Touch Point

With more phones now able to employ NFC, has its time finally arrived?


Nayar, in fact, warns against betting too heavily on using NFC as a payment method. Pointing to the self-service checkout machines that became a fad in some supermarkets and drugstores a few years ago but has met with some consumer resistance, Nayar says that stores risk investing in expensive hardware and then finding that most people don't use it. "We're watching the NFC space very closely," he says, "and we're implementing it where it could have a use, but we're not betting the farm on any one technology."

But NFC isn't just about shaving off seconds in line at the cash register. By being a bridge between the online and physical worlds, it might also transform the way consumers engage with stores and marketers.

The NFC Forum's Arnold divides NFC uses into "transactions" (i.e., mobile payments), "pairing" (connecting two NFC-enabled devices), and "sharing" (where phones and other devices can interact with NFC tags). It's the last piece that provides the biggest opportunity for ads, she says. Brands, for instance, can use tags to embed additional content or deals on out-of-home ads like posters. A recent campaign at BART stations in the San Francisco Bay Area, for example, had users tapping their phones against Jack in the Box posters to receive discount coupons.

Razorfish notes that one of the key opportunities with NFC is the ability to create a detailed profile of every consumer with a technology-enabled phone. After all, "NFC can connect a consumer with the physical world in ways that generate an infinite number of interactions or valuable profile data points," Gelb and Schweickhardt write. These profiles, in turn, could be combined with ads, coupons, product databases, and payments: "The ability to see a consumer's full behavioral pattern will allow marketers to reach a whole new level of analysis and optimization of marketing programs."

As for actual campaigns, Gelb tells Adweek that Razorfish is currently running a few NFC pilot programs and plans to do more as the technology is adopted more widely.

Shopkick's Roeding, like Chen at Digitas, says knowing if a product was actually purchased is a huge plus. In fact, he says, it's been the missing link in the app's mission to full store/brand engagement. While shopkick's app can tell when users enter into partner stores like Macy's and Best Buy, and when they're looking at products (customers scan NFC tags of specific goods), there's no way to tell whether that activity actually led to a purchase. With NFC, he notes, shopkick can get that missing information, which makes it easier for brands to see the value of these programs.

As for Google Wallet, launched in September (and which currently supports Citi MasterCards and Google prepaid cards), the program's potential becomes clear when it's paired with Google Offers, the deals program that encourages people to go into the brick-and-mortar stores to redeem offers. It's a way to go beyond "the novelty factor" of mobile payments by helping businesses attract and retain customers, says Google Wallet business product manager Marc Freed-Finnegan.

NFC chips also allow businesses to load their loyalty cards into devices so that purchases are tracked and redeemed automatically. For example, instead of carrying around a loyalty card for Jamba Juice or Toys"R"Us (two of Google Wallet's initial partners), consumers can just tap their phones to automatically earn rewards based on their purchases.

Such integration can also create new analytics services for businesses, giving them a clearer sense of which offers are reaching which customers when.

Other possibilities are being jump-started. Think&Go, a company that develops NFC programs and is based in Meyreuil, France, launched a system in E. Leclerc supermarkets where people can swipe NFC-enabled phones on NFC tags in the aisles. These work in part like interactive labels and help users in a variety of ways, from offering deals to giving allergy alerts. It also monitors consumer behavior.

While NFC has had a slow start here, it's made far bigger inroads in tech-savvy Japan. The main reason, according to Forrester's Husson, is Japan relies heavily on mass transit, so it's become a common way to pay for transportation. That's an unlikely path to mass popularity in the car-centric U.S., but Husson predicts that mass transit could become "a trigger for wider adoption."

One of the remaining questions in the U.S. is if and when Apple will embrace NFC. There have been hints that it's interested. It's filed patents related to NFC and hired an NFC expert a few months ago. And other companies are jumping in. It was reported this summer, for instance, that Vodafone and other wireless operators in the U.K. have agreed to develop a shared platform for mobile payment systems, which may speed up adaptation of NFC, according to a Vodafone executive.

And the numbers are starting to shift. U.K.-based Juniper Research predicts that the value of mobile retail marketing will reach $15 billion globally by 2012, representing a growth of 50 percent over 2011. It also estimates that 300 million NFC-enabled smartphones (one out of every five) will be available worldwide by 2014.

Says Arnold, "We're at the cusp right now."