The Internet of Things, or IoT, still has a futuristic, Jetsons sort of feel to it. The idea that the entire world around us -- from our cars, homes, and even our cities -- are all inter-connected is an intriguing concept, but won't impact us for years, right? Turns out, not only is the IoT already a thriving industry that's impacting virtually all of us, it's on the cusp of exploding.
If estimates prove correct, the IoT market will skyrocket to $1.7 trillion in five short years. But that's a forecast for 2020, so it would be easy to think that doesn't impact us today. But according to research firm IDC, IoT-related sales totaled $660 billion last year: It's already more than a passing fancy. And it's not necessarily Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Nest smart home hub device or Apple's (NASDAQ:AAPL) smart car solutions where the revenues lie.
How does IoT affect me?
The world's marketers will spend nearly $235 billion in digital and mobile spots in 2015, as per a recent eMarketer report. And the shift to digital ads will continue to grow, moving away from traditional advertising mediums including TV, radio, and newspapers. In just two years, digital ads are expected to account for a third of the entire advertising market spend globally.
What's driving the change in how companies reach consumers? The Internet, mobile, and the IoT. The beauty of digital ads, as Google and Apple know first-hand, is that marketers are able to target their spots with sometimes uncanny accuracy. By tracking things like location and Internet usage, digital advertising behemoths like Google are able to deliver the right ad, at the right time, to the right person on a fairly consistent basis, something traditional forms of advertising simply can't do.
Now, factor the IoT into the digital advertising mix. If location and Internet usage are able to garner enough data to assure marketers that their spots are being targeted appropriately, imagine multiplying the amount of user information a hundred fold. Business and IT execs around the country aren't just imagining the use of IoT-related data to reach consumers, they're already utilizing it.
The IoT of the present
A study was conducted in July by a group called 2nd Watch, in which business and information technology, or IT, execs were asked if they were utilizing IoT data in their digital advertising efforts. Of the execs surveyed, a whopping 59% said they were either using, or "aggressively" using IoT data to drive their marketing campaigns. Another 27% said they haven't as yet implemented IoT-driven digital advertising, but plan to soon.
The primary reason so many companies are already on board with IoT marketing isn't surprising: It allows them to "better understand customer preferences," and the results speak for themselves. A full 70% of the execs surveyed said their IoT marketing efforts were either extremely or quite successful. Why? Data. And to think, we're just skimming the surface of the IoT.
When Google bought "smart" thermostat manufacturer Nest for $3.2 billion in early 2014, it was clear from the get-go it had big plans to dominate the smart home market. Since acquiring Nest, Google has made it the hub for a variety of smart home applications. Imagine your home knowing when you wake up, and automatically kicking the thermostat into gear? Or, alerting you when you are getting low on detergent while you're at the store?
When it comes to Apple, there are never a shortage of rumors. One of the more recent involves the development of a driverless iCar. Whether that comes to pass or not is still speculative, but what isn't in question is Apple's CarPlay. The cutting-edge smart car solution CarPlay has already inked deals with some of the world's largest automakers, and will essentially keep drivers informed of what's happening in their digital lives without ever having to take their hands of the wheel.
Google's Nest and Apple's CarPlay are intriguing products that will generate revenue in and of themselves. But that's not where the value lies. Imagine the user data a digital advertising monster like Google will amass by tracking us in our homes? Or Apple's CarPlay recognizing when, and where, we stop for gas or a bite to eat? The marketing opportunities utilizing all that information are virtually limitless: as nearly 60% of today's business and IT execs already know.
Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.