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: info@salmon.comor 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.