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By 2025, Internet of things applications could have $11 trillion impact

The Internet of things, the term used to describe the use of sensors and other Internet-connected devices to track and control physical objects, opens up entirely new ways of doing business. For instance, in manufacturing the application of this technology can reduce maintenance costs by up to 25%, cut unplanned outages by up to 50%, and extend the lives of machines by years.

The Internet of things can also give rise to new business models that could alter the basis of competition. Products that report how they are actually being used can provide much better insight into customer behavior than focus groups. Connected products can even adapt to their customers’ preferences. And the ability to offer almost anything—from a drill press to a car to an aircraft engine—as a service can transform the very nature of what is bought and sold.

In a recent study from the McKinsey Global Institute, it is estimated that 150 specific IoT applications that exist today or could be in widespread use within 10 years could have a total economic impact of $3.9 trillion to $11.1 trillion per year in 2025. It is also estimated two-thirds of value will be generated in business-to-business settings and that business customers and consumers will likely capture more than 90% of the value created.

To capture this value, however, businesses need to overcome three significant obstacles:

  • Push technology vendors to provide connected, interoperable components and systems, with analytics;
  • Address security and privacy concerns; and most importantly
  • Make organizational changes to maximize the operating and strategic benefits that IoT data can provide.

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Internet adspend to overtake TV, study finds

According to the latest International Ad Forecast from Warc, the internet is expected to overtake TV to become the largest medium for advertising in 2016. Across all key markets, internet adspend is expected to register rapid growth, rising 15.6% to $135.9bn in 2015 and 12.7% to $153.1bn in 2016. At the same time, adspend on TV is expected to fall 0.9% to $144.9bn this year before rebounding with 3.1% growth in 2016. By then, TV adspend across the 12 markets will be worth $149.4bn, or $3.7bn less than adspend devoted to the internet.

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Big Spenders on a Budget: What the Top 200 U.S. Advertisers Are Doing to Spend Smarter

The 200 Leading National Advertisers accounted for 51% of U.S. measured-media ad spending and nearly two-thirds of TV advertising in 2014. U.S. Ad spending for these companies rose a slim 2.0% in 2014, but the story is not that marketers are pulling back. They are spending smarter.

Procter & Gamble Co., the nation’s and world’s largest advertiser, is among those making the pitch to Wall Street that digital is more efficient.

“We’re shifting more advertising to digital media, search, social, video and mobile as consumers spend more time there,” P&G Chief Financial Officer Jon Moeller said at a June investor conference. “In general, digital media delivers a higher return on investment than TV or print.”

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Brand Engagement on Digital Platforms

Mark Bonchek and Cara France, writing in “The Harvard Business Review,” provide “A Cheat Sheet for Marketers on the Future of Digital Platforms.

Marketers need to understand the future of consumer engagement on digital platforms, such as Twitter, Facebook, LinkedIn, Pinterest, YouTube, SnapChat, and Instagram.  Bonchek and France discuss the seven Ps of these platforms:

  1. People-digital and social platforms empower customers, employees, and citizens by removing friction in the flow of information and communication.
  2. Participate-platforms are two-sided networks that encourage the creation of communities of users and participants.
  3. Personalize-platforms will help filter the information being received and provide experiences that are more personalized, relevant, and meaningful.
  4. Product-platforms are becoming more integrated into products and services. There will be a convergence of digital platforms and connected devices, which will impact the relationship between products and platforms.
  5. Process-companies are adopting platforms that will impact business processes and organizational management.
  6. Pay-there will be greater integration of e-commerce and social networks on digital platforms.
  7. Partner-companies will need to improve their partnership and collaboration efforts to create opportunities for brands to form alliances.

The authors believe that companies can achieve increased brand engagement by involving and empowering customers.

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