NFC and Your Mobile Phone, Doesn’t Simply Mean “Payments”.

If you are involved with technology, content creation, marketing or advertising, you have probably heard of “Near Field Communication”. Actually, if you watch the news or listen to NPR, you have probably seen, or heard about it because of Google’s “Google Wallet” which is now being tested in select U.S. cities.  NFC has been around for sometime, and handset manufacturers like Nokia have actually been embedding the technology in their handsets since mid 2006, although you wouldn’t have found any of those phones on sale in the U.S. outside of an importer. So why is NFC so hot right now? Because there are tens of billions of dollars in mobile payment revenues riding on it. And now with handset manufacturers, teleco’s, payment companies, marketers, advertisers, and other key players on the same page, the doors have opened and NFC-enabled phones are starting to show up in the U.S.A.

The first big announcement started at the end of last year when Google and Samsung dropped the news about the Nexus-S. Now other manufacturers like Nokia, HTC, Motorola, and Blackberry have all chimed in with commitments to release NFC enabled phones in the next year. Even Apple is hinting that NFC might be included in the next generation iPhone. If you look at the numbers and the surrounding research it suggests that 30% of all mobile phones shipped worldwide will be NFC-enabled by 2015, which seems like a fairly conservative prediction since by the end of 2011 more than half of all phones sold will be smartphones. So what does this mean to all of us, both consumer, and content creator/advertiser? Quite a bit.

Right now when you hear “NFC” it is usually associated with mobile payments, and this is really where people are pushing the technology.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,but it is not NFC’s only use. Right now mobile marketing is the fasts growing segment of the advertising industry.NFC has the potential to create newer, richer ways of connecting target audiences with a brand, and this is very appealing to agencies, marketing firms, their clients and you the consumer. Imagine being at your favorite store, and seeing an NFC enabled sign for a new product. By simply tapping your phone in a designated area of the sign, you are taken to a micro-site for the product, or you are given specific details, or you can see the product in a 360 degree view.This is where things get interesting and revolutionary. Mobile users don’t have to install an application, and hope it works since NFC is embedded in the phone itself. Is this the death of things like QR codes? Not immediately, but eventually.

In a recent article for Mobile Market Watch by Mikhail Damiani, he talks about how 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. This is huge. It’s like Yelp, or Foursquare on steroids. Google is also jumping on the trend by rolling out NFC enabled Recommended on Google Places window stickers in a test they are conducting in Portland Oregon. Those Google stickers, communicate localized information about the venue you are at. Rich detailed information designed to extend the overall user experience.

As for you the consumer, NFC marketing has some advantages over current mobile application based marketing. Like I said before you don’t have to download and install anything on your phone, you don’t have to enable GPS, and NFC doesn’t collect personally identifiable information about you. In addition, after you leave the NFC enabled area, you won’t have any form of advertising pushed to you on your phone. Because NFC has such a low power draw, it can remain on all the time in the background, with no noticeable impact on battery life. And all interactions are fully opt-in and secure – the only way you will receive anything, is if you proactively tap your mobile phone on the designated area. Because of all of this, marketers and advertisers will have 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. Over the next couple of years as NFC handsets become more common, NFC based campaigns will evolve in both their creativeness, and usefulness. Instead of simple messaging, the advertisements will provide you with immediate offers, relevant information, special deals, and a rich deep user experience.

Right now there is a short window of opportunity for advertisers. The ramp up and acceptance for mobile payments is going to take some time, which gives us about 12 to 18 months to play. Hopefully your first introduction to NFC will not be a mobile payment, but instead will be a rich media experience delivered to the palm of your hand.

This type of introduction to NFC is going to be essential to the success and sustainability of NFC’s use as a marketing/advertising tool.  Americans really are creatures of habit, and if their only connotation of NFC is paying for things, it’s going to be difficult to convince them that tapping their phone for entertainment content will be as valuable if not more so won’t result in a payment transaction. In addition the content is going to have to be easy to engage, and provide value to the person opting in, especially if they want continued or return engagement in the future.

I think the next 18 months is going to be extremely interesting for the NFC world, and I expect to see a lot more engagement with it as we move forward.

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