How to Make Money fromConnected Home ProductsConnectivityReturn on1www.arrayent.com
“ Smartphone ownership has morethan doubled in two years. ”Source: Nielsen“ By 2020 there will be50 billionconnected devic...
ConsumerSafety. Protect home investments withaffordable remote monitoring.Savings. Save money by decreasing energyusage fr...
Connected Economy: ConsumersConsumers are leading the charge to connectivity across the globe. With soaringmobile web usag...
Connected HomeArmed with smartphones, consumers are eager for products and apps that enablethem to monitor their homes fro...
Connected products offer manufacturers, retailers, and service providersmonetization opportunities. The next few slides wi...
OverviewConnected products command a higher price point in themarket by offering new features, featuring smartphones onpac...
Smart thermostats exemplify the emerging market for mobile home energy management. One of theleading new products, The Nes...
OverviewConnected products deliver data that can be translated intofollow-on sales. Utilizing new data and mobile engageme...
Monster Power’s suite of smart plugs and surgeprotectors put energy control into the consumer’shands. The company’s Power ...
OverviewDemand for digital advertising is quickly outpacing the growth oftraditional television, radio, and print ads. Mob...
Highly trusted apps such as Mint.com (personal finance) arepulling big revenue from mobile advertising.Mint charges partne...
OverviewHome service companies have long utilized a subscription-basedrevenue strategy, charging customers on a monthly or...
Companies such as ADT and Comcast have led theway in carving out stable revenue from subscriptionfees.Thanks to the extrem...
OverviewOnce a smartphone is connected and data is generated fromhome products, there are innumerable features that can be...
The Iris platform by Lowes offers an integrated suiteof services and tools. Smartphone features includeenhanced reporting,...
New Revenue StrategiesPremium Product SalesComplimentary Product SalesMobile Advertising RevenueSubscription RevenueAdditi...
Arrayent: The Platform forconnected products.Learn more about our products and services atwww.arrayent.com or email info@a...
Appendix 1 Closed–Loop Marketing 101 - Descriptionwww.arrayent.com 19
Appendix 2 Source ListConsumer TrendsEurope Tops US in Mobile Ad Response Rates, eMarketer Inc, March 13, 2012http://8.10....
Appendix 2 Source ListSmart AppliancesConnected Personal Objects: Getting Intimate with the Internet of Things, Guthrie Do...
Appendix 2 Source ListOn Guard: Next-Generation Home-Security Systems, Consumers Digest, Gregory Scoblete, July 2011http:/...
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Return on Connectivity

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Return on Connectivity

  1. 1. How to Make Money fromConnected Home ProductsConnectivityReturn on1www.arrayent.com
  2. 2. “ Smartphone ownership has morethan doubled in two years. ”Source: Nielsen“ By 2020 there will be50 billionconnected devices. ”Source: Ericssonwww.arrayent.com 2
  3. 3. ConsumerSafety. Protect home investments withaffordable remote monitoring.Savings. Save money by decreasing energyusage from home products.Comfort. Maximize time with remote homeproduct and appliance management.Smart Service. Take advantage of remotediagnostic testing and advanced customerservice programs.Green. Reduce energy consumption andprotect the environment.Connectivity TrendsDriving Business and Consumer BenefitsBusinessDiversify. Diversify revenue strategies andearn income from new sources.New Markets. Engage current and highpotential mobile customers.Efficient Diagnostics. Save money withremote product diagnostic testing andmonitoring.Quality Customer Service. Provide best-in-class customer service with new productinformation and advice.Brand Reputation. Build brand reputation forproduct innovation and leadership.www.arrayent.com 3
  4. 4. Connected Economy: ConsumersConsumers are leading the charge to connectivity across the globe. With soaringmobile web usage rates, the products of the future must be connected or riskobsolescence. Mobile apps offer brands an opportunity to engage target customerswhere they are actively deciding, controlling, learning, and purchasing.“Nearly half of consumers interactwith brands online.” Source: IBM“The movement to mobility isat full throttle.” Source: Accenture“Smartphone sales in Brazilgrew by 165% in 2011.”Source: Nielsen“49% of smartphone owners in theUS frequently use their device whileshopping.” Source: Nielsen“62% of smartphone owners havedownloaded apps, 87% of whichhave used daily deal websites.”Source: Nielsen“Over half of 45-54 year olds acton mobile ads in South Africa.”Source: Nielsen4www.arrayent.com
  5. 5. Connected HomeArmed with smartphones, consumers are eager for products and apps that enablethem to monitor their homes from anywhere and save money on energy bills.Manufacturers and retailers are responding with connected products, features, andapps to meet the emerging demand.“8 billion devices will beconnected on the homenetwork by 2015.”Source: Parks AssociatesLowe’s launched Iris in 2012,a customer portal and mobileapp for their connectedproducts.“Smart appliance market tobe $26.1 Billion by 2019.”Source: Pike Research5www.arrayent.com
  6. 6. Connected products offer manufacturers, retailers, and service providersmonetization opportunities. The next few slides will show how today’s mostinnovative companies are earning money from connected home products andmobile applications using these five revenue strategies:Revenue Strategiesfor Connected Home ProductsPremium Product Sales$Mobile Advertising Revenue$ Complimentary Product Sales$Subscription Revenue$Additional App Feature Revenue$6www.arrayent.com
  7. 7. OverviewConnected products command a higher price point in themarket by offering new features, featuring smartphones onpackaging, and enhancing customer value. A quick scan ofthe market proves industry leaders are already testing themarket with a wide range of high priced connectedproducts and earning a generous margin to cover newcosts.The MoneyDemand for smart products is pushing prices up 20-300%.If Zowie normally sells 50,000 widgets/year at $100/widgetearning $25/widget in profit, a connected widget selling atthe same rate with a 50% mark-up and $20/widget in profitwould yield $1M or an additional $500K. This modelprovides for a small increase in COGS per unit, but delivers200% more profit for a high value, connected product.Best Practices• Raise prices moderately to establish the product value, but ensure high volume sales.• Leverage other monetization strategies such as follow-in sales and advertising.• Great fit for connected products without their own mobile app.“ Increase customervalue with aconnected productand earn 20-300%more.”Revenue StrategyPremium Product Sales7www.arrayent.com
  8. 8. Smart thermostats exemplify the emerging market for mobile home energy management. One of theleading new products, The Nest Learning Thermostat, offers a sleek product and app to remotelymonitor and adjust the temperature of your home. Retailing at $250, this premium product is setting anew bar for elegance, functionality, and price - breaking open a new market for smart thermostats andshifting the existing market.Premium Product SalesSmart Thermostat4 out of the top 10 Consumer Reports’ ratedthermostats offer mobile energy managementand include generous mark-ups.(See Appendix for more Thermostat prices) Nest is selling for3-5x’s the competition.Example:Example8www.arrayent.com
  9. 9. OverviewConnected products deliver data that can be translated intofollow-on sales. Utilizing new data and mobile engagementpoints, marketing teams can identify new customer needs,develop products to meet their needs, and cheaply test ads.This strategy is focused on getting new and existing products infront of their connected customers and earning a percentage ofthe final sale (See Appendix to learn how to market new productsusing Closed Loop Marketing).Complimentary products could be connected or non-connectedproducts - built by you or a partner.The MoneyApp owners with advanced targeting are able to advanceadditional sales with little to no cost and at least 30-40% retailermargins. This is a great way to diversify revenue and meetcustomer needs without increasing costs.Best Practices• Top revenue strategy for companies with a mobile app.• Learn, test, and evaluate new product ideas and marketing in short, fast cycles with a mobile app andClosed Loop Marketing (See Appendix).• Limit the use of outside ads if you have the opportunity to sell complimentary products for a higher return.“Leverage data andcustomer interface tosell follow-onproducts.”Revenue StrategyComplimentary Product Sales9www.arrayent.com
  10. 10. Monster Power’s suite of smart plugs and surgeprotectors put energy control into the consumer’shands. The company’s Power Control App enablescustomers to “manage power consumption from theirsmartphone anywhere, anytime.”By monitoring the power consumption of devicesconnected to Monster Power products, Monster caninform users of “Vampire” devices on standby that aredriving up electricity bills and recommend relatedMonster Power products that can save consumersmoney. The app features a built-in “Market” whereusers can then buy these complimentary products.Follow-on product ideas:• Garage door Thermostats• Security system Smoke alarm, sensors• Weather monitor Irrigation ControlComplimentary Product SalesSmart Home PowerExample:Example10www.arrayent.com
  11. 11. OverviewDemand for digital advertising is quickly outpacing the growth oftraditional television, radio, and print ads. Mobile consumers areengaged and receptive to new information and opportunities.Companies with a smartphone or tablet app can open theirinterface to advertisers, earning money from display ads,including banners or videos, or integrated productrecommendations.The MoneyAdvertising rates vary depending on the level of targeting.Connected home products can assume a premium ad ratebetween $5-10 per thousand impressions. An active app withuser visits of 3x’s a week and 50,000 devices can yield $65,000in ad revenue/year with zero costs. App owners will offer acompelling platform for anyone looking to get in front ofconnected home owners and renters.Best Practices.• Utilize ads to bring in revenue from a free or freemium app.• Optimal for usage rates of at least 3-4x per week.• Accumulate demographic and usage information to ensure advertisers pay a premium for your uniquedemographic.Revenue StrategyMobile Advertising Revenue11www.arrayent.com
  12. 12. Highly trusted apps such as Mint.com (personal finance) arepulling big revenue from mobile advertising.Mint charges partners a premium based on lead generation(PPL) and cost per action (CPA) based on seamlesslyintegrated referrals. Mint is positioned much like a trustedadvisor with highly-targeted, actionable data.By keeping track of usage statistics and makingrecommendations that help consumers save money orincrease convenience, home products companies with anactive user base have tremendous opportunity to createhighly trusted apps like Mint.com.Mobile Advertising RevenueTrusted AppsExample:ExampleTrusted Traffic12www.arrayent.com
  13. 13. OverviewHome service companies have long utilized a subscription-basedrevenue strategy, charging customers on a monthly or yearlybasis in exchange for continued services. Common examplesinclude home security systems, cable television, and internet.The subscription model may be extended to other connectedhome products, especially if the customer is receiving a regularbenefit that requires a continued service.The MoneyA typical subscription rate for connected products is about$9.99/yr. Rates will depend greatly on 1) how the customerperceives the value of the service and 2) the usage rates for theapp and home product. Cost of services are very minimal.Best Practices• Strong option for companies with a service to offer.• Companies with regular monitoring could offer custom reports as a service feature.• Owners may want to avoid selling the app and charging monthly fees.“Extend thesubscription model toconnected homeproducts that provideregular benefits tocustomers.”Revenue StrategySubscription Revenue13www.arrayent.com
  14. 14. Companies such as ADT and Comcast have led theway in carving out stable revenue from subscriptionfees.Thanks to the extremely low business cost of servicefor connected products, there is major potential fordisruption in the subscription fee market. At$8.99/month, Nexia is now offering a highlycompetitive connected product at a much lowersubscription price.Subscription RevenueHome ServicesExamples:Example14www.arrayent.com
  15. 15. OverviewOnce a smartphone is connected and data is generated fromhome products, there are innumerable features that can beadded to the app. For example, a connected thermostat couldoffer a base subscription of $10/year, and a $5/month “learn andset behavior” premium feature that tracks usage patterns andautomatically configures schedules for customers. A connectedsecurity system could turn on door locking from mobile phones.The MoneyNew app features can be sold from within the app store or fromthe retailers site. Rates will most often be smaller monthlysubscriptions, but one-time rates may exist. Cost of services arevery limited.Best Practices• Consistently offer software updates and new features to entice add-on pricing• Perfect for lower price products or apps with a freemium version• Freemium can be offered to increase usage and then sell upgrades“Additionalfeatures aresimple to offer –once yourproduct isconnected.”Revenue StrategyFreemium App Revenue15www.arrayent.com
  16. 16. The Iris platform by Lowes offers an integrated suiteof services and tools. Smartphone features includeenhanced reporting, tracking, and mobile controls.By tracking usage rates, the company can easily helpa customer optimize usage rates and electricity bills.Home products’ companies provide continuoussecurity for people that want to stay connected andenergy savings cost conscious customers.Lowes is able to charge low upgrade fees, but arecounting on high volumes and control of the wholehome.Additional App Feature RevenueLowes’ Connected HomeExampleExamples:16www.arrayent.com
  17. 17. New Revenue StrategiesPremium Product SalesComplimentary Product SalesMobile Advertising RevenueSubscription RevenueAdditional Feature RevenueBusiness BenefitsEarn more with connected productsEngage mobile customersDiversify revenue streamsIncrease value to customersConsumer BenefitsSave money and timeProtect assets and investmentsMonitor and manage the homeReduce energy usageConnected home products help your businessand your customers. Stay relevant. Make money. Get connected.17www.arrayent.com
  18. 18. Arrayent: The Platform forconnected products.Learn more about our products and services atwww.arrayent.com or email info@arrayent.com18www.arrayent.com
  19. 19. Appendix 1 Closed–Loop Marketing 101 - Descriptionwww.arrayent.com 19
  20. 20. Appendix 2 Source ListConsumer TrendsEurope Tops US in Mobile Ad Response Rates, eMarketer Inc, March 13, 2012http://8.10.209.13/Article.aspx?R=1008897Untrustworthy? How Nielsen Sees The Future of Mobile, Business Insider, Laura Stampler, June 14, 2012http://www.businessinsider.com/how-nielsen-sees-the-future-of-mobile-display-advertising-2012-6?op=1How Connectivity Influences Global Shopping, NielsenWire, August 28, 2012http://blog.nielsen.com/nielsenwire/online_mobile/how-connectivity-influences-global-shopping/Two Thirds of New Mobile Buyers Now Opting for Smartphones, Nielsen Blog, July 12, 2012http://blog.nielsen.com/nielsenwire/online_mobile/two-thirds-of-new-mobile-buyers-now-opting-for-smartphones/From social media to Social CRM – What customers want, IBM Institute for Business Value, IBM Global Business Services Executive ReportMobile Media Report (Q3-2011), Nielsen, http://www.slideshare.net/victori98pt/state-of-mobile-q32011-by-nielsen2011 Year in Review, Scorecard for Mobile Advertising Reach and Targeting (S.M.A.R.T.) Report, Millenial Media, January 2012http://www.millennialmedia.com/mobile-intelligence/smart-report/State of the Media: U.S. Digital Consumer Report Q3-Q4 2011, Nielsen,Global AdView Pulse lite, Q 1 2012, NielsenService Providers and the Connected Home, Kurt Scherf, Parks Associates5 Mobile Ad Trends For 2012, Forbes, Jim Payne, January 4 2012http://www.forbes.com/sites/ciocentral/2012/01/04/5-mobile-ad-trends-for-2012/Mobile Reigns Supreme in U.S. Media Consumption, InMobi Insights, Surag Patel, August 16, 2012http://www.inmobi.com/insights/2012/08/16/mobile-reigns-supreme-in-u-s-media-consumption/Connected Consumer 2012, Mobile Future Foreward, Chetan Sharma, http://www.chetansharma.com/connectedconsumer.htm20www.arrayent.com
  21. 21. Appendix 2 Source ListSmart AppliancesConnected Personal Objects: Getting Intimate with the Internet of Things, Guthrie Dolin, May 19, 2012http://www.slideshare.net/gdolin/connected-personalobjects-planningness2012Ericsson CEO Predicts 50 Billion Internet Connected Devices by 2020, Stacy Higginbotham, April 14, 2010http://gigaom.com/2010/04/14/ericsson-sees-the-internet-of-things-by-2020/The Nest Thermostat: Values, Passion & Emotion – A Branding Story, Biquitous, Chris Fernandez, November 17, 2011http://www.biquitous.com/nest-thermostat-branding-storyBundled energy management services, Fierce Energy, Tom Kerber, August 2, 2012http://www.fierceenergy.com/story/bundled-energy-management-services/2012-08-02Household Appliances on the Smart Grid, Smart Appliances Research Report, Pike Research, Q4 2010http://www.pikeresearch.com/research/smart-appliancesNetworked Home Energy Management Devices and In-Home Connected Displays, Home Area Networks Research Report, PikeResearch, Q3, 2012 http://www.pikeresearch.com/research/home-area-networksLowe’s jumps into smart home energy market, Smart Planet, Kirsten Korosec, January 5, 2012http://www.smartplanet.com/blog/intelligent-energy/lowes-jumps-into-smart-home-energy-market/11801AlertMe announces strategic partnership with Lowe’s to provide Smart Home technologies to North American consumers, AlertMePress Release, January 5, 2012, https://www.alertme.com/press-release/alertme-announces-strategic-partnership-lowe%E2%80%99s-provide-smart-home-technologies-norCan Lowe’s Sell Easy Smart Home Monitoring and Control From Anywhere? Eric Bochtler, Innovation Point of View, August 24, 2012http://www.innovationpov.com/can-lowes-sell-easy-smart-home-monitoring-and-control-from-anywhere/Move over Siri. Introducing Iris, Lowe’s smart home hub, Consumer Reports, July 31, 2012http://news.consumerreports.org/home/2012/07/lowes-introduces-iris-smart-home-management-system.htmlOn Guard: Next-Generation Home-Security Systems, Consumers Digest, Gregory Scoblete, July 2011http://www.consumersdigest.com/electronics/on-guard/video-surveillance-systems21www.arrayent.com
  22. 22. Appendix 2 Source ListOn Guard: Next-Generation Home-Security Systems, Consumers Digest, Gregory Scoblete, July 2011http://www.consumersdigest.com/electronics/on-guard/video-surveillance-systemsPanasonic Launches Android App for Smart Appliances, Video World Insider, Tara Seals, August 21, 2012http://www.videoworldinsider.com/topics/video-world-insider/articles/304192-panasonic-launches-android-app-smart-appliances.htmAlways On, Always Connected, Finding Growth Opportunities in an Era of Hyermobile Consumers, Accenture Consumer Electronics Report 2012LG Unveils New Line of Smart Home Appliances at CES, WebProNews, Zach Walton, January 9, 2012http://www.webpronews.com/lg-smart-appliances-ces-2012-01Mobile AdvertisingAmazon Offers Advertising Opt-Out on Kindle Fire, Wall Street Journal, Greg Bensinger, September 10, 2012http://online.wsj.com/article/SB10000872396390444554704577642591117657990.htmlWhen Freemium Fails, Wall Street Journal http://online.wsj.com/article/SB10000872396390443713704577603782317318996.htmlAdMob Network Case Study, Best, Cool, Fun Gameshttps://docs.google.com/a/google.com/viewer?url=http%3A%2F%2Fwww.google.com%2Fads%2Fadmob%2Fpdf%2Fapps-bestcoolfun.pdf&embedded=trueAdMob Network Case Study, BackFlip Studioshttps://docs.google.com/a/google.com/viewer?url=http%3A%2F%2Fwww.google.com%2Fads%2Fadmob%2Fpdf%2Fapps-backflip.pdf&embedded=trueiAd, Apple Advertisinghttp://advertising.apple.com/brands/Mobile Will Grab TV Advertising’s Crown, Matt Cohler, TechCrunch, September 25, 2012www.techcrunch.com/2012/09/25/mobile-will-grab-tv-advertisings-crown/US to Top Japan as World’s Biggest Mobile Ad Market, eMarketer, August 1, 2012http://www.emarketer.com/newsroom/index.php/top-japan-worlds-biggest-mobile-ad-market/22www.arrayent.com

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