When will mobile transactions like NFC change advertising as we know it?


Here’s a quick quiz to test your perception of the mobile revolution.

Which of the following alternatives is an appropriate definition of the abbreviation NFC?

A. Never Freaking Coming.

B. Near Field Communications.

After attending the recent NFC & Mobile Money Summit in New York, I sense an uncertainty about the correct answer, even among people within the mobile industry.

NFC is technology transfer small amounts of data between two devices held close to each other. Think checking out at a retailer store by clicking your smartphone on a counter device. 

“The NFC market is at an interesting crossroads right now,” said Justin Springham, managing editor at Mobile World Live, as he kicked off coverage of the event. “There is much debate around whether the technology has what it takes to become a mass market success.”

Liu Xin from China Mobile, the world’s largest mobile operator, blasted the complexity: “For the customer, NFC is not an easy service to get into. They need to change the handset, change the SIM-card, they need subscriber services. And that is not attractive to people. It should not be an additional function but must be a default one like GPS or Wi-Fi.”

Others, like Anne Bouverot, director-general of the GSMA, the worldwide organisation for mobile operators, took a more positive view: “Mobile NFC is digitising ticketing, payments, vouchers, loyalty programmes, access control or even the simple act of exchanging business cards. This saves us time and money and enriches our lives.”

I think this confusion, controversy, or whatever is due to short-term expectations clashing with long-term possibilities.

NFC is a technology with great potential. By just holding an NFC-enabled phone near another device, you can make a payment, redeem coupons, register loyalty points, and receive a receipt and new offers – all in one seamless transaction.

This is by far smoother than handing over the paper coupons – that you had to remember to bring in the first place – then taking your loyalty card out of the wallet or purse, swiping it, putting it back again, then picking your credit card out and swiping that.

With NFC you can also get rid of your keys, ID card and most other cards, as well.

At the Mobile Money Summit, Neil Garner, founder and CEO of NFC vendor Proxama, summed it up nicely: “NFC technology is about value add, it’s about engagement, it’s about making the physical-digital divide work better. It’s not about one-tap payments. It’s about value-added services and creating a seamless experience. QR codes are a transitory technology – they work but they are not engaging. There’s a gap here.”

But the infrastructure needed for NFC to be a factor in our daily lives takes time to build and needs standards, open technology, and business models for all parties involved, as well as the “positive involvement of regulators,” as Elizabeth Buse, Visa’s global executive stressed.

Those four principles drove the success of credit cards 30 years ago, and could do the same with NFC and mobile money today.

I’ve said it before and I’ll say it again: I’m among those convinced that mobile money, mobile transactions, and the mobile wallet together will be the next big thing around the corner.

When it reaches the tipping point, it will change our daily lives.

If you ever have tried some NFC services that work properly, you would probably agree with me: Wow, this is actually very good.

But let’s leave the monetary transaction aside for the time being and look at another aspect of NFC: advertising.

From a news media perspective, the fresh take-away from NFC & Mobile Money Summit was a presentation by Mikhail Damiani, CEO and co-founder of BlueBite, of how to enhance offline advertising with NFC.

The idea behind BlueBite is to use mobile to take what is traditionally a one-way, impression-based medium, and turn it into a two-way interaction between the brand and consumer.

At present, NFC is the preferred technology.

“Through the years we have used different technology, including Bluetooth, Wi-Fi, QR, and NFC. Tomorrow it may be something else,” Mikhail explained in an interview with me.

Here’s more from our exchange.

How did you get into NFC and advertising? “My close friend Tom and I, who have known each other since seventh grade, attended New York University together. We had a professor in 2002 who said, ‘One day, you’ll walk past a Gap store and you will receive a coupon on your phone and will be able to walk in and redeem it.’

“That stuck with us, and after college we worked in finance briefly, and then decided to pursue a venture that would allow us to deliver relevant mobile content based on the location of a user.”

Best campaign you’ve done? “The Samsung Galaxy campaign (see video clip below) was one of the best we did, as it had all of the right components, and, most importantly, a positive and valuable consumer experience. Users were able to tap our NFC-enabled posters and receive free music, e-books, and other content. The campaign rewarded users for their participation and created a positive brand connection.” 

Worst campaign (or mistake) you ever did? “In the beginning of our company, we focused too much on the technology itself and thought that we could just provide the technology to other companies that would deploy it.

“However, the technology is only a small part of a successful campaign. If the other pieces are not handled correctly, there is a chance that consumers will have a negative experience, which to us is unacceptable.

“We had a few experiences where the companies using our technology would create unsuccessful campaigns for which the technology was ultimately blamed, although the failure was in the implementation itself, not the technology. As a result, we have now taken ownership of and responsibility for the entire campaign process.”

What will it take for more advertisers to use NFC as an advertising tool? “It will take more education on both the marketer and consumer sides. Case studies of previous successful campaigns also help in bringing more advertisers on board.”

Why dont we see more NFC-enabled campaigns? “Advertisers are reluctant to try new and unproven media. In the same way it took years for online advertising to become mainstream, it will take years for NFC advertising to become mainstream.”

Do you think NFC will become mainstream in advertising? “Yes, as we continue to prove the concept and show successful campaigns, as well as an increase in consumer adoption, there is no reason why most advertising campaigns should not have an NFC component.”

Newspapers are offline media. How could they integrate NFC as a value-added service for the reader or advertiser? “Newspapers and magazines can integrate NFC to deliver digital content to their readers and connect advertisers with their target audience through the mobile phone.

“The biggest hurdle for print is the additional cost. Whereas they can print a QR code for free, each NFC chip will add a significant cost to each magazine or newspaper that at this point is prohibitive.”

What can NFC do that QR codes cant? “NFC allows users to interact without the need to download an external application. NFC is also more secure and has less room for error as far as lighting, distance, etc.”

Why doesnt Apple introduce NFC? “I suspect it has to do with consumer demand, or lack thereof. The average iPhone user was not too disappointed with Apple for not introducing NFC into their latest models. It will take an increase in infrastructure for people to start demanding that Apple include NFC in their products.”

How does that affect the development? “Apple has a significant market share but also dominant mind share here in the U.S. when it comes to advertising. Many agencies and brands will not use a technology until Apple adopts it and, therefore, sit on the sidelines for the time being.”

Bluetooth never has taken off. Do you see risks that NFC will face the same destiny? “This will depend on the quality of the deployments and consumer experience. NFC is a much more frictionless experience than Bluetooth, so this helps the technology. But it is still very much dependent on the consumer experience of each deployment.”

You gave a presentation at the NFC & Mobile Money Summit at the session called “The State of the NFC Market.” So what is the state of the NFC market? “The NFC market has grown quite tremendously since 2011. We have done more campaigns so far in 2013 than 2012 and 2011 combined.

“We are excited about the launch of Isis [a mobile wallet, introduced by AT&T, Verizon and T-Mobile] and some major transportation systems in the U.S., which we think will accelerate consumer adoption. We think 2014 will be a big year for mobile and NFC.”

So, finally, what is the correct answer to the initial quiz?

Well, I would actually say the correct answer is A and B. NFC is short for Near Field Communications – but, as promising as it is, it does seem like it is Never Freaking Coming.

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