Adam Mc

Thoughts on the web.

Buzzwords: NFC (Near-field Communication)

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Every few months there is a new hot technology. Something so exciting that it becomes an industry buzzword that eventually finds it’s way to the tip of our client’s tongues.

Thinking back over the last few years we can come up with quite a few of these buzzwords: Live Chat, File-Sharing, Flash Games, RFID, Mobile, Social, Facebook Games, QR Codes, Apps, etc… If we go back even further we find a few more like: Internet, World Wide Web, AOL and Email. Some of these terms became more successful than others and for every one there are countless more that never panned out.

All of these buzzwords have two things in common:

  • For a while they were so hot that you couldn’t help but feel they were the “next big thing” and some marketers were rushing to jump on the bandwagon.
  • Eventually the buzz faded. The real cost/benefit of each was realized and, good or bad, each earned it’s place in our list of tactics.

From time to time new buzzwords will start to gain some traction. Let’s take a look at one of these and sort out exactly what this term means and put some real facts up against the coming buzz.

NFC (Near-field Communication)

Two weeks ago a rumor hit the interweb that the next iPhone will include NFC hardware. Thanks to this rumor there is once again buzz about NFC. But NFC is hardly a brand new technology. It’s been included in some cell phones since 2006 and in fact many Android phones already include NFC capabilities. The widely reported Google Wallet also uses NFC technology to turn your smartphone into a payment device.

What is it?

NFC stands for near-field communication and is a low-power short-range radio communication technology. It allows two devices to communicate securely with each other when they are put in close proximity. For example: we all have key cards to get into the building. All we have to do is wave that card over a reader in the wall and the door unlocks – This is an example of NFC technology in use. Another common example is the use of NFC chips in credit cards.

NFC in Credit Cards

If you see an icon that looks this - You've got an NFC chip in your pocket.

Take a look at the back of your credit and debit cards. 

See something that looks like the icon in that picture?

Then you have an NFC chip in your pocket. Instead of swiping that card at the checkout you could just tap it on the card reader to complete your transaction.

NFC works using radio waves between two specific elements. A passive tag and an active device, referred to in the industry as a initiator (active device) and a target (passive tag).

A passive tag is a data chip that contains some piece of information. An active device is a electronically powered reader. Once the reader and the tag are put within a few centimeters of each other the electronically powered reader sends out a radio frequency field that powers and activates the passive tag. Once the tag is activated it sends it’s information or data to the reader and BOOM – communication is made.

Why is it a big deal?

The benefits and opportunities of NFC fall into 3 categories: Ease of Use, Device Support and Use Cases.

Ease of use:

Remember QR Codes? Remember how people thought “Oh wow! Here’s a way to make a simple connection between offline media and an online destination! Just scan and GO!”.  But it isn’t just as simple as “scan and go”.

You have to:

  1. Get out your phone.
  2. Find and open your scanning app. (if you have one)
  3. Line up your camera to the code.
  4. Wait for the camera to focus on the code.
  5. And THEN go to the destination.

Sure there are certain circumstances that work well for QR Codes and there are certain audiences that embrace and use them. But in general the process is too clunky and takes too long to complete. Which is why QR codes often don’t yield the type of results you want them to. Sure – there are plenty of caveats to that statement, ways to increase their adoption and audiences that will act of them. But for the general populace in the US and Europe: adoption is very low.

This is where NFC has a great opportunity. With NFC a consumer could tap their phone to get data instead of scanning an image. Making the process simpler than a QR Code.

With NFC:

  1. Get out your phone.
  2. Find and open the appropriate app.
  3. Tap your phone.
  4. Get data.

Device Support:

The modern smartphone market and NFC are in the same position relative to each other that cell phone cameras and QR Codes were a few years ago.

QR Codes hit their technology stride 10+ years back – About the time that camera phones were becoming common place in Asia. In Asia QR Codes have had great success for years. But devices in Asia started to come equipped with QR code readers years ago and the companies selling these devices did some of the work to educate general consumers about how to use them. For Asian companies the rise of the QR Code there represented a modern sales opportunity so they made an effort to showcase it. The same is not true here in the US. So while consumers may know what a QR code is – they haven’t been guided towards them and have been on their own in learning what they are good for and how to use them. QR Code apps have to be downloaded here in the US.

On the other hand – NFC is just starting to come into it’s own. Right as smartphones are becoming the leading mobile device. Because of this many cell phones are being built with NFC technology as a feature. In fact, in 2011 over 40 NFC enabled handsets were released with sales of over 30 million. Shipments of NFC enabled handsets are expected to reach 700 million by 2016. A majority of the devices released in 2011 were Android phones – Which leads right into the 3rd point of why NFC is important: The Use Cases.

Use Cases:

In order for any new technology to successfully be adopted the general populace has to be given a good reason to use it. Look at the cycle of any of our modern appliances and you’ll see a similar pattern – none of them become ubiquitous until they are made consumer friendly. But consumer friendly doesn’t just mean easy to use – it means people have been directed on HOW to use it.

With the release of Google Wallet last year Google brought into a sharp focus the potential power of NFC enabled devices. Turning your phone into your payment device seemed like the perfect use of this technology. But Google, and others, aren’t stopping there. NFC can be used for payments, membership cards, syncing settings on devices, connecting to apps, sharing data like contact information, music and video and to activate links. 

Imagine embedding a passive NFC chip into a direct mail, print or OOH advertisement. All a user has to do is tap their phone to be get whatever data or content we want them to have. NFC has the possibility of finally delivering an easy way to jump from physical media to digital content. There will be people who say “it’s easier to type in a URL than tap a NFC tag” and they are right. But it’s not as interesting and doesn’t feel as high tech – two things that consumers will react to.

How it’s used is why the Apple rumor is so important. Apple has a track record of taking innovative and cutting edge technology and creating a dead simple consumer friendly way for it to be used. They do this by solving a problem or providing new functionality by using said technology. For example: touch screens were around for a long time before the iPhone made them the default modern interface. SO – if Apple is getting into the NFC game that means they will have some great consumer friendly feature that uses NFC (most likely mobile payments, loyalty cards or event tickets). They will promote this new feature extensively and thanks to their effort this feature will not only introduce the mass market to how NFC works but also what can be done with it. It will make NFC something that everyone with an iPhone understands.

The Downside.

NFC is still only available on limited devices. The number of devices that support NFC is growing but still limited. 30 million NFC enabled devices were sold last year but that’s only 6% of the 500 Million total smartphones sold in 2011.

NFC being a part of our tech arsenal is new and as of right now – we’re still waiting for it’s benefits to be realized. It takes time for new things to be understood and embraced by the everyday customer. (But as mentioned above – Apple may help us with that.) Google Wallet has had some limited adoption and credit cards with NFC exist but aren’t well known.

NFC isn’t perfect. There are security concerns circling around near-field communication. The biggest one being that without an authorization process it’s possible for someone to activate the NFC chip in your credit card or phone simply by placing a powered reader within an inch or so of it. It remains to be seen how this will play out and if the concern here is completely warranted – or mostly hypothetical situations.

The Bottom Line.

NFC technology and it’s place in the general psyche is going to change in the next 6 – 12 months. How well the general populace adopts this new tech will decide on whether, as marketers, we have use for it as a tactic.

 

For more information about NFC you can check out these links:

Wikipedia – NFC: http://en.wikipedia.org/wiki/Near_field_communication

Google Wallet: http://www.google.com/wallet/

Google I/O 2011 “How to NFC”: http://www.google.com/events/io/2011/sessions/how-to-nfc.html

Ars Technica NFC & iPhone article: http://arstechnica.com/apple/2012/06/report-claims-iphone-prototypes-incude-nfc-hardware/

9to5 Mac iPhone Prototype has NFC: http://9to5mac.com/2012/06/25/new-iphone-prototypes-have-nfc-chips-and-antenna/

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