Apple’s Adoption of NFC Will Make Digital Out-of-Home Screens Smarter and More Valuable
By Ken Goldberg
NEW YORK, NY — For years, Near Field Communication (NFC) has been the domain of Android-based smartphones. Widely used in Europe and Asia, NFC has never truly broken through in North America, and particularly the United States. Now with Apple’s announcement of the inclusion of NFC in both the iPhone 6 and the Apple Watch, NFC will suddenly be “discovered” by legions of Apple loyalists, rendering it legitimate and relevant overnight.
But it won’t be just Apple crowing about NFC-enabled mobile payments. Apple will have plenty of retail partners, including McDonald’s, CVS, and Walgreens, among others, who are also gearing up for NFC.
Today, where there is retail, there is digital signage, the reigning king of calls to action. And digital out-of-home (DOOH) content married with NFC to enable information sharing, data exchange, and transactions may well become the long sought bridge between digital signage and mobile technologies, especially smartphones.
A Reuters article by Noel Randewich, Apple Gives NFC Chip Technology a Prized Seal of Approval, provides some insight into the pre- and post-Apple penetration of NFC in smartphones:
Manufacturers included NFC chips in about 300 million smartphones last year, equivalent to around a third of all smartphones shipped. The number of NFC-enabled phones this year is expected to keep growing and reach around 550 million devices, helped by Apple’s devices and an expanding number of Android gadgets, Gartner analyst Mark Hung estimates.
As well as phones, NFC technology is being built into point-of-sale devices, video game consoles and medical tools. Shipments of NFC chips are expected to reach 1.64 billion units in 2018, according to market research firm IHS iSuppli.
NFC Near, But Not Here Yet
Apple’s adoption of NFC technology is a watershed moment; however, marketers and digital out-of-home operators may want to temper their excitement because Apple Pay is currently limited to mobile payment. According to an article by Buster Hein on the website Cult of Mac, Apple has put its NFC chip on lockdown, meaning that the chip can only be used for mobile transactions, at least temporarily. Apple has demonstrated that its NFC chip has additional capabilities beyond Apple Pay. For example, at last week’s Apple event, the Apple Watch was shown unlocking a hotel room door using NFC. This points to the fact that some developers are getting access to additional NFC features before it’s opened up to all developers, according to Cult of Mac.
Many people were certain that NFC would appear in earlier iPhone releases, but Apple has the luxury of moving slowly, and the marketing clout to convince people that an extra row of icons on the iPhone 5 home screen constituted innovation. If nothing else, Apple carefully considers every major move it makes, and the long-awaited addition of NFC is no exception. It was never going to be sufficient for Apple to market “tap to share” or any simplistic application of NFC technology. Instead, they took years to develop a strategy, knowing they would have one chance to get it right, and more importantly, to dominate. Apple Pay has been presented by Apple as the killer app for NFC. With Apple’s adoption, it has become prime time for NFC.
Without doubt, the imperative driving NFC for Apple was always inserting the iPhone into secure payment systems, allowing Apple to take a piece of every NFC-enabled transaction. Agreements with Visa, MasterCard, and American Express appear to be the evidence of a decision to embrace the established credit payment giants, rather than to compete with them, at least for now. Adding the Apple Watch as an option for the Apple Pay scheme would give consumers both a reason to feel good about “tap to pay” and to also consider strapping yet another screen to their wrist.
The buzz over the announcement will undoubtedly focus on NFC-enabled payments. However, for digital out-of-home operators, the impending legitimacy of NFC presents opportunities that go beyond payment transactions.
At a high level, NFC simply allows communication and data transfer between two devices when they are placed in close proximity to each other. If you have used a Mobil SpeedPass, you already know how it works. The inherent opt-in action of tapping an NFC hot spot makes NFC the perfect technology to bridge the yawning chasm between a digital signage display on a wall and the smartphone in nearly every pocket. Think about some of the possibilities:
Tell Me More: A consumer sees a topic or product on a digital signage screen and wants to know more: show me reviews, tell me where to buy it, send me a recipe, and give me nutritional information on a product. Tap a hot spot and your smartphone takes you there, either for instant consumption or to read later.
Delivery, Please: See it, like it, buy it. Tap-to-buy is certainly an opportunity for digital out-of-home networks to get into the transaction business. For example, tap an NFC hot spot and get a quick form to have something you see on the screen sent to your home or office. I’ve been waiting for that since 2011. The Twitter Buy Now button is currently getting a lot of press and generating excitement. If 140 characters and a JPEG excite advertisers, then a 30-second sound and motion video will send them over the moon.
The implications of this are very broad. First, retailers will understand that digital posters made “smart” by NFC can do more than just influence behavior; they can now enable it by closing the deal with NFC. Perhaps more important in this age of analytics, the data collected in an NFC-enabled campaign can help measure promotion and campaign effectiveness, provide solid metrics on content effectiveness, enhance A-B testing of different campaigns, and provide clear ROI numbers on DOOH-driven transactions. That does not even account for the value of the customer information that can be gleaned from opt-in NFC transactions, which is significant.
Let’s Make a Deal: An item promoted on a digital signage display offers a coupon for extra savings to those who tap an NFC hot spot. Marketers that combine customer opt-in with IMEI device identification and database integration can tailor coupons to a specific individual. Just as Apple Pay hopes to transform payment, the same NFC chip can play a role in transforming consumer promotions.
Syncing Content With Offers: The ability to change the behavior of a single NFC tag or set of tags throughout a venue to match changing offers, information or products on digital signage screens is inherently valuable. Real Digital Media recently integrated iZipline’s MediaTagz system with Real Digital Media’s NEOCAST Media Server to provide exactly that. Each NFC tag in an enabled environment is able to direct smartphones to initiate different actions based on the content currently playing on screen. We live in a world of glance media: the ability to provide more information, promotions, and even transactions to people on-the-go greatly increases the value of the on-screen content.
Buh Bye, Collateral Racks: Expensive, bulky collateral racks boast extremely high ROI when paired with relevant digital signage, and they can now be replaced with NFC tags.
NFC is nothing new, but Apple’s warm acceptance of the technology takes it from “cool, but…” status to mainstream relevance. NFC payment systems will pop up so fast in the coming months that it will seem like they have been here forever. Digital out-of-home operators and content producers will quickly learn the value of embracing the communication and data exchange that NFC offers. iBeacons made a lot of noise recently, but now the playing field, utility, and consumer control has clearly passed to NFC. It works. It will soon be close to ubiquitous and the opportunities to leverage it are too valuable to ignore.
Ken Goldberg is Chief Executive Officer of Real Digital Media, headquartered in Sarasota, Florida. RDM works with owners and operators of out-of-home networks in retail, hospitality, health care, corporate and other venues. Ken is a frequent speaker at industry events and guest contributor to several industry publications. His own blog, “Broad Thinking. Narrowcasting” is widely read throughout the digital signage marketplace, and is considered the go-to source for insight, analysis and forward thinking. Ken is currently Vice Chair of the Digital Signage Federation, and will serve as its Chair in 2015. This article was based on an original post on Broad Thinking. Narrowcasting.
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