Contextual Commerce builds on the success of Contextual Marketing, where companies track consumer patterns and provide advertising when and where it’s most effective.
Contextual marketing is an online marketing model in which people are served with targeted advertising. Each time a user performs a search, reads an article, or clicks on an ad, a cookie stored on their computer tracks the user’s activity. This data is then applied to creating a behavioural profile of the consumer for marketing purposes.
“A large portion of marketing dollars are wasted when the wrong offers are made to the wrong people at the wrong place and time.”
— – Jon Gettinger, Sr. Vice President of Marketing, Aria Systems
Perhaps the most prominent online advertising service using targeted advertising is Google AdWords. Since it’s inception, in 2000, AdWords has become the main source of revenue for the company. According to The Statistics Portal Google’s ad revenue in 2014 amounted to almost US$59.06bn, accounting for 89.5 percent of the company’s total revenues.
Following a successful IPO, and the need to generate revenue for shareholders, Facebook joined the contextual marketing party in 2007. The social media giant saw revenue grow from US$7.87m in 2013 to US$12.47bn in 2014.
While the positives for applying contextual marketing may seem enticing, companies need to ensure that consumers are not faced with endless messages. Pinterest recently announced ‘Buyable Pins’, which were rolled out to US ‘Pinners’ on iPhones and iPads.
“You’ll start seeing buyable Pins all over Pinterest—in your home feed, on boards you love, and in search results. When you spot a Pin with a blue price, that means you can buy it.”
— – Pinterest Blog
The comments on Pinterest’s blog show that many users are excited about their Shopify stores coming to life, and increasing accessibility to their products. Others, however, are complaining that the new service is providing too many advertising pins, taking away from what Pinterest used to be, an area to share ideas.
There are some companies in the Bitcoin industry that are turning targeted advertising on its head, including the GetGems messaging app. GetGems is a social media platform focused on rewarding user participation, with a share of advertising revenue. “Why let companies profit from the networks we build?,” states the company.
The project is attempting to incentivise social messaging users through with its native token GEMZ, issued on the Counterparty platform. Users can buy or receive GEMZ for their participation in the community. GetGems also pays GEMZ to users who choose to receive messages from advertisers.
“The Bitcoin revolution reclaimed currency from the control of traditional establishments. It’s time we do the same for social networks.”
— – GetGems
Beyond contextual marketing, many companies are focusing on contextual commerce, which will harness the Internet of Things (IoT). The Internet of Things revolves around increased machine-to-machine communication, it’s built on cloud computing and networks of data-gathering sensors.
Cisco a worldwide leading IT company estimates that 50 billion devices and objects will be connected to the Internet by 2020. “The IoT can potentially transform nearly every industry-locally and globally. It brings networking technology to places where it was once unavailable or impractical. The challenge is to build the right infrastructure.”
“The IoT will generate an enormous, truly unprecedented amount of precise information about buyers and their needs. It’s a marketer’s dream come true.” Jon Gettinger, Aria Systems Sr. Vice President Marketing at
By harnessing the IoT, contextual commerce combines the power of data from everyday devices with the proven success of contextual marketing.
Rebel Interactive Group provide an example of contextual commerce: Molly loves drinking a protein shake after every workout. Instead of her having to keep track of how many she has left, and then going to buy more before she runs out, her fitness tracker could relay information to the company she buys her protein shakes from. As soon as she’s completed 24 workouts, the protein shake company will ship her a new 24-pack of shakes automatically.
Braintree, a PayPal company, views contextual commerce as an exciting opportunity and recently procured a contextual commerce company called Method. “This means we will be able to offer merchants a complete commerce solution (payments and order management) to help them add contextual commerce channels to the ways that they sell to their customers. For consumers it will mean seamless, simpler, and safer ways to buy the things they want, anywhere they discover them.”
Braintree also partnered with Coinbase, in Sept 2014. To accept bitcoin, Braintree merchants simply need to open a separate merchant account with Coinbase and then link to their Braintree account. “We’ll enable our customers to easily accept bitcoin in the coming months via a partnership with Coinbase – a trusted, high quality bitcoin payment processor with 1.6M consumer wallets and 36,000 merchants globally,” stated Bill Ready, Braintree CEO.
Bitcoin is open to everyone and everything, and thus every sensor can have its own Bitcoin account, at no cost and without human involvement. While traditional payment systems might be able to manage this in a cost-efficient way, numerous developers are working on payment systems using the open source Bitcoin platform, enabling the Internet of Things and contextual commerce to become as successful as contextual advertising.