Explosion of Connected Devices Presents New Challenges

August 13, 2015

It is virtually impossible to miss the ever increasing number of devices that are connected to the Internet in day-to-day life. These devices, dubbed the “Internet of Things (IoT),” range from wearable fit-bands to smart thermostats to a large portion of vehicles on the road. While there are already roughly 25 billion connected devices in use, experts expect that there will be further explosive growth to 50 billion connected devices by 2020. This astounding number shows a radical shift in how consumers are receiving and transmitting intimate data about themselves.

The Internet of Things increasingly is being seen as an opportunity for advertisers to directly present their products to consumers in novel ways using the data that has been collected through these devices. Earlier this week, Adweek published an article about using wearable devices in marketing campaigns. The article states, “The ability to target consumers in a relevant and personalized—not to mention physically attached—context instead of trying to piece together a consumer's intentions after the fact, should be the long-term goal of any marketing plan.” Undoubtedly, advertisers will want to capitalize on the ability to market to individuals in the myriad of new ways available to them during all stages of a potential customer’s daily life.

With this developing technology comes the major challenge of making sure the data collected through connected devices is secure and used in a responsible manner. Marketers seeking to use the Internet of Things to communicate with consumers and serve them personalized ads need to be careful not to use data about those consumers in ways that go above and beyond what the consumer would rightfully expect. The FTC’s Internet of Things report from January recommends that companies be very transparent about how they are collecting and using personal information. The FTC has been frequently investigating companies for either not adequately securing data or for using data in “unfair or deceptive” ways. As we have seen from the onslaught of data breaches by major companies in the past few years, protecting sensitive data from hackers is becoming increasingly more difficult. Also, many IoT devices do not have easily utilized display capacities for consumers to receive privacy or other notices and for them to express their preferences in these areas. IoT provides significant new challenges as to how to deal transparently to meet consumer needs effectively.

Companies looking to utilize data to advertise via the Internet of Things need to come up with sound data privacy and security policies now. Not only does this include implementing the most stringent safeguards against data theft, but also it includes providing consumers with adequate disclosure and choice about what types of data are collected from them for advertising purposes. Without these proactive steps, advertisers leave themselves open to lawsuits and FTC investigations. As the Internet of Things becomes even more integrated into our daily lives, advertisers need to be prepared for all of the benefits and risks that this technology brings.

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