Why There’s More To Near Field Communications Than Just Mobile Payment
NEW YORK, NY – Google Analytics’ success in measuring and tracking online behavior is well known, but they have not been able to translate that same level of detail to the offline world. Gaining insight into a consumer’s day-to-day offline shopping behavior is not easy, and spotting trends as they develop is not always clear. Predicting buying trends early on can help retailers tailor their marketing message and help to control inventory, which could have a significant impact on the bottom line. That’s why finding a cost-effective method for tracking consumer purchasing behavior offline is so important.
You might have heard about a new mobile technology called Near-Field Communications (NFC) that enables consumers to use their smartphones to make payments instead of using credit cards or cash. NFC enables consumers to complete a payment transaction by simply tapping an NFC-enabled phone to a payment terminal. While the idea of using your phone instead of a piece of plastic is starting to catch on, is there a big difference between swiping plastic and tapping an NFC-enabled device to complete a transaction? The reality is that contact-less payment has not improved the transaction process for merchants so far, and it’s still too early to say if it will improve the checkout experience for consumers.
When Google launched its new mobile transaction app in May 2011, Google Wallet, it brought a lot of attention to the NFC space. But one of the really important aspects of NFC technology may have been lost in all of the hype about mobile payment—and that’s marketing.
What Can Marketers Do With NFC Technology?
After more than a decade since its introduction, NFC technology is finally starting to achieve scale. According to The 2011 Mobile Consumer Report from Experian Simmons, more than 30% of iPhone owners would like to make purchases in stores using their mobile phone. NFC is included in Apple’s iOS specification and should be included in the iPhone 6 when it’s released early next year. A recent study from Juniper Research revealed that one in five smartphones worldwide will be equipped with Near-Field Communications functionality by 2014, which equates to almost 300 million NFC-capable handsets.
“It’s not hard to imagine people adopting NFC technology, considering all of the utility built into today’s smartphones,” said Tony Sabetti, Director POS and Payment Terminal Alliances, Isis. “When you consider the fact that most smartphones have cameras, clocks, email, calendars, contact, music, and other specialized applications. It should not be a surprise to anyone when people start using smartphones to pay for purchases, considering all the utility currently built into today’s handsets.”
NFC technology can open the door to a broad spectrum of interactive marketing experiences by enabling brands to connect with consumers through real-time engagement. What does this really mean? Imagine being able to motivate a purchase at the moment of decision—while simultaneously building loyalty and social media buzz. Now link this experience to a backend analytics system that tracks consumer behavior by connecting mobile purchase activity across brands and location. In essence, NFC has the potential to track consumer engagement on a granular level using similar methods to Google Analytics, but now in the offline world.
“What Google does not have is consumer information on the ground and across brands,” said Theresa Billy, VP of Business Development at Thinaire, a provider of NFC mobile engagement solutions. “NFC will be able to capture consumer analytics and provide marketers with valuable information that will drive business.”
“From a marketing perspective, when a consumer is looking for information and is ready to make a decision, brands can make a real impact. Business has become social, and NFC can have an impact from a social media perspective,” added Ms. Billy. “Trust has become a currency, and NFC can deliver information at the point when a consumer is most receptive to receiving information at the point of decision.”
Understanding how to take advantage of NFC-based technology will become vitally important to marketers as the technology starts to gain more momentum. That’s why a conference called NFC Bootcamp—How To Market with NFC was recently held in New York. NFC Bootcamp’s interactive forum is designed to help retailers, brands, and marketing agencies gain insight into the capabilities of marketing with NFC to expand reach and drive sales. The conference brought together four experts in NFC technology and marketing: Theresa Billy, VP of Business Development, Thinaire; Tony Sabetti, Director POS and Payment Terminal Alliances, Isis; Philip Evans, Senior Business Manager RFID and iButton Products, Maxim Integrated Products; and Amitaabh Malhotra, co-founder, DeviceFidelity.
NFC, RFID, BlueTooth, WiFi—What’s the Difference?
It’s important to understand some fundamental aspects of NFC that set the technology apart. NFC technology is a proximity-based wireless technology that’s limited in range to only a few centimeters. This extremely short range is important to note because it requires a very deliberate action on the part of a consumer to physically tap an NFC terminal to complete a transaction, or to receive or exchange information with another NFC-enabled device.
WiFi, BlueTooth, and RFID technologies use a broader signal range that typically spans several feet. Radio-frequency identification (RFID) uses a tag and reader system that employs dozens of protocols and frequencies. In contrast, NFC uses a defined frequency and has more than one mode depending on the application. For example, there’s Card Emulation mode that’s used for mobile payment and ticketing transactions, and a Discovery mode that enables consumers to get information directly from tags embedded in an object or in advertising. In Discovery mode, a smartphone can pull information, such as a URL or transit schedule, and acquire information directly on a mobile device. Discovery mode can provide consumers with deeper interactive experiences that can benefit retailers, galleries, and museums. An NFC handset can also operate in Peer-to-Peer mode, which enables two NFC-enabled devices to directly exchange information, such as linking your phone to your laptop or instead of using a business card, two NFC-enabled devices can exchange contact information.
Safer Than Plastic
One of the true distinguishing factors of NFC-based technology is security. An NFC-based transaction is far more secure than using a credit card because there are multiple layers required to complete a purchase. All NFC-enabled smartphones contain a “Secure Element” (an embedded chipset or SIM card) that’s unique to every handset. In addition to the secure element, there’s also a Trusted Services Manager (TSM) that issues an encrypted digital key that’s unique to each transaction, which only the wireless carrier knows. The TSM sits between the wireless carriers and the card issuer, providing three layers of back-end security. Finally, a consumer using an NFC-based handset needs to enter his/her unique password to authorize the transaction.
“NFC technology has been around for about 10 years, but it hasn’t had a lot of momentum until now. The reason is that NFC technology needed the smartphone to be successful, and the convergence of smartphones with NFC is just happening now,” said Mr. Sabetti. “We firmly believe that NFC implementation in handsets will be as common as cameras and Bluetooth.”
Isis is about to launch its mobile commerce platform sometime in 2013 with multiple NFC handsets manufacturers. When it launches, Isis will have one of the broadest national networks, spanning multiple bank, handset providers, and network operators that include AT&T Mobility, T-Mobile, and Verizon Wireless.
DeviceFidelity’s In2Pay NFC solution has just been added to Isis’s network. In2Pay provides a plug-in-play solution that uses a microSD card to transform any smartphone with a memory card slot into an interactive NFC device.
Moneto is developing another NFC payment solution that is unique to the market because it provides users with a prepaid mobile wallet, similar to a prepaid credit card, and also uses a microSD card to enable NFC functionality on any smartphone.
NFC technology can provide retailers with the ability to deliver personalized rewards and offers direct to a consumer’s smartphone. The technology can bridge mobile information sharing across digital signage networks and a new generation of “smart posters” that embed NFC tags in printed advertising.
“A key component of consumer acceptance of NFC will be the speed with which retailers rollout NFC-enabled point-of-sale readers. Given the demographics of smartphone users, there is an opportunity for the tech-savvy retailer to attract upscale consumers by offering these payment options. Never underestimate the marketing power of “cool” – just look at the iPhone,” said Mark Webster, CEO of Rollouts Incorporated, a leading retail technology deployment company.
The ease of use of NFC can lead to increased loyalty by consumers and create new opportunities for brands and retailers that embrace the technology; however, retailers will need to do their part to train sales associates and educate consumers on how NFC works. There are both technical and human factors at play that need to be streamlined to ensure success.
Free Trend Report: Why Location Is the New Currency of Marketing
Finding effective ways to deliver branded messages in today’s complex media environment is one of the biggest challenges facing advertisers. Traditional methods of advertising have become less effective as consumers spend less time in places where marketers have traditionally had an advantage in reaching them. In addition, consumer attention has fragmented across multiple channels as media options and device platforms increasingly diversify.
Active consumers spend money, and while they are going about their daily routine, they are also actively looking for information. According to Google, more than 50% of all mobile searches have local intent, and 17% of search happens while consumers are on the go.
Digital Out-of-Home (DOOH) advertising, also known as Digital Place-based (DPb) media, utilizes strategically placed, networked digital signage displays to reach on-the-go consumers while they are outside of their home with highly targeted messages. Location-based mobile and digital out-of-home media are part of a larger multiscreen ecosystem that effectively amplifies brand messages to create a deeper level of engagement with active consumers.
Why Location Is the New Currency of Marketing is aimed at CMOs, media buyers and strategists and provides insight into why marketers are increasingly shifting their advertising dollars to these rapidly emerging media platforms.
Highlights from Why Location Is the New Currency of Marketing include:
- The Connected Consumer
- Leveraging the Moment
- Multiscreen Campaign Planning
- Amplifying Reach With DPb Media