Here's a not-too-distant future Eric Franchi imagines: You order a movie ticket on your phone, then decide to stop at a convenience store to buy snacks. As you stand in the aisle, your wrist vibrates. The company whose candy you were eyeing has sent you a discount.
Mr. Franchi is co-founder of Undertone, a digital ad network based in New York, and one of an ambitious few in adland testing "wearable" products. In three years, he believes, smartwatches will be pervasive -- and a booming business for advertisers.
At the Mobile World Conference in February, the world's largest smartphone manufacturer Samsung unveiled two sleek products in the second generation of its watches with internet capabilities. The Samsung Gear 2 and Gear 2 Neo will land on the market April 8. LG and Motorola have unmasked their own devices. Qualcomm also has its own. So do a gamut of companies, from hardware veterans Sony and Intel to Pebble Technology, a small, scrappy company financed by the crowdfunding site Kickstarter. (And then there's China, where one analyst said "hundreds" of manufacturers are in the mix.)
The potential for advertising on such devices ratcheted up in
March when Google -- which earns 90% of
its core revenue from ads --
released Android Wear, a software-development kit for
wearables. Google is tying up with HTC, LG, Motorola, Samsung and
Asus, along with chip-makers Broadcom, Intel and Qualcomm, among others. (Gear 2 will run on
Tizen, Samsung's own operating system, but a Samsung representative
said the company remains open to supporting various operating
At the moment, Android Wear looks to be the Google Now, or the intelligent personal assistant, on a watch. In Google's short video demonstration, users activate the device with a simple command: "Okay, Google."
Agency insiders suggested that any effective advertising with Android wearables would need to be on native applications. Ian Schafer, CEO of Deep Focus, believes smartwatch ads will combine Google's capabilities with Waze (which knows where you are and where you're going) with the predictive power of Google Now. Advertisers could then invest in cross-screen buys once ads come to Google Now.
But some advertisers are skeptical that ads will leap onto Android smartwatches -- or even that they should. "Wearables are so personal, and so intimate, that [advertising] can easily be construed as an invasion," cautioned Jonathan Greene, VP-mobile and social platforms at R/GA. "My guess is that Google will be careful turning on access to it." Ads, he said, "will be limited at best."
For now, Google is bunching its wearables venture into its non-advertising arm where futuristic products are born, with business models to be determined. This is also where, at least publicly, the company is shelving Google Glass.
In February, at South by Southwest, Undertone debuted Future Proof Labs, a platform for the exploration of digital advertising on wearables. Undertone views beacons, which are miniature positioning systems that can link to a phone's bluetooth, as key. Beacons have been deployed in single-brand retail stores and stadiums, and soon may be moving to retail megastores. They can trace phone purchases and apps and then theoretically link to an ad on a smartwatch. "It ends up being applicable to every category," said Sal Candela, Undertone's VP-mobile strategic sales.
Some speculate the technology could work in reverse: Watches collect data---spending habits, location, even health---and the notifications strike the wearer on their email or phone.