PPB July 2018

PPAI Exclusive Research | FEATURE Though the “smart product” revolution is already under way, its footprint in the promotional products industry is still small. To explore this uncharted territory, the 2018 PPAI Business Study further questioned the state of smart product development to effectively navigate this evolving future landscape. Results reveal that while only 17 percent of suppliers indicate they are developing home devices that are smart products, 30 percent of distributors say customers are requesting them. Not only is there a disconnect between supply and demand, but also in the types of products being developed (Figure 4) . Mark Abels, CEO of supplier SELCO, described his experience with smart watches as “moving slowly,” but having had some sales. “I think that is slowly changing, as people you might not expect to be interested are getting curious,” he says. “The watch will continue to evolve, and it may or may not find a bigger place in a connected world, but even if it doesn’t, people will continue to try to incorporate it. The real estate it occupies on millions of people is too good to ignore.” In these early stages of the smart product ecosystem, survey respondents foresee varying implications for the industry (Figure 5) . On average, the majority believe the impact of smart product development means more competition (74 percent), lower margins (65 percent) and increased industry collaboration (67 percent). More than half (52 percent) say they expect no change to personal revenues or costs in the next three years, 38 percent anticipate an increase, and only 10 percent expect costs to decrease. Smart products have extended the ability for providers and users to continuously monitor their status and environment; to react and adapt to conditions; to maintain optimal performance regardless of circumstances; and to actively communicate with the user, environment or other products and systems. In turn, smart products generate real-time data of an unprecedented variety and volume. Throughout the product lifecycle, opportunities abound to collect, sort and take action on data to improve manufacturing and distribution, as well as the overall customer experience. One of the more noteworthy, though somewhat counterintuitive, study findings shows that many distributor technology decision makers are keen to share data with suppliers to more effectively collaborate on product and service development and delivery (Figure 6) . Eric Granata, vice president of business development at distributor ROBYN, believes there are a number of caveats for suppliers and distributors to consider. “Should we offer solutions like these?” he posits. “Howwill it change our business? What about security, data privacy and ethics? Are theremany in our industry (suppliers or distributors) who are ready to tackle that and risk their business to answer the question— ‘Was it worth it for the rest of us?’” The IoPP (Internet of Promotional Products) As a catalyst to new infrastructures, new monopolies, new politics and new economics, technology is changing who participates, how business is done, how rapidly competition moves and where the economic benefits are going and not going. The Internet of Things will soon become the Internet of Everyday Things, which will ultimately lead us to the Internet of Promotional Products. Though not likely to occur in the next five or even 10 years, as we move into an era where one generation’s technological advancements stand on the shoulders of the previous generation’s, the Figure 7: Value Dimensions In An IoPP World CONSUMERS Promotional Product Users Immersive Brand Experiences Consumers will be surrounded by connected interfaces that they use to consume, communicate, transact and experience. An unprecedented degree of information access and control will allow communities to form, facilitating greater power to judge, reject, embrace and endorse the brands in their world. Promotional products that are not smart will not provide any value and, as a result, go unused. BRANDS Promotional Product Buyers No Longer A Hard Sell IoPP will enable brands to communicate with consumers like never before. Promotional products will act as brand-owned digital media assets, delivering direct transactions and individualized consumer experiences. For the rst time, brands will be able to “follow” their ad investments inde nitely and anywhere around the world, unlocking signi cant value across the entire consumer lifecycle. INDUSTRY Promotional Product Distributors The data and insights generated through smart products will become their own “product,” arming distributors with tools to help brands understand what is being offered, to whom, and how successfully their solutions are performing. Sales teams will need to work with clients to understand what has value to them, and work with their own teams to price it right. The added value will demand new pricing models, which will ultimately lead to increased revenues and greater advertising market share. Promotional Product Suppliers Product data will provide a more detailed picture of usage patterns by segment, such as industry, geography or product line. Based on this data, suppliers will gain greater context to understand which speci c product categories do well and which to discontinue, and suggest more appropriate products, accordingly. Increased Collaboration Information will be available to all supply chain members simultaneously; however, the ability to remain connected to the product and track how it’s being used over time will be best managed by distributors for management capability. Distributors can then share usage data with suppliers, in turn shifting the focus from selling to maximizing IoPP value, organically building collaboration depth to capture intrinsic supply chain value. | JULY 2018 | 31