“NFC” – Not Always Synonymous With Mobile Payments

The following is a guest post from Mikhail Damiani, CEO & Co-Founder of Blue Bite. Lately, one would be hard-pressed to read through a tech journal or mobile-focused publication …

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The following is a guest post from Mikhail Damiani, CEO & Co-Founder of Blue Bite.

Lately, one would be hard-pressed to read through a tech journal or mobile-focused publication without finding some mention of NFC (Near-Field-Communication).  But why the sudden surge of excitement and evangelization of the not-so-new technology? In fact, NFC has been around for years, and manufacturers like Nokia have been embedding the technology in their handsets as early as 2006, albeit, these phones have not made their way into the U.S.

With tens of billions of dollars in revenues from mobile payments on the line, the interested parties have been busy carving up the proverbial pie for the past few years, preventing the U.S. consumer from taking full advantage of the power of NFC.  Finally, with the cell phone manufacturers, telecom companies, payment technology companies and other key players seemingly on the same page, the floodgates have opened and NFC-enabled phones have started crossing the U.S. border.

The first major announcement came from Google at the end of 2010 with its planned launch of the Nexus-S by Samsung in early 2011.  Other manufacturers including Nokia, HTC, Blackberry and Motorola have also affirmed their commitment to NFC and will be rolling out new phones with the capability later in 2011.  Market research from IHS suggests that 30% of all mobile phones shipped worldwide will be NFC-enabled by 2015.  Based on current observations and depending on the rate of usage of NFC-enabled features by consumers, these numbers may prove to be extremely conservative.  Speaking of consumer usability, what the average U.S. mobile phone owner will utilize NFC for is an interesting topic of conversation.

The overwhelming majority of publications these days liken NFC to mobile payments.  The ability to pay for things with your mobile phone and potentially replace credit cards is arguably the most powerful and transformational aspect of the technology.  However, it is not its only use.  With mobile marketing being the fastest growing segment of advertising, the ability to leverage NFC for new and improved ways to connect a brand with its target audience can be extremely appealing to marketers, agencies and consumers.  Imagine walking into a movie theatre lobby and seeing an NFC-enabled display for an upcoming movie release.  By tapping your phone in one designated area of the display, you can view the trailer of the movie, and if you like what you see, you can tap another area to purchase the ticket.  This type of experience is truly revolutionary.

Companies have already started experimenting with similar applications.  RMG Networks, a place-based media network with hundreds of thousands of digital screens across cafes, health clubs, airports, airplanes, pharmacies and casinos announced the launch of mTAG, an NFC-enabled platform allowing users to tap their phone to discover relevant mobile content associated with the on-screen creative at their current location.  Google has deployed NFC-enabled “Recommended on Google Places” window stickers in a number of Portland, Oregon businesses which will allow consumers to get localized information about the venue they are standing in front of.

From a consumer’s standpoint, NFC-based marketing has a few major advantages: unlike mobile apps, there is no need to download and install any applications or enable the phone’s GPS, which gives rise to “big brother” concerns; unlike SMS, NFC doesn’t collect personally identifiable information such as name and phone number, and the user will not be receiving any unwanted messages once he/she has left the point of interaction; NFC is also easier to setup than Bluetooth or WiFi, as it requires minimal modification of the phone’s settings and can remain “on” all the time without draining the battery; finally, all interactions are fully opt-in and secure – the only way a consumer will receive anything, is by proactively tapping the mobile phone on the designated area.  Marketers will benefit from the ability to micro-target specific locations and the audience in those locations who are most interested in the offer – thus, any such engagements are more relevant and valuable.  As NFC-enabled handset saturation increases and users and marketers become more familiar with the uses of NFC, the types of campaigns and content will evolve in both creativity and usefulness.

Luckily for advertisers, the realization of mobile payments in the real world will take some time.  This brief window of 9-12 months will allow for the familiarization of consumers with the marketing side of NFC.  If implemented correctly, the average U.S. mobile phone user’s inaugural NFC experience will be a rich media interaction with a brand, not a payment for groceries at the local supermarket.  This type of introduction to NFC is essential to the success and sustainability of its use as a marketing tool.  U.S. consumers are creatures of habit, and if the only connotation of NFC is mobile payments, it may be difficult to convince them that tapping their phone for entertainment content will be valuable and most importantly, will not result in a charge.  By the same token, marketers and advertising agencies must ensure that the actual experience is as easy as possible and provides value for the consumer, that is, if they expect consumers to reengage in the future.

As long as these considerations are taken into account, NFC can prove to be a powerful medium for mobile phone users, and both its marketing and mobile payment capabilities can coexist and even flourish together in the near future.

About the Author

Mikhail directs all aspects of Blue Bite’s business and operations. This includes building the management team, strategic partnerships, sales, and client management.  Prior to Blue Bite, he worked as an investment banking analyst at GCA Savvian in San Francisco.  Mikhail holds a B.S. in Finance and Management from The Stern School of Business at NYU.

Company Websitewww.BlueBite.com
Company Media KitBlue Bite Media Kit
Email: mikhail@bluebite.com
Blue Bite on Twitterwww.twitter.com/bluebite (@bluebite)

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