05/03/12 15:54
- What is NFC?
- Contact-less payments
- NFC-enabled posters
- NFC vs QR codes
- Internet connectivity
- The two-way advantage
- A need for incentives
- Critical mass
- Retail potential
- A symbiotic relationship
In the past year or so there has been much talk in marketing and advertising circles about Near Field Communications (NFC). Some have claimed NFC will usher in a new era of interaction and engagement. Others have been more circumspect, suggesting that NFC offers little more from an advertising perspective than existing technologies such as QR codes, SMS, or short codes.
The out-of-home sector has been quick to seize upon NFC as the key to getting consumers to directly interact with posters and transform the OOH print medium from one that is passively absorbed to one in which the audience is actively engaged. But what does NFC offer for digital out-of-home?
What is NFC?
Firstly, for those of you who have been living under a rock for the last couple of years, here’s a brief explanation of what NFC is. Back in 2004, Sony, Nokia and Philips established the Near Field Communication Forum for the purposes of enabling “the use of touch-based interactions in consumer electronics, mobile devices, PCs, smart objects and for payment purposes”. As of March 2011 (when Google joined as a Principal member) the organisation had 135 members and had established a set of standards for smartphones and other electronic devices to establish radio communication with each other through contact or by bringing them into close proximity. In short, NFC allows mobiles to transmit and receive data to and from other nearby NFC enabled devices, or unpowered chips known as “tags”.
Contact-less payments
Up to now, much of the innovation has focused on NFC's ability to facilitate contact-less payments. Google Wallet, which launched last year, enables owners of Android phones to use their mobile as a virtual wallet, storing credit card details, vouchers, discounts and other offers in the application. In the UK, mobile phone operator Orange has recently partnered with the EAT chain to create Quick Tap Treats which gives Orange customers with NFC enabled phones the opportunity to tap their phones to NFC tagged posters and receive daily rewards, such as a free coffee or pastry.
Last week Olympic sponsor Visa demonstrated a mobile payment application, produced in partnership with Samsung, that will enable payments to be made at any of the 3000 contact-less payment terminals to be installed around Olympic venues this summer. Such significant levels of investment in NFC as a method for transactions means it will inevitably gain ground and likely prove popular — in Japan and Korea where handsets have come equipped with wireless payment chips for some years, contact-less payments are already commonplace.
NFC-enabled posters
In the area of out-of-home advertising companies such as Posterscope have been enthusiastically demonstrating the possibilities for NFC. Using tags embedded in posters or small NFC terminals attached to poster sites, an owner of a NFC-enabled handset would be able to tap their phone against the poster and trigger an action — view a movie trailer, purchase and download a song or e-book, receive a coupon or special offer, buy tickets to events, or “like” a brand on Facebook, for example. However, whilst such developments do offer scope for greater interaction with static posters, questions remain about what NFC offers advertisers and consumers that cannot be achieved via other means already widely available.
NFC vs QR codes
For some time now, QR codes have been used on posters to trigger many of the same interactions demonstrated with NFC. A QR code can also take a user to a website to view a video, purchase tickets or e-books, “like” a Facebook page or receive a coupon. NFC proponents would argue that with QR codes consumers need to have a reader app installed to process the code, whereas NFC-enabled devices can respond automatically, requiring little effort on the user’s part.
However, manufacturers such as Blackberry produce handsets with QR readers pre-installed, other reader apps are freely and easily available, and opening the app on a phone before scanning the code is not particularly taxing. It can also be argued that QR codes frequently require users accessing a website for many activities, but judging from the test campaigns produced so far, the same can also be said for many NFC triggered actions.
Internet connectivity
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In such situations, NFC may eventually have the edge, as a site fitted with a small NFC terminal (rather than a tag) offers the ability to receive information from a handset and then transmit the data elsewhere via an Internet connection. However, many of the existing digital screen networks still rely on 3G connectivity with all the attendant challenges of file sizes, speed, and reliability that brings. With WiFi likely to come to the Tube in the not too distant future, Internet connectivity will be less of an issue, but that development will be to the advantage of QR codes and RFID as well as NFC.
There is also an issue of cost. The cost of adding a QR code to creative is negligible, and RFID chips are now available for mere pence per unit. A NFC campaign will, at least for the immediate future, cost brands and media owners significantly more to implement at scale.
The two-way advantage
The real advantage of NFC over technologies like QR codes or RFID would appear to be the two-way aspect of the communication. Even if Internet connectivity is likely to be an issue, using a NFC terminal that extracts data from a handset instead of transmitting to it, opens up opportunities: a NFC-enabled phone could be used to trigger DOOH creative that is personalised for the consumer, for example. Data could also be deposited on the phone for use later when the user is able to access the Internet, or for them to share it with other NFC handset users.
QR codes can contain small amounts of information, but data size is limited, and frequently the more data that is encoded the greater the chance of errors when the code is scanned. NFC is capable of communicating larger amounts of data, and is also less susceptible to other problems affecting QR code scanning such as poor readability in low light.
A need for incentives
“On the Threshold of Change” Kinetic’s 2011 report on the future of out-of-home media in the UK indicated that a key factor in consumer willingness to interact with digital posters would be the speed at which that interaction can take place. In this regard, the ease of swiping a NFC-enabled phone gives the technology the edge over existing methods. However, as Richard Metcalf, Business Development Director of mobile marketing agency Joule points out, ease of use alone will not be enough to induce consumers to interact: “There needs to be an incentive, the content needs to be engaging enough to warrant that action by the consumer.”
Critical mass
But by far the biggest hurdle facing NFC and its role in DOOH is that of ubiquity. For the technology to have a significant impact it will need to reach a level of mass adoption. As Richard Metcalf points out, “key factors are NFC enabled handset penetration and consumer awareness”. Juniper Research, in its NFC Retail Marketing & Mobile Payments Report, forecast that by 2014 one in five smartphones worldwide will be NFC-enabled, but half of those are anticipated to be in the US. Consequently, it is likely to be some time before significant numbers of UK consumers have got into the habit of using their phone to pay for products and services, or interact with adverts.
Until we see sufficient levels of market penetration we expect to see few large-scale deployments of NFC-based campaigns. Richard Metcalf suggests NFC may not go mainstream until 2015 or 2016, but adds that a significant catalyst, like the Visa/Samsung, and proposed O2 and Everything Everywhere NFC activity around the Olympics, could accelerate take up.
Retail potential
In spite of the gradual pace of adoption and potential challenges, NFC is a promising technology with regard to digital out-of-home’s future landscape. The Kinetic report pointed to a future where interaction, integration with social media, and location based advertising and promotions are going to be of increasing importance in OOH. Kinetic’s research revealed that around half of consumers would consider downloading ‘money off’ vouchers for retailers from digital sites to their mobile phone, and Juniper research pointed to the retail aspect as having potentially greater revenue potential than payment processes. As Richard Metcalf states, the real value to the end user comes when there is a transactional element to it: “Anything where you’ve got a voucher, tickets, an actual payment or ordering mechanism. I think that’s the most attractive aspect of it.”
A symbiotic relationship
And it’s not simply a case of QR vs NFC. Whilst the two technologies have distinct advantages and weaknesses in comparison to each other, there is an argument that their differences will ultimately make them complementary technologies. Matthias Galica, Founder and CEO of ShareSquare, believes that ultimately QR codes will achieve a place in marketing, whereas NFC will fundamentally become the best way to do mobile transactions. He suggests a future where a consumer may scan a QR code to access a game in which they win a free Coke, with the coupon downloaded to their phone, and then swipe a NFC-enabled vending machine to redeem it.
Given the seemingly inevitable growth of personalisation, social media integration and transactional marketing within digital out-of-home, provided some of the challenges can be overcome, NFC appears well-placed to become a frequent component of DOOH campaigns within the next few years.
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