THE AGE OF PROGRAMMATIC COMMERCE

Transcription

1 THE AGE OF PROGRAMMATIC COMMERCE

2 Patrick Munden Global Head of Marketing Salmon Ltd. Patrick is recognised as a spokesperson for the digital commerce industry. His expertise is founded on ten years experience in global ecommerce with companies such as ebay, where he headed up B2B marketing. Patrick is passionate about digital disruption and how retailers need to harness the power of digital tech and the connected customer to excel in a digital-first world. 2

3 The Internet of Things is driving a digital revolution that will transform the way we live and work. Right now, there are more than 5 billion devices connected to the internet*. By 2020, Gartner predicts this will reach 20.7 billion. We are at the beginning of a thrilling journey as this technology begins to reveal its potential. At Salmon, we work with some of the world s leading brands, helping them to define and deliver digital commerce solutions that support the customer journey. Through our clients, we can already see the Internet of Things transforming the way ecommerce is evolving. At first glance, the idea of a domestic appliance with WiFi may sound like a strange and exotic proposition. But once we grasp the potential for self-analysis and decision-making, the huge potential of the connected home becomes immediately evident. In both business and consumer context, there is one key facilitator: the willingness of the user to allow decision-making to be delegated. The consumer no longer needs to make an active purchasing decision. They are willing to hand that responsibility to the machine. Appliances and devices constantly learn user preferences so that the software can make the choice by itself. The user can guide and customise the purchase by pre-programming their preferences and habits. Over the coming decade, this phenomenon programmatic commerce will revolutionise manufacturing, marketing and retail. When analysing demand for a product, or a part for a machine, the onus will shift to the very devices we use and make purchasing decisions on our behalf. Likewise, in industry, the Internet of Things lets us equip machines with artificial intelligence. Every moving part, every asset, can report its status and movement; the machine itself can report faults and notify engineers. The idea of a machine that can order its own consumables and parts is appealing to consumers and manufacturers alike. * 3

4 Let s look more closely at the three key trends that will emerge as programmatic commerce takes hold. 1. TECHNOLOGY THAT MAKES DECISIONS In an age of social media and multichannel commerce, marketers are increasingly tapping into diverse data silos to learn about customers preferences and habits. Data-driven marketing is achieving more effective personalisation, and marketers are more able to engage with customers on an individual level. Coffee machine I m broken I ve notified an engineer Coffee is running low Based on your preferences, coffee has been re-ordered View your preferences THREE IMPACTING KEY TRENDS #1 Programmatic commerce takes this one stage further, replacing consideration with software automation. For example: let s say you must have a fresh cup of coffee every morning, before heading out to work. The coffee machine in your kitchen knows when supplies are low, because its sensor measures the amount of beans left in the machine. Additionally, you ve given the machine instructions to order more coffee when it s running low. The machine knows the bean, strength, brand and price that you prefer, and it can factor in the likely delivery cost. When the machine detects low supply, it prepares the order, and asks you to confirm it on your mobile device. As its efficiency improves, and it learns likely outcomes, it starts to order the coffee automatically, on your behalf. 4

5 NEW CHALLENGES FOR MARKETERS This fully automated ordering process presents a new challenge for marketers: how do you influence a choice that has already been made? The coffee machine has been programmed with the brand of choice; if it s not your brand, you re effectively locked out of the process. There s a clear incentive for coffee producers to have their brands pre-programmed on delivery, so customers choose a certain brand for convenience. In a B2B context, the equivalent scenario may be a copy machine pre-programmed to order a certain type of paper. For marketers, this represents a fundamental shift in the buyer journey. The preference for coffee type may be set before the machine is purchased; the procurement of a photocopier may be partly influenced by the price or availability of the consumables it orders. As such, marketers need to engage at a much earlier stage in the buying process, since there are fewer opportunities to encourage a switch in brand. Your Preferences enc The Coffee Co. No substitutions Auto replenish Best price Free delivery 5

6 Digital Assistant Your son s birthday is on Wednesday Here are 3 options based upon his age, likes and previous orders 2. DIGITAL ASSISTANTS COME OF AGE THREE IMPACTING KEY TRENDS #2 In October 2011, Apple launched Siri, a digital assistant that answers questions personally, and instantly. Siri brought artificial intelligence to the palm of our hands, and fundamentally changed the way we interact with the devices around us. Today, the digital assistant is omnipresent, from Microsoft s Cortana through to Amazon s Echo device. Consumers are becoming more comfortable with the idea of interacting with this technology. But more crucially, they are more comfortable with allowing it to access their personal data. The personal assistant on your smartphone can alert you to a forthcoming anniversary, offering convenience in exchange for personal data. Not only would this reminder prevent a fraught conversation over dinner, but the assistant could also anticipate the event and recommend a gift. The assistant knows who the recipient is, and uses his or her age, gender and wish-lists to present a gifting shortlist. Simply refine the results, review the selections and tap the Buy button to make the final purchase. What s new in this exchange is the personal assistant s ability to conduct an intelligent search for the user. Rather than scouring the web for the right item at the right price, the software gets the user part way there. In our example, you didn t need to conduct a web search, because the assistant had already filtered your buying choices. 6

7 THE CONSEQUENCES FOR ONLINE SEARCH Online search currently dominates commerce, and visibility in search engines is key. But the digital assistant is set to change this, because it has permission to tap into personal information, and can therefore improve relevance in its results. This exceptional access to personal data is incredibly powerful, and it will eventually make SEO and PPC far less dominant in search. Personal assistants will query more diverse sources of information, and will have the ability to comb through more resources, some of which are not visible in search. This flips the whole idea of search, because the focus shifts from request to recommendation. For marketers, digital commerce will be less about appearing in search results, and more about creating a strong link between product data and content. If we assume that the personal assistant can access specific information about a family member, content must be clear and targeted in order to be chosen as the assistant s recommended gift. Digital Assistant One item Nerf Mega Blaster has been viewed 3 times more than the others and has 4 5* reviews Perfect, please order 7

8 3. FROM DEMAND CREATION TO ANTICIPATION The increase in device sensors, combined with accessible personal data, leads us to a situation where demand can be anticipated. As such, the sales and marketing department will play less of a role in creating demand for a product in the market. THREE IMPACTING KEY TRENDS #3 A car equipped with tyre sensors can tell the driver when the tyre tread is close to legal limits. The sensor sends a message to the car s manufacturer, which is crowdsourcing data from its entire customer base. Armed with this information, it has unprecedented insight into the speed at which its tyres wear down in real conditions. It can then source tyres and allocate them to its dealer network in readiness for an influx of orders, which will be placed by each car s on-board computer. Because the manufacturer has advance notice of likely orders, it can negotiate better discounts on its tyres, and enjoy increased flexibility to offer the consumer a promotional offer. The consumer saves time and money, solves a problem that could be inconvenient to fix, and the manufacturer is top of mind when the consumer is next looking for a part for their car. In turn, the manufacturer can control its cash flow, improve supply chain efficiency, and avoid expensive storage costs for overstocked items. Car Manufacturer HQ Tyre report: Depots Received signals Manage demand Car Manufacturer HQ Stock distributor: North depot Low demand High demand Low demand High demand South depot 8

9 SO WHAT DOES IT ALL MEAN? Programmatic commerce is set to change consumer behaviour and transform commerce, both online and offline. The consequences of this change, and opportunities it will present, are unprecedented. Buying and selling will be transformed into an automated process, guided by artificial intelligence. The technology we buy will make decisions for us, based on our preferences and habits. Manufacturers can benefit from exceptional operational efficiency, with real-time data informing the supply chain, decreasing both cost and waste. For marketers, there will be new challenges, as the bond between consumer and brand is formed at a much earlier stage in the consumer s journey. And SEO and PPC will be disrupted, since we will be less reliant on search to solve our problems. Technological innovation always presents challenges for business, as well as new opportunities. Your organisation will need guidance to successfully position itself in this new and unexplored market. With more than 25 years experience in commerce, Salmon is ready to drive that conversation and provide the support your business needs to succeed. Speak to Salmon today and find out how we can help your business lead the way in programmatic commerce. CONCLUSION Businesses are already looking at ways to leverage data to better inform their operations and drive growth. As the Internet of Things becomes commonplace, businesses must also invest in strategy to ensure they are poised to take advantage. 9

10 ABOUT SALMON Salmon is a global digital commerce consultancy the largest in WPP s network of companies. We define and deliver market-changing solutions and customer journeys for the world s leading brands. Established in 1989, with operations in London, New York, Sydney and Beijing, Salmon clients include AkzoNobel, Argos, Audi UK, DFS, Halfords, Premier Farnell, Sainsbury s and Selfridges. For more information, info@salmon.com or visit: Salmon Ltd. All rights reserved. All company and product names, brands and symbols mentioned herein are brand names and/or registered trademarks of their respective owners.