Marketers are yet to make the most of wearable technology, other than in the health category

Two years ago, consumers and the marketing world were eagerly anticipating the next generation of wearables: the smartwatch. Apple, Samsung and Motorola led the charge, keen to build on the success of wearables like the FitBit, Garmin, Nike+ and the Jawbone. They expected a huge take-up from consumers. And they touted to marketers both the benefits of the data that would be collected from the devices and the new frontier in app opportunities.

From a consumer point of view, in a market now worth $US14 billion ($18.5bn), Apple and Samsung quickly found themselves in the top five companies selling wearables. Yet at the end of the first quarter of 2016, they were sitting at Nos 3 and 5 respectively, behind FitBit and the Chinese brand Xiaomi, with Garmin at No 4.

Similarly, the marketing success stories never quite reached expectations. One of the early opportunities identified for the smartwatches was “glanceable marketing” — the ability to tap into the two-second glance a person darts at their smartwatch when it buzzes with an alert. It was seen as having great potential for engaging consumers, particularly in shopping environments. But few brands have gone down that path.

App developers moved swiftly to develop useful utilities for the smartwatches such as designer watch faces, games and news feeds, but many have been slow to turn the smartwatch into a marketing tool. The major marketing winners in this space have been the health-related brands, much like their wristband predecessors.

Medibank marketers were quick to jump on to the opportunities in 2014. Initially they offered a free FitBit for signing up to a policy before the end of the financial year, and today they are rewarding wearable users who walk 10,000 steps per day with 10 FlyBuy points.

Milo has done something similar for kids with their recent launch of the Milo Champions Band. Promoted by well-known dad and former Australian cricketer Brad Haddin, it’s another wristband device that connects to a smartphone app, tracking the child’s physical activity as well as the food and drink they are having, and giving them health and skills tips along the way.

Disney was also fast to market with the MagicBand at its Disneyland venues around the world. The wristband identifies the visitor, allowing access to the shuttle buses, park entry, shorter queues, and the ability to be easily recognised by the hosts in the restaurants. The band doubles as a payment device linked to your credit card. It also provides an incredible amount of relevant data on how people move and transact through their parks, so that they can continue to finetune the experience for future visitors.

There’s no doubt that expectations about the quality of data that could be obtained from wearables have been met. The issue has been whether those brands that have collected and mined the data have done so in a positive way. Consumers have kept a sharp eye on the health sector: a reward for completing 10,000 steps is a positive use of the data, but having your health insurance premium increased for averaging fewer than 5000 steps would obviously be seen negatively.

There is still a great deal of optimism for the wearables category over the next four years, with the market expected to more than double to $US34bn ($45bn), on sales of more than 400 million wearable devices.

The next frontier of wearables is in clothing, with textile manufacturers already able to weave conductive thread into garments. This enables clothing to be used like the touchpad on your laptop, or conversely, for the clothing to react with vibrations like a video game hand controller. Google is at the forefront of the former, and Australian brand Wearable Experiments is leading the charge on the latter. Sports marketers are particularly excited about this, as fans’ football jerseys will be able to react in real time to the bumps and tackles of their idols on the field.

The Nielsen figures show 3 million Australians over the age of 14 have a smart device on their wrist, which suggest wearables as a category is still in its early stages. As such, it will continue to provide opportunities for marketers who can bring together and exploit their utility, the data collected, and their ability to be used to engage customers with brands in a relevant way.