May 2013

Initial Thoughts: The Xbox One Launch

The Xbox one launch was interesting, but not that surprising in tone, especially when compared back with the PS4 launch. The difference in tones boils down to the way both companies approach ‘gaming’ and ‘entertainment’. Sony’s presentation was much more focused on the pure ‘gaming’ elements a console can offer and supporting features that would enhance that experience. Microsoft, as they both stated and implied throughout the presentation see their opportunity as part of the wider entertainment offering a console can supply. The company seemed to do a balancing act between providing enough credentials to support those looking for reassurance of a next generation gaming experience (especially through showing how the next Call of Duty looked on the hardware in game) and laying out their vision for how one device can bring convergence into the living room beyond what we’ve already seen.

The Kinect’s upgraded functionality was interesting, but the fact that it was phrased as the device hub between controller, user, system and other possible peripherals/devices was even more telling. Microsoft integrating elements of the vision for UX behind Windows 8 was inevitable, but the introduction of ‘snap mode’ allowing multitasking in a clear fashion speaks to the company’s view of this as an intuitive computing device and set top box for the living room, with gesture and voice becoming more refined for user input. The view of the Xbox One as an overall entertainment device, especially with the focus on DVR possibilities, almost framed live TV in the same way previous console launches talked about launch game titles. The referenced partnerships with the NFL and the adaption of premium video content from the Halo TV series indicates Microsoft can see the console’s possibility to create more active viewing experiences and a more intuitive ‘social TV’ experience.

Up until now, social TV and more engaged activities while viewing content have always been the domain of ‘second screen’ devices such as tablets, mobiles and laptops, simply because of ease of use. However, Microsoft’s mentions of smart glass and their rather clear moves towards creating a more refined way to interact with the console and on-screen content seems to indicate that they are taking their ambition to make the Xbox One the next ‘water cooler’ seriously.

From a gaming perspective, Microsoft said enough to reassure consumers that the graphics, titles and experience will be more than iterative, but the wide focus of the console may alienate those looking for more dedicated gaming announcements at launch.

From a wider consumer electronics perspective, Microsoft laid out plans for an ambitious home experience delivered by its next generation device, which many will wait to have substantiated in the coming months.

From an advertising point of view, the console looks to make steps forward in the way brands can target and speak to consumers, given the recognition for users Kinect will feature and the integration with live TV. The value of Microsoft’s TV integration, as seen with the NFL, will hinge on how clearly the company can create a frame work for similar content integration partnerships. The Kinect's ability to recognize users and auto-log in brings up interesting opportunities for addressable advertising and content, especially with Microsoft's announced mixture of video content and gaming.

Overall, Microsoft delivered something expected, while still giving a few surprises. Clearly going for the middle of the road, ‘all-in-one’ market for the console, the months between E3 and Christmas will be interesting to see how Sony and Microsoft position themselves relative to each other.

Thursday, 9 May 2013

How do you market to a refrigerator: Smart devices and the upcoming ‘second market’ for advertisers?

The roles of connected devices are growing within our lives. From smart appliances to the refinement of in car computer connectivity, more and more of the objects we encounter daily allow for connectivity and control. However, what lies beyond this generation of smart devices may truly change the way we buy certain products as consumers and how marketers and advertisers drive purchase.

The next evolution of smart devices will not only allow connectivity and control, but will also predict what we need before we need it. The proliferation of the data sources available to connect to means that we are facing a possible revolution in the way we consider functionality. Whereas now, a smart washing machine may allow for a consumer to start it via mobile, in the near future we will expect this and more. When the appliance breaks we will not only expect a notification on our mobiles, but also for the device to have already sourced a list of local repairmen, found those that are available at the same time as you are (via your calendar) and recommended the best price for servicing.

Smart devices won’t only play a role in curating data to enable quicker consumer choices, but they may also take care of routine purchase. For example, a smart refrigerator could not only interface with the products within it to know when your routine purchases need replacing, but it could compare prices against online grocers, schedule times for delivery when you have indicated and use one or multiple suppliers to arrange the best price. This possibility of device led purchase begins to create a new market opportunity. Advertisers will need to drive more emotional, less routine product discovery and purchase through existing marketing channels to consumers, but more rational, information led purchase through smart devices as they grow in ubiquity.

The opportunities and changes posed by a growth in smart devices don’t apply universally across all products. Instead, the types of products and services affected are more mass and routine than luxury. Goods and services that heavily utilize emotional factors such as brand (e.g. luxury goods) or are ‘one-off’ purchases are unlikely to bear the brunt of a change in purchasing behaviour. However, for products grounded in at least a semi-rational and routine purchase, the growth of a comparable smart device (e.g. groceries and a refrigerator, clothing and a washing machine, servicing and appliances or a car, utilities and a home coordinating computer) creates two interconnected consumers: human and device.

For marketers focusing on these devices in the future, this shift means expanding information exchanges and connectivity to provide the largest footprint for connected devices to interface. Focusing on this mechanical market isn’t necessarily new for any agencies or brands, as any SEO will attest to. In fact, the same principles that have been important in driving site visibility within search engines will be important for reaching those connected devices that are informing or executing purchase online.

The presence that sells to a device doing routine shopping will not be a website, but an API, stripping away the trapping of design and style to provide pure, structured data on requested products and services. Successful APIs providing data will need to work quickly, provide timely results and interconnect with other data sources that can help tailor prices and products to make the most favourable rational conditions for a device. APIs will gain visibility through open standards and coordination with manufacturers, but will need more to differentiate.

Differentiation must come from APIs using data sources to make the most favourable rational ‘sell’ for searching devices, in similar way to how Sainsbury currently uses Nectar data. If APIs can predict which items a device will be looking for or when they are considering purchase, sales promotion activity can focus on lowering the rational cost of items at specific times, increasing the attractiveness of a retailer to a machine. Traditional direct marketing mechanics will still prove valuable, but your posted coupon pack may instead be emailed to your appliances. In addition, using data sources outside of just price can help to differentiate brands, such as using social data to prove quality through recommendations or scoring.

Consumer focused marketing may also change as smart devices becomes more refined. The focus on consumer marketing may narrow, moving away from direct response price-led messages aimed at driving frequency of purchase and instead just on driving initial trial. The goal of speaking to a consumer in essence becomes driving trial of a brand to get on a ‘repeat’ or ‘routine’ purchase list and then minimizing the reasons why the consumer would remove you from that set. If smart devices take over more of the routine and rational parts of purchasing, building a brand around a product becomes important only in initial trial and as a defensive move against other brands edging a product out of the ‘routine’ purchase set, ensuring that the consumer passively accepts the chance or recommendation of repeat purchase through a device.

For example, a car in need of servicing and connected to the internet may look at APIs providing information on the cost and availability of dealerships and mechanics to provide the service. The car’s driver may make the final decision on which available options are best, but will agree to the best priced option unless given another reason to, such as brand loyalty. In this example, brand still holds some sway, as a device is curating choices instead of executing them.

In a device led purchase example, the consumer behaviour is more passive, such as a connected fridge using several online grocers to complete the weekly shop; mixing and matching orders to get the cheapest and fastest possible combination of grocery deliveries. The role of the consumer is only to preclude certain grocers due to previous experiences or brand preference, but both of these motivations need to be more powerful than the default behaviour of accepting what has been suggested or ordered.

So should we expect direct mail addressed to your microwave coming shortly? Probably not. Quite a few things need to occur before this can become a reality. Manufacturers need to continue to drive development of smart devices, refining the experience and enhancing the variety of connectivity available in the consumer’s life. Consumers must make the smart device market more defined through adoption, as well as allowing their data to be accessed to enhance the predictive experience. Finally, advertisers and brands must give consumers a reason to share their data and redefine the way it is used, moving from warehousing and the privacy concerns it entails to a more just-In-time system of continuous access across various organizations.

While the challenges required in creating a generation of smart devices to curate and decide your purchases is numerous, it may not be as far off as you think. Google Now and apps such as Tempo have shown the value of predictive functionality while the required technology and data is rapidly becoming available, awaiting adoption. So, while its not yet be time to hold a refrigerator focus group about the latest Yeo Valley 30 second ad, it might be soon enough.

Wednesday, 8 May 2013