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The Big Question: What Do Wearables Mean for Advertisers?

sovrnmarketing // October 27, 2014

wearable technology

Flurry Analytics recently compared the adoption of new technologies from the twenty and twenty-first centuries and found that smart device adoption is occurring 10 times faster than the PC revolution of the 80’s, two times faster than the Internet Boom of the 90’s, and 3x faster than social network adoption. Various technology writers have cited this report to support their theory that wearable tech will follow suit.
When Google Glass rumors first started circulating, the internet was a frenzy of predictions about potential advertising revenue from the new-fangled eyewear revolution. This Flurry study was among the go-to supporting evidence for the frenzy. Unfortunately Glass sales were mostly underwhelming; revenue for 2014 is currently projected at around $800K. Business Insider suspects that Google Glass sales will peak in about four years – a near century in the tech industry.

Passing the Torch

Luckily, the fate of the wearables does not rest on Google’s shoulders. A family of slightly sexier tech has taken the torch, mostly wrist-wear of various flavors. Now that Apple has finally jumped on the bandwagon with their Apple Watch, wearable hype is climaxing worldwide. In fact, the wearable market is predicted to grow to 91 million devices in 2015, a 90% growth from this year.
Along with the wildfire adoption of smart devices came major innovations in advertising. Display ads for mobile browsers, native mobile ads, mobile video ads, in-app purchases, mobile couponing, the list goes on. With the onslaught of wearable smart devices, the advertising industry is collectively wondering: how will we stake our claim on wearables?

On Utility and Security

Earlier this month, Michele Tobin, VP of mobile gaming giant Rovio, brought up the importance of utility in smart devices. “Mobile is most valuable when providing a utility. The reason we use a particular app is because it provides us with something we need right at that moment…To build an effective native ad on mobile, the advertising experience has to be related to that utility.” In the case of wearables, utility is arguably even more important. Screen real estate is limited, battery life is crucial. Any app on the device must be hyper-efficient and streamlined. Ads that hope to succeed in wearables must fit seamlessly into this utility model.
Though mobile users are accustomed to constant contact with their device, wearables up the ante of device intimacy. Infusing ads into this mix could easily be taken as an intrusion by wearers, so brands and advertisers are treading very lightly. The idea of location-targeted “notifications” bearing coupons, promotions and tips has been thrown around, but surveyed consumers are overwhelmingly creeped out by the prospect of being targeted through their wrists.

And the winner is…

While many are pondering the potential for smart watch ads, there is another opportunity with a lower barrier to entry: data. Smart watches have the potential to track location, personal routines including fitness regimens, spending patterns and more. While successful on-watch ads seem unlikely in the near future, data collection is already underway. With predictions of a short-lived hot spell for the wearable family (sales are supposed to taper off and then flatten as soon as 2016), is it worth building a whole new advertising model or utilizing behind-the-scenes data gathering to better target consumers on other platforms?
The two major hurdles that we face right now are security and utility. The first to surpass said hurdles has a $91 million market to themselves – at least for a little while. In the meantime, the money is in the data.

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