Using 2D barcodes at the point of sale sounds like a great idea, but obstacles remain for the technology to thoroughly make it to the mass market.
Since the 1970s, the traditional barcode has remained a technical solution for retailers to manage inventory and efficiently enter prices at the point of sale (POS). Mobile marketing agencies and advertisers are turning that idea on its head, putting barcode technology in consumers’ hands with the 2D barcode.
Due in no small part to the adoption of smartphones, mobile couponing is slowly evolving from its roots as a purely SMS-based technology. The 2D barcode, which can be delivered to the handset in a number of different ways or scanned directly using the cell phone’s camera, can direct customers to a wealth of information via the mobile Web.
From virtual coupons to video spots to Web sites, the 2D barcodes offer advertisers some unique opportunities. Users can be instantly directed to virtual coupons, video spots and specific sites on the mobile Web. But some say the technology hasn’t fully arrived, noting reach limitations, as well as logistical and technical problems associated with on-device couponing at the POS.
REACH IS KEY
Probably one of the biggest criticisms leveled at 2D barcodes is that they don’t have the kind of reach inherent in traditional SMS and short code campaigns. By the very nature of the technology, the 2D barcode works best on a smartphone and only on a device with a data plan, which severely limits the amount of people advertisers can influence. Even as smartphone adoption and data plans barrel toward 50 percent penetration, the technology still hasn’t reached the ubiquity possible with feature phone-based SMS couponing.
Jay Henderson, director of product marketing for Unica, a company that makes analytics software for marketers, agrees that 2D barcodes are heavily dependent, or at least more easily accessible to, smartphone users. “I think at the end of the day, SMS still has the best reach. iPhone apps are cool, but the question is what percentage of the market does that represent?”
Henderson says that increasingly sophisticated analytics tools like Unica’s that offer incredibly detailed feedback on mobile campaigns are one of the most valuable aspects of the channel. For a relatively low cost, companies are able to experiment with different mobile strategies to figure out what works for the audience they’re trying to attract. “SMS, MMS, barcode – I think ultimately, the thing that we really try to encourage is that our customers experiment with how they invest in these different channels.”
COMPLICATIONS AT THE POS
Bob Reid, vice president of business development for bCODE, says that mobile couponing with barcodes can offer an extremely rich channel for advertisers. However, he says, 2D barcodes at the POS are simply not going to work anytime soon.
“What we found in talking to major retailers like Target, Walmart, Best Buy, is that they didn’t want any mobile coupon coming to the point of sale,” Reid says. He notes that the last thing a major retailer wants is someone fumbling around in line with their phone trying to find a coupon in their e-mail or other messages.
Reid also notes that current scanning equipment just isn’t there yet. Laser scanners have problems reading barcodes off the reflective touch screen of a smartphone. Yet the investment to retool a retail chain the size of WalMart or Best Buy with optical scanners is staggering.
bCODE actually started out with 2D barcodes, but Reid says the response from large entities like TicketMaster was less than enthusiastic. “TicketMaster and others said, ‘We need 99 percent reach or nothing,’” Reid says.
As a result, bCODE evolved into a kind of barcode that can reach any phone that can handle a text message. Its current system uses a 64-bit barcode, in the form of a string of numbers, that is texted as a coupon to the handset. For instance, a consumer opts in for a discount program with Retailer X. Retailer X sends out a coupon on Fridays and Tuesdays. The customer receives the coupon as an SMS, finds the bCODE redemption unit, scans the coupon on her phone and the bCODE unit prints a coupon, which can then be redeemed at the POS.
Reid says bCODE subsidizes the entirety of the hardware, which comes in the form of a small kiosk that can read the code off the phone, and charges so much per scan. It’s landed some pretty big brand names, including IKEA. Interestingly, Reid said that in the case of IKEA, the company has found that people coming in with bCODEs are typically spending more. According to bCODE’s data, its users are typically spending $100 to $150 over the average customer.
MOVES IN OPTICAL SCANNERS
As with any new technology, it’s inevitable that someone will make the leap. In the case of accepting 2D barcodes at the POS, one of those companies was JCPenney. With the help of Cellfire, a company that specializes in mobile coupon campaigns, the department store giant recently retooled its East Coast stores with Motorola optical scanners, which can deal with screen glare more easily than laser scanners.
Dan Kihanya, vice president for consumer marketing at Cellfire, says that while an initial investment in optical scanners may represent a significant cost, they do have a number of uses that a large retailer might find attractive. Because an optical scanner actually takes a photo, it can be used in everything from inventory to scanning drivers’ licenses, and he expects use cases will only continue to be created.
One of the issues regarding customers presenting their phones at the cash register is that clerks could be liable for a very expensive piece of hardware should an iPhone or a BlackBerry get dropped. Kihanya says this wasn’t a terribly big concern for JCPenney, adding that retail clerks won’t even have to touch the customer’s phone.
“There isn’t really a need for the customer to give up their phone. The scanners work pretty well, so you could hold it up and it would work up to probably a foot and a half away,” he says.
ALMOST THERE
Regardless of all the challenges inherent in fostering a new technology like 2D barcodes, the potential is undoubtedly there. For users to be able to point their devices at a little barcode, which can be placed virtually anywhere, and be served up whatever it is an advertiser wants them to see is truly a groundbreaking concept.
Diane Strahan, vice president of marketing for Neustar, knows a lot about 2D barcodes. Neustar has been employing a similar model with 2D barcodes to the one it used in bringing the common short code to market. She says that “two-step solutions” like the one bCODE has rolled out are great examples of innovative interim steps toward ubiquitous adoption of the pure 2D barcode technology.
“I absolutely think that 2D barcodes are going to have very wide reach, and the question is when does that tipping point happen? The reason you see all of these interim or quasi 2D barcode solutions is because we haven’t gotten to that point yet of ubiquitous 2D barcode availability,” she says.
Strahan notes that the two biggest technological issues the technology faces have been tackled. “We’ve demonstrated it can work technically, and we’ve removed the IP patent challenge. So now we’re moving forward in delivering a commercial solution that allows multiple campaign managers and their operators – and anyone who wants to get involved in this industry who’s using open standards and platforms – to work, and that is how we get the reach issue addressed.”