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Apple Watch Hype Aside, Advertisers Still Wary About Wearables

The Apple Watch is almost here, but advertisers still face many unknowns.

On Monday, the public had some of their key questions about the Apple Watch answered, as the product was officially unveiled. But many marketers still don’t quite know what to expect insofar as how they can use the hi-tech gadget to target consumers. It will take some time before they figure it all out.

Considering the heightened debate and speculation about what advertising even means when it comes to wearables, nearables, and the Internet of Things, this is the time for brands, agencies, and tech providers to start producing a game plan.

Part of why advertisers don’t generally have a particular set of strategies in place is because the wearables space is such nascent territory. While Apple may help vastly develop it, there are still an abundance of unknowns.

“Right now the marketplace for wearables is very small,” says Tim Dunn, director of strategy at Isobar, US. “Android Wear has only sold 720,000 units globally in the whole of 2014, with Pebble around the same amount. The total market (for smart bands) was around 5 [million].”

Isobar's Tim Dunn
Isobar’s Tim Dunn

Apple plans to change that radically, Dunn notes. As for just how much of an impact the Apple Watch could make in building the wearables marketplace, JP Morgan is forecasting that there will be over 26 million smart watch sales in 2015 alone. That would be a substantial growth spurt, but still, wearables are miles behind smartphones, which by 2018, will be owned by some 2 billion consumers.  

An Accessory To The Smartphone

Jaq Andrews, marketing and technology specialist at mobile app development company Zco Corporation, suspects that the wearables won’t be nearly as big as smartphones anytime soon. This is partly the fault of its design.

“The screen on a watch just isn’t large enough for many types of apps, and consumers have more functionality in their phones,” Andrews says, adding that the smartwatch is an accessory to the smartphone. In Apple CEO Tim Cook’s introductory presentation on the Apple Watch, he suggested as much by explaining how the device communicates and syncs up with a user’s iPhone.

But even as an extension of the iPhone, the Apple Watch offers users a new experience — one consumers have expressed an extreme interest in.

“I’m confident the analysts have it right in terms of sales,” Dunn says. “Apple has designed a product that works for many different users, and that has balanced fashion and usability in a way no one else has come close to. As iPhone 1 galvanized the smartphone market in 2007, so should [the Apple Watch], with huge gains to be made by everyone in wearables and the Internet of Things.”

Gaining Trust And Consent

Marketers will need more than just the popularity of the Apple Watch in order to use it for targeted ads. They’ll need consumer consent. The Apple Watch will be a highly private zone for consumers, and so any potential ad experience they face will have to be 100 percent opt-in.

unnamed-1“Anyone trying to devise an interruptive ad format for this screen would be making a severe intrusion into the user’s privacy, and it will not be allowed by Apple in any event,” Dunn says. “All brand interactions must be tied to a smartphone app, indicating consent. But even then, the volume and nature of interactions must be carefully monitored.”

Brands will have to have a solid relationship with consumers via their smartphones before they even try to target them on their smartwatches. Otherwise, they risk offending a user and losing their interest for good.

“The critical thing to deploying messaging to [the Apple Watch] is to develop a pre-existing customer relationship, and a reason to download both a smartphone app and its Watch extension,” Dunn says, suggesting that this be accomplished through content, rewards, and location-sensitive relevance.

The Apple Watch Pioneers

During his presentation, Apple’s VP of Tech Kevin Lynch mentioned some of the smartwatch’s initial marketing partners, names that include Whole Foods, The Weather Channel, and Starwood Hotel. Cook also noted that Apple Pay, which will be available on the Apple Watch, is already used by 700,000 retailers.

There are 3.7 million retail establishments in the US, according to figures from the National Retail Federation trade group, so Apple Pay is off to a pretty good start since it was introduced barely six months ago.

The questions that remain are what opportunities will exist that will be native to the Apple Watch — and how will those experiences influence the wider wearables and IoT marketing landscape? And how important will those opportunities be to marketers who are already invested in mobile? Will it be enough to move ad dollars into the Apple Watch and wearables at large?

Adam Meshekow, EVP, Product Strategy & National Sales at SITO Mobile, thinks the marketers will look to the Apple Watch not as a second smartphone, but as a brave new platform.

SITO's Adam Meshekow
SITO’s Adam Meshekow

“The first advertisers will be convenience retailers and [Quick Serve Restaurants] verticals as they will be the ones to embrace the technology,” Meshekow says. “I imagine the McDonalds and Starbucks of the world will want to speak to the wearable market first as they are seeing a steep decline with that younger generation.”

John Haake, CMO at Verve Mobile, echoes Meshekow viewpoint: “I’d expect QSRs and the likes of Starbucks will experiment early with foot traffic incentives. It’s unclear to me how branding or awareness campaigns would manifest themselves on the small screens of watches, but you never know.”

It’s worth noting that when feature phones first started gaining popularity in the mid-2000s, marketers initially had trouble conceiving of mobile devices offering any clear advertising placement. Then SMS ads appeared and ultimately, feature phones evolved into “smartphones,” which paved the way for better connectivity which allowed for placing richer ads.

Still, as Meshekow points out, there is no uniform wearables platform yet that is mainstream and no standard advertising format.

“Until the market understands the penetration, scale, and usability of advertising via wearables there is little to be known,” Meshekow says. “Marketing teams should test and learn what formats, creative executions, and targeting perform in the wearable market, so testing and learning will be the best way for marketers to embrace this new medium.”

The Possibilities Aren’t Endless

For the moment, we can assume that building a larger framework for physical retailers and businesses to use the Apple Watch and other wearables as a marketing tool will likely involve three primary options:

Notifications: Although most of its functions require the Apple Watch being tethered to a signal from the iPhone, the speed and ease of simply looking at or touching a device on their wrist changes the way consumers will respond to notifications and send messages and images.

Glances: Think the Apple Watch screen-size, which ranges between 38-to-42 millimeters, is too small for impactful ads? Think again. In his presentation, Cook showed a graphical representation of his beating heart and how that moving image could be sent to another wearer. He also showed the ability to draw on the face of the smartwatch and send that pictorial instantly to a friend.

Data: Mobile advertising in general and geomarketing in particular are valued for giving advertisers more precise data about consumer shopping patterns in the physical world than can the cookie-based behavioral targeting on users’ desktops. The use of location and opt-in payments as wearers go about their day will increase the depth of the analytics given off by Apple Watch and similar wearables that will attract consumers’ attention.996115_364392067078336_658673464955482941_n

It’s probably true that the Apple Watch and its wearable rivals are not for everyone — at least not yet. But consumers have shown a desire for devices becoming smaller, lighter, and more personal. This certainly fits the bill. It would be surprising if advertisers didn’t try to use the limited space to be creative and think beyond the standard mobile banner strip, which frankly has become dull. In other words, if advertisers do it right — and yes, many will probably do it wrong — they can acquire complete share of voice by presenting a user with a single, memorable image.

The Apple Watch and its second- and third updates will demonstrate new possibilities even as consumers demand more assurances that their privacy is respected and protected. Developers and marketers who support them can earn the trust of an opted-in user by being more relevant and timely with their offers, messages, and creativity.

Although wearables are already on the market, they’re still an early adopter product. They are at least two years away from even touching the mainstream. But many of the answers brands are seeking as they ponder how to leverage the Apple Watch can be found in the channels they’re already sussing out today.