Return on Intelligence: Where the Smart Money is Going in Smart Packaging

Editor's Notes

• #3: This was a fairly ordinary news day Front page of NYT… most exciting thing was the jet blue flight attendant who went postal and insulted the passengers before jumping down the emergency exit slide But the real news on this day from a data point of view, wasn’t on the front page of the times…
• #4: It was that more objects than people had signed up to cellphone accounts with AT&T and Verizon Which raises the question: what are all these things, and why do they need connections to the internet?
• #5: In fact there are lots of them and they’re all getting connected in one way or another
• #6: Every product becoming interface to personalized digital content and experiences – a direct, 1:2:1 media channel for communications and service
• #7: And consumer expectations are changing accordingly!
• #8: But what about the products that aren’t connected devices like consumer electronics, home appliances or cars? Especially since they only represents 0.2% of the total annual product volume. Over three trillion consumer products are made and sold each year! So bigger IoT opportunity for marketers is the ‘Internet of Everything’, where everyday non-electronic ‘packaged’ household products can be given real-time, social web intelligence via smart packaging, smart software and smartphones.
• #11: This is only possible because the next wave of packaging innovation is upon us. The convergence of two forces: (1) declining costs of IoT and digital printing techs  (from smart tags, printed electronics + embedded chips to cloud computing infrastructure and high-speed variable data printers) Our computing power has increased a billion-fold every decade since the end of the 1950’s98, while prices dropped 10,000-fold during the same period99 1000% growth in smartphone subscriptions 2010 – 2019 (to 5.6 billion) (2) along with the mass adoption of mobile devices and ubiquitous broadband connectivity This created an opportunity to “make products smart”  by connecting them to the Web via their packaging. Packages able to communicate directly to consumers and supply chain users
• #12: There’s a range of tech with relative costs and flexibility (uniqueness of the ID, basically) Will depend on economics of the products / sector Adding technology to a product’s packaging requires the cost of the technology itself.  For example, NFC or RFID can cost around 15-30 cents per pack, depending on volume (however, see the ThinFilm point earlier about printed electronics promising to radically reduce these costs). Chipsets using Bluetooth, Wi-Fi, or other active technologies can cost upwards of $10 plus per unit. However, EVRYTHNG partner Thinfilm is developing a line of intelligent labels that sense information and store data for a fraction of the cost of conventional electronics  between 1/10th and 1/100th!!!
• #23: So the value opportunity is across multiple stakeholders…. Marketing and Sales will drive revenue growth and capture market share by engaging consumers at point of purchase, building brand loyalty, providing additional services, and up-and cross-selling products based on individual consumers’ behavior. Manufacturing and Operations have effective ways of executing item-level tracking strategies through the supply chain and all the way through “the last mile” to the consumer. Product Security and Legal will be able to allow their field forces or consumers to authenticate products in the market, update product information or inform consumers of recalls, and be alerted to patterns that indicate counterfeiting or diversion activities. Product Development & Consumer Insights will collect real-time scan and usage data to better understand who, what, how, when and why consumers are buying and using their products, and what new products and features they might pay for
• #24: The question isn’t whether consumers will directly engage with branded products digitally using smart mobile devices, but how quickly all brands will realize that they need to take control of their physical products as digital media (using existing labels and barcodes or adding new tags as smart packaging triggers for digital engagement). And this means brands must control the interface and data too – while partnering with a third party app to engage consumers with products is tempting, it’s really handing ownership and acontrol of customer relationships to someone else which simply doesn’t make sense as a long-term strategy. The truth is that if a brand doesn’t control its own products as a core digital media asset then someone else – Amazon – will be happy to do it on their behalf. The number of QR codes and barcodes being scanned by consumers with smartphones is an obvious data point. Analysis of recent data shown a 20% rise from last year with 21.8 million smartphone scans in the first quarter of 2014, with product info and video the most popular content. However, in Mary Meeker’s famous Internet Trends analysis last year, she reported that there were nine million QR code scans a month in China alone, a 400% rise on the previous year. There 42% are being used for tickets, discounts and rewards, while 33% used them for wider promotional purposes. Add this to technologies like NFC (see below), Augmented Reality and other forms of image recognition, and this all points to a clear consumer demand for mobile solutions to combine the physical and digital worlds (although poor execution has slowed adoption of some technologies like QR codes in the West). New consumer behaviours There are other equally important behaviours where consumer scan barcodes or swipe / tap NFC-cards and devices emerging fast, or that have already become mainstream in different markets. For instance, there are now estimated to be around 1/2 million self-scanning machines in retail outlets w/wide while Tesco are already piloting newer scanning technologies like ‘scan as you shop’ handheld scanners in 60 stores. 39.1% of US consumers last year rated it as “very” or “somewhat” important to have self-checkout / self-scanning options when selecting their primary grocery store. And a Cisco report recently found that the majority of consumers globally (52%) were open to automated self-scanning at checkout to avoid queues – unsurprisingly, with a skew towards the younger demographic: 57%of so called Gen Y (18-29 year olds) and 55% of Gen X (30-49 year olds) shoppers preferred it. And let’s not forget that 80% of the three million journeys a day on public transport in London already use NFC-powered Oyster cards – not to mention that there are over 40 million contactless payment cards in the UK and 174,000 retail terminals as of Feb 2014 – that’s a lot of new scanning, tapping and swiping consumer behaviours going on.
• #25: (1) One-way, broadcast story-telling (2) Digital interactivity & brand communities (3) Mobile consumer-smart product engagement The era of “Product voice” is a game-changing opportunity for marketers to use unique technology to create greater brand attraction, loyalty and affinity and consumer intimacy through products.
• #26: And consumers are already engaging with products in stores and at home. *out of a sample group of 649
• #27: So this is what we do….
• #28: We do it with a high scale, platform-as-a-service environment to manage information from & about billions of products, and drive applications connecting with them The reason is
• #29: What happens as soon as you start to combine more than one packaging technology solution? Here’s a real use case handled by our software… [explain] Soon hardware simply won’t exist without software – from the firmware that runs on it, to the cloud intelligence that programs and controls it In our ENGINE, each package is a flexible, programmable thing that can serve multiple purposes and be triggered by multiple tags and other connectivity technologies
• #30: Our job is to make this simple – to handle ALL the complexity of this VAST amount of data flowing to, from and about the product packages - generated by users, apps and information systems Don’t think of them just as products or packaging or tags or sensors Think of them as that, COMBINED WITH a continuous stream of real-time data about individual items, users, and contexts of consumption:  time, place, historical CRM records, in-the-moment offers and experiences The real COMPETITIVE opportunity in making packages smart  is not just adding connectivity technologies  but to manage and operate connected packages as DATA And that… is where the smart money is going
• #31: We’re working with some of the world’s top consumer goods companies Thank you very much for the opportunity to share the work we’re doing with you this evening