By Christopher Smith, brandrepublic.com, Monday, 23 April 2012 08:30AM
NFC has been hovering on the edges of consumer adoption for some time and brands are yet to take advantage of the technology's potential.
There is a massive, exciting opportunity to create new methods of consumer engagement and enhance existing marketing and communication channels.
NFC uses RFID (radio frequency identification) to enable close range two-way communication between mobile devices and physical objects.
The technology will allow us to make transactions and exchange digital content and information quickly and simply, in a way that's far more direct and secure than existing methods such as Bluetooth and QR codes.
The slow uptake by brands has been largely due to the lack of NFC-enabled handsets in the UK market, but things are shifting and the hardware is becoming more readily available.
The recent Berg Insight report stated that sales of NFC-enabled handsets increased to 30 million units globally by the end of 2011 and that this number will increase to 700 million units by 2016.
As mobile becomes the key communication channel between brands and their customers, NFC will add a further layer of communication that will link digital and physical spaces' interaction with brands.
Financial services and mobile operators have had NFC on their radar for some time.
Visa has run a wide range of trials globally and, in 2008, O2 trialled NFC for VIPs at the Wireless Festival, giving them access to extra privileges as they were scanned into VIP zones. O2 also ran successful trials with handsets replacing Oyster cards.
Barclaycard has made huge leaps driving consumer adoption of this technology through the early adoption of contactless cards and their partnership with Orange to launch an NFC wallet phone.
Google announced Google Wallet last year to much fanfare but the platform is reliant on partnerships with banks and credit cards in order to take it mainstream.
Right now the only bank on board is Citi and the only network operator deal in place is with Sprint in the US.
A strategic approach to mobile and digital brand strategy should start considering the impact NFC could have on business and marketing objectives.
Outside of payments and commerce, four areas of opportunity for brands include OOH, location-based, events/sponsorship and retail.
Outdoor advertising will become more directly interactive with NFC replacing QR codes to enable two-way interactions and distribution of content, applications and information.
Brands will also be able to take location-based activity to the next level, which will give greater scope for gamification.
And NFC could enable brands to interact more directly with their customers in the event and sponsorship space - extending their experience into the digital and social space.
In the retail environment, NFC will also be able to offer another dimension for brands through enhanced product exploration and loyalty that extends the retail experience onto mobile and digital.
We're all waiting for consumer adoption and awareness levels to rise.
A recent study by Posterscope and Clear Channel showed that only 51% of smartphone owners have even heard of NFC and 6 in 10 of those with an NFC-enabled handset don't even know they have it.
The tipping point of consumer awareness and adoption of the technology is likely to come when Apple integrates NFC into its hardware and software.
Although just rumours at this stage, it’s likely that Apple would exert its usual levels of control and tie NFC to Apple devices only and payments directly to iTunes accounts.
As an agency we're determined to keep exploring the possibilities of innovation and new technology such as NFC, and how it could benefit our clients. In partnership with O2, we recently ran the Isobar Create London event in Shoreditch, a 34-hour hackathon that invited teams of designers and developers to come together to develop innovative new concepts using NFC.
After a monumental effort of creative thinking and graft, some fantastic working prototypes were developed.
This included an app that linked directly to activity at concerts and events, an integrated ticketing and queue management app at theme parks, an app that syncs the users’ dietary requirements with food products in store, an app that integrates payment of prescriptions with an interactive medication diary, and an app that directly connects a user’s handset to a specific Wi-Fi network.
All of these demonstrate that the potential for NFC goes far beyond just commerce.
What’s clear, however, is that NFC is an underestimated emerging channel that will greatly improve interactions between brands and consumers, fundamentally changing the way businesses operate and the way consumers behave.
This article was first published on brandrepublic.com