NFC packaging updates the lowly QR code, but will consumers care?

Grolsch inserted NFC technology into its bottles in Russia so users could watch a movie by clinking a mobile device.
Grolsch inserted NFC technology into its bottles in Russia so users could watch a movie by clinking a mobile device.

Diageo and Coca-Cola are already experimenting with the technology, which (they swear) provides a better experience than its predecessor

There’s an old saying in marketing that one should "let the product do the talking." Now some are taking that advice literally.

In the last year or so, several brands have added components to their packaging that let consumers use their smartphones to interact with the products in stores. The technology, based on near-field communication or NFC, is the successor to the much-derided QR code. 

Proponents say such digital packaging can act as a vehicle for offers and rewards and allay "information anxiety" about a product. Skeptics counter that the relatively high price of NFC chips will keep deployment low and that most consumers aren’t interested in interacting with packaging, no matter how zingy the technology.

Some recent attempts
David Luttenberger, global packaging director for Mintel, says that he’s seen a big increase in NFC-enhanced product packaging over the past 18 months or so. "China is big into it," he says. "I also saw it in India. It goes hand in hand with the growth of mobile devices."

The impetus for NFC-enabled packaging is the growth of NFC-enabled phones. Researcher IHS predicts that by 2018, there will be 1.2 billion NFC handsets on the global market, a four-fold increase from 2013. 

NFC, a radio frequency-based technology, lets phones communicate via a swipe with other devices equipped with an NFC chip. The technology is now standard in Android phones. In 2014, Apple, which had resisted NFC, added it to its then-new iPhone 6.

While the use of NFC chips in product packaging is hardly mainstream, there have been some notable experiments. Diageo outfitted its premium Johnnie Walker Blue with NFC chips last year. Customers with NFC-enabled phones could use them to read the label and verify that the item was not counterfeit. Customers could also get personalized messages, including promotional offers and cocktail recipes. Rémy Martin and Ferngrove Wine Group have also introduced NFC-enabled packaging.

Coca-Cola ran a program in Germany in which cans sported jerseys of local soccer teams. When they scanned the cans, consumers entered their Facebook information and were eligible to win a jersey. "So you have an anonymous user going to a known user," says Andy Hobsbawm, co-founder and CMO of Evrythng, a UK firm that helps create digital packaging solutions.

Grolsch Beer also recently tried inserting Bluetooth beacons into its bottles in Russia. Clinking a bottle to a mobile or desktop device lets you watch a free movie. 

Looking for utility
While those efforts may be interesting, Luttenberger says that consumers will have limited interest in such packaging unless they provide real utility. "Give me a piece of information that’s going to make my purchasing decision more confident or ensure that the product is fresh," Luttenberger says. "It’s not just about throwing it on a box of Twinkies so the world can watch a movie."

As an example, Luttenberger says Ikea could put NFC chips on its furniture that activate a video showing how to construct the item. Recipes are also an obvious value-add for food packaging, he says.

Hobsbawm sees at least five applications for NFC packaging including offers and rewards; content to battle "information anxiety" about a product (like how you set it up or put it together); telling the backstory about a product ("These were handmade by old ladies in Estonia"); information about how to recycle the item; and a mechanism for reordering. 

Of course, marketers have tried this before with QR codes, and consumers — at least in the US — rejected them. Luttenberger says that it’s easy to see why QR codes failed — they were clunky as hell. "The first generation of QR applications were based on if I could get a scanner and if I could get a Wi-Fi signal at Walmart or Target or wherever I was, and if I was able to scan a QR code," he says. "Most of the applications were non-mobile optimized."

Such apps typically took users to a website with type that looked minuscule on a smartphone. Often the site would be hard to navigate as well. "Don’t take me to your website and show me all 240 varieties," Luttenberger says. "Give me some information about this particular product. That’s where most brands failed. They were making a promise of mobile engagement, but they didn’t fulfill that promise."

Mary Greenwood, director of new technology and business development at Avery Dennison Materials Group, agrees. "The brands I have talked to say that consumers don’t like to download an app in order to read a QR code. And they say that using a QR app can be time consuming," she says. "A user has to focus the phone over the QR code until it connects, and often the lighting is not optimal."

Not everyone thinks that QR Codes are an epic fail. Hobsbawm points out that they’re still very popular in Asia, for instance, and that items ranging from airline tickets to subway turnstiles now use QR codes.

The future of digital packaging
QR codes may not be beloved, but they are cheap. The same can’t be said for NFC chips. While there was no firm pricing figure, Hobsbawm says that it currently costs around $0.05 to put an NFC chip on a package. That’s not a huge concern if you’re selling a $40 bottle of scotch, but would be if you’re selling a $0.99 candy bar. That said, Hobsbawm expects the price for NFC chips to hit $0.01 in the near future. 

Widely available and cheap NFC chips might help pave the way for integration with the Internet of Things, a possibility that Amazon helped spotlight with Dash, a one-click button that lets consumers automatically reorder items such as Tide detergent and Kraft Mac & Cheese. Some big-ticket items like washing machines and refrigerators are already sporting Internet connectivity, though the products haven’t quite taken the market by storm.  

"The world is actually combining," says Hobsbawm. "This distinction between what is a piece of smart packaging technology and what is a smart connected product is becoming very blurred. The bigger picture question is how does your product connect to the bigger digital ecosystem in people’s lives?"

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