Who Is Your New Marketing Target? Machines!

The new era of retail is Programmatic Commerce, when consumers delegate purchase decisions to machines. Brands need to react quickly to engage with the Internet of Things.

The Internet of Things together with changes in consumer-buying habits are set to have profound consequences for marketers.

Connected devices are growing at an astonishing rate. Cisco’s latest Visual Networking Index has predicted that, by 2020, there will be 26 billion connected devices across the globe, up from 16 billion connections in 2015.

This is a trend that will revolutionise many aspects of life—not least, commerce. At Salmon we’ve termed this new era of retail “Programmatic Commerce” and believe it to be one of the most significant trends on the horizon for marketers in the digital age.

What Is Programmatic Commerce?[

Programmatic Commerce](https://en.wikipedia.org/wiki/Programmatic_Commerce) encapsulates a shift in buying patterns, with consumers allowing purchase decisions to be delegated to connected machines. Imagine the coffee machine in your kitchen not only detecting when the coffee is running low, but automatically reordering supplies according to your pre-set preferences. Or picture the tyres on your car detecting when the tread is close to the legal limit, then sending a message to the car’s manufacturer, enabling them to order replacements in advance. Buying and selling, particularly of routine purchases, will be transformed into an automated process, guided by artificial intelligence and pre-set consumer parameters.

The origins of this shift may be seen already today, particularly in grocery ecommerce. Online grocery retailers are already collecting data on consumer purchases and are able to predict repeat grocery purchases and present these items to consumers in a list when they visit the site. Consumers can then accept these suggestions, partly automating the process. Consumers are already prepared to delegate these less exciting, “replenishment” purchase choices, while in the process realising the benefit of the retailer collecting data on them. Programmatic Commerce represents the next step in this process.

Lock In/Lock Out

Programmatic Commerce will give consumers the opportunity to partly or fully automate their repeat purchases by inputting their preferences in advance. The way that this will work is likely to vary—consumers might select a brand in advance or instruct the device based on the product that will be the cheapest or will arrive most quickly. Devices might even come with default brands in place, which the consumer would then need to change manually. All of these developments would fundamentally shift products’ route to market and the role of marketing therein.

We predict a scenario of lock in/lock out, where consumers would tend to remain with one product once they have selected it without changing their choice. This would, of course, offer great benefits for the brand locked in, but mean that it would be more difficult for marketers to alter choices once they have been made.

Marketing teams would need to respond to this shift in two ways. First, brands would need to engage with consumers at a much earlier stage in the buying process, in order to be front of mind when a consumer makes the initial product selection. Second, brands would need to fundamentally rethink their partnerships. Depending on how the device makes the purchase, in order to influence the consumer the brand might need to have a partnership with a grocer such as Tesco, a marketplace such as Amazon, or even the device manufacturer. This new route to market would fundamentally shift the marketing landscape.

From Demand Anticipation To Demand Creation

Programmatic Commerce would create a situation where retailers can shift from demand creation to anticipation. This is because of the increase in availability of data from device sensors, as well as accessible consumer data. As in the example of the connected car above, car tyres could alert manufacturers as tread wears down, giving manufacturers unprecedented insight into likely demand. This will enable improvements in supply chain efficiency and cash flow. Manufacturers can ensure that replacements are available for consumers, and consumers can benefit from improved convenience. As a result, the sales and marketing department will play less of a role in creating demand for a product in the market.

The Rise Of The Digital Assistant

An accompanying development in Programmatic Commerce will be that digital assistants come of age. Consumers are becoming much more comfortable with digital assistant such as Apple’s Siri and Amazon’s Alexa—and, crucially, are comfortable with allowing them to access personal data. Currently, smartphone personal assistants can alert you to an upcoming anniversary, using personal data to provide convenience. Programmatic Commerce will take this one step further, as your assistant could recommend a gift based on its information about the recipient’s age, gender, and wish-lists. Again, this will impact marketers’ approach. SEO will become far less dominant in product searches, and marketers will need to ensure that products and content are clearly targeted to meet assistants’ search criteria.

The Future

Programmatic Commerce depends on one key facilitator: the willingness of the user to allow decision-making to be delegated. This change in consumer behaviour, tied with the advance in connected technology, will transform commerce, and marketers must be prepared to respond. The marketing teams that react most quickly to the changing landscape and take advantage of the Internet of Things will be the ones to benefit in the long run, particularly as brands face the risk of being “locked out.” Brands need to build a level of trust so that the “lock-in” is long term—trust both in terms of what personal data is used but also how it is used will be paramount.

Programmatic Commerce and the Internet of Things can offer new levels of convenience to us all— it’s up to brands to make sure they aren’t left behind.