Digital Disruption impacts business anD life

The Dentsu Aegis Network (DAN), in partnership with The Economist, produced and recently released a white paper that covers key trends in the digital economy. The paper, titled “Asia Pacific’s Digital Disruption – The Next Set of Waves,” talks about the significant developments in digital technology that the market is advancing towards. The findings were shared at the DAN Communications Conference held last week in the Capella Hotel, Sentosa, Singapore.

The next digital movements include The Internet of Things (IoT), Virtual Reality (VR), Augmented Reality (AR), and Artificial Intelligence (AI). They are all groundbreaking and herald a new era where product manufacturers will rely on technology to develop a closer, more direct and more individualized relationship with their identified customers. Without a doubt, these technologies are redefining the possibilities of marketing. THE INTERNET OF THINGS • The IoT is a network of connected physical objects that communicate with

one another. An estimated 2.9 billion people worldwide are using the Internet to access information, communicate with others, conduct business and shop online. But increasingly, physical objects come equipped with sensors, embedded software and wireless network connectivity, which enable them to collect and exchange data. IoT is fast becoming a part of everything around us, from intelligent fashion to smart homes, offices, manufacturing facilities, vehicles and retail outlets. It promises to reshape the way people consume and how they live their lives.

• Data generated by IoT-ready devices provide deep insight into users ’behavioral patterns, allowing for much more precise consumer engagement and enabling more efficient and tailored product development. Possibly the most far-reaching consequence of the proliferation of IoT is a shift from consumers buying and owning

products to new offerings where the buyer may no longer own a physical thing, but rather will be billed on a pay-peruse basis. Companies like Airbnb, a home-rental platform, and Uber, a transportation network, have firmly established the “on-demand everything” mindset among consumers.

• The coming IoT surge will force many company leaders to rethink their business models at the most

fundamental level. Dr. Wen-Syan Li, senior vice president and IoT head of a software firm, sees a strong link between the smartphone boom and consumer acceptance of IoT products. People are now very familiar with the idea of services that seamlessly connect the physical with the digital world. As a result, it is much easier to grasp the concept that any object imaginable, like fitness devices, cars and bicycles, can be digitally connected, trackable and controllable. This has led to a marked increase in acceptance of consumer IoT devices for personal and home use. IDC, a market intelligence consultancy, reports that close to one third of all connected devices worldwide will be in Asia by 2020. VIRTUAL AND AUGMENTED REALITY • VR/AR may well be poised to become the next

major consumer computing platforms after personal computers, the Internet and smartphones, enabling new forms of experience. According to the 2016 report by Digi-Capital, a US consultancy group, total investment in VR and AR startups worldwide over the past 12 months amounted to US$2 billion, double the amount of the previous period.

• VR and AR are often lumped together as similar technologies, because they both generally require some sort of head-mounted display or headset. But there is a basic difference: VR simulates a full, immersive physical presence in a real or imagined three-dimensional environment, while AR supplements the view of live, actual physical surroundings with an overlay of digital assets. The Pokemon Go craze exemplifies this technology.

• Media companies and advertisers across Asia have already started experimenting with

VR/AR. Shangri-La Hotels in Hong Kong has equipped its global sales office with VR headsets to let customers experience its 94 hotels and destinations in highly engrossing 360-degree videos. Audi, a German car manufacturer, ran the “Drive Back in Time” campaign in Singapore, creating VR videos that allowed people to drive around iconic areas of the city in 1965. Over a period of 10 days, 6,000 people experienced an Audi drive, which would have taken more than two years to achieve through regular showroom visits. ARTIFICIAL INTELLIGENCE • The term AI describes a rapidly developing set of technologies, from smartphone apps to voice-controlled home devices, connected vehicles and personal robots with advance cognitive abilities patterned on the human brain. This allows digital devices to perform complex tasks like understanding natural communication, identifying consumer preferences over time or recognizing someone’s moods and adjusting their responses accordingly.

• The technology sector is in the midst

of an AI boom. The Transparency Market Research consultancy revealed that the global market for AI was valued at $126 billion in 2015, and is set to grow more than 36 percent per year from 2016 to 2024 to reach revenues of more than $3 trillion in 2024.

• For the marketing profession, this means that highly personalized interaction with consumers and sophisticated predictive analysis will become the norm rather than the exception. Marketing will be increasingly conversational in nature. Consumers will often be the ones that initiate contact with a brand. Each interaction between brand and consumer helps build the understanding of the individual wants and needs of the consumer. The more meaningful the conversation between the brand and the consumer is, the more relevant the marketing program becomes. • Robots will play an active role as interfaces for consumers to make sense of their environment. The International Federation of Robotics has predicted that 35 million robots for personal use will be sold between 2015 and 2018, but only 8,100 of these will be social companions, according to the group’s estimates. The vast majority will be units that are only able to perform simple tasks, like vacuuming floors or mowing lawns. A robot personal assistant is being tested in a Kentucky Fried Chicken concept store named KFC Original+ in Shanghai. The robot gets visitors’ orders, taking into account KFC’s customer data to better adapt its behaviors to patrons’ needs, as well as to improve transactional efficiency. Other leading global brands such as MasterCard, Pizza Hut, Nestlé and many more are integrating robots into their consumers’ journey.

• On the downside, price and culturebased issues are the primary hurdles for AI. Key technologies that power robot mobility and object manipulation are still expensive, despite the fact that the smartphone boom has contributed to falling prices for some hardware components commonly used in robot production, like displays and sensors. Each culture has a specific view on robotics. In Japan, people tend to idealize robots and see them as companions and friends. China has a strong government emphasis on AI technology, because it is strategically important to the country’s manufacturing sector. In the west, there are privacy concerns, and pop culture’s message about robots is more mixed: Hollywood has portrayed robots as a threat to humans in films like Terminator and TV series like Westworld, while the purpose of robots like Baymax and Iron Giant is to serve humans.

Asia is likely to play a critical role in the growth and acceptance of these technologies. The region’s high population growth, rapid urbanization and growing affluence are creating the conditions for fast adoption on a large scale. As many consumers are investing in big-ticket items for the first time, they are leapfrogging to smart, connected products, bypassing traditional technology.