the age of programmatic commerce · for example: let’s say you must have a fresh cup of coffee...
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THE AGE OF PROGRAMMATIC
COMMERCE
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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.
Patrick MundenGlobal Head of MarketingSalmon Ltd.
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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.
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.
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.
*http://www.gartner.com/newsroom/id/3165317
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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.
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.
Let’s look more closely at the three key trends that
will emerge as programmatic commerce takes hold.
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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.
I’m broken
Coffee machine
I’ve notified an engineer
Based on your preferences, coffee has been re-ordered
Coffee is running low
View your preferences
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NEW CHALLENGES FOR MARKETERS
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.
This fully automated ordering process presents a new challenge for marketers: how do you influence a choice that has already been made?
Your Preferencesenncre
The Coffee Co.
No substitutions
Auto replenish
Best price
Free delivery
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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.
2. DIGITAL ASSISTANTS COME OF AGE
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.
Digital AssistantYour son’s birthday is on Wednesday
Here are 3 options based upon his age, likes and previous orders
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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.
THE CONSEQUENCES FOR ONLINE SEARCH
Digital Assistant
Perfect, please order
One item ‘Nerf Mega Blaster’ has been viewed 3 times more than the others and has 4 5* reviews
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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.
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 HQLow
demand
Highdemand
Depots
Tyre report:
Received signals
Manage demand
Lowdemand
Highdemand
Car Manufacturer HQStock distributor:
North depot South depot
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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.
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.
SO WHAT DOES IT ALL MEAN?
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.
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©2016 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.
For more information,email: [email protected] visit: www.salmon.com
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.