Mobile Commerce Daily is now Retail Dive: Mobile Commerce! Click here to learn more!

NFC to ignite billions of dollars of incremental revenue: Razorfish

Near field communication has the potential to generate billions of dollars of incremental revenue from mobile marketing services alone, not even factoring in payments, which will be a watershed moment for mobile, according to Razorfish.

The growth and impact of NFC had been stifled by the competitive ecosystem, not by a lack of infrastructure to support it, but now the technology figures in the plans of Apple, Google and Facebook, which is changing the game. Because the market in the United States for credit and debit cards is saturated, NFC is not reaching the tipping point due to contactless mobile payment, but rather due to the countless transformative mobile marketing applications of NFC, per Razorfish.

“This new data and integrated [NFC-based] service offering could generate billions if not hundreds of billions of dollars in incremental ad revenue,” said Paul Gelb, vice president of mobile at Razorfish, New York. “The additional data would increase ad effectiveness and efficiency by allowing marketers to target the most valuable consumers with the most effective ad content at the time they would be most receptive to the message.

“NFC’s advertising potential is what is of the most interest to new NFC market entrants such as Google, Microsoft, Apple and Facebook,” he said. “NFC is going to be a differentiator in the mobile industry, which is a competitive market.

“If one platform or company breaks into something successful, others will try to compete in this area as well—all major players are at least working on an NFC initiative.”

In fact, Apple has submitted a patent for a dynamically priced advertising system that matches advertisers’ ad requests with consumer profiles that reside in a database that Apple would control, according to the Patently Apple blog.

Using the dynamically priced system, how much an advertiser would pay for an ad would be based on the unique characteristics of each target consumer.

All about the data
Mr. Gelb said that the aggregated data from each NFC user’s purchase behavior creates purchase histories that are integrated into data from various sources by credit reports firms to create robust consumer profiles.

These profiles are used to create highly targeted lists of consumer sales leads that can be sold at high prices to direct marketers, per Razorfish.

“This value stream provides an opportunity for NFC to generate exponentially more value than credit or debit cards,” Mr. Gelb said. “NFC can connect a consumer in the physical world in ways that generate an infinite number of interactions or profile data points.”

Examples include users’ current location and location history, what content they have consumed, who they have been in contact with, who is in their social graph and how influential they are as consumers.

NFC providers can also close the loop between mobile marketing programs and conversions, per Razorfish.

“Payments are just a small part of what NFC has to offer—so what is driving interest and investment in it?” Mr. Gelb said. “For players that are investing in it, their primary motivator is driving marketing opportunities, as NFC is the last piece of the puzzle to close the loop between marketing initiatives and finalizing the sale.

“NFC can also provide measurement of not only what consumers do on their mobile devices but in the store as well,” he said. “If you are Google, you can provide direct response, integrate with merchants’ inventory, let them target users on their platform and using NFC on those devices, track how users complete the sale.

“Whoever is able to do that, they will command significant streams of revenue, because that information is extremely valuable for marketers—‘I spent this much and it led to this amount of sales.’”

That final in-store conversion data will be the most valuable aspect of NFC.

Mr. Gelb said that if you ask any honest traditional marketer, he or she will admit that their measurements have become increasingly inaccurate.

“Outside of digital, when there is a sale it is hard to figure out which types of marketing and media had an impact,” Mr. Gelb said. “With mobile you can measure which channels were most effective.

“Loyalty and CRM will be a huge component of this—if you look at decision-drivers for hospitality, now you will have a mobile wallet,” he said. “Privacy issues have the opportunity to be resolved, because you can actually compensate users for opting into a loyalty program on their mobile device and easily redeem rewards that via a mobile wallet.”

Final Take
Mr. Gelb