Google’s Gingerbread (Android 2.3) offers near field communication (NFC) support, which can be used for both “contactless payments” and marketing purposes. People tend to think about and discuss NFC in the context of “mobile wallets” and payments exclusively but there’s a great deal more it can do.
For example, Google has been testing NFC-based marketing in Portland with window decals for small businesses. The idea there is touch the phone (Nexus S) to the window decal and get a bunch of information about the business (e.g., Google Place page data).
Big Plans for NFC Beyond Payments
Google appears to have big plans for NFC and it’s starting to put those into action. The Wall Street Journal is reporting this morning that Google has teamed up with MasterCard and Citigroup (and POS company VeriFone) on NFC and mobile payments.
Last week Bloomberg reported that Google and VeriFone were working together to install new NFC-enabled POS hardware and software in a number of retail stores in San Francisco and New York:
The company will pay to install thousands of special cash- register systems from VeriFone Systems Inc. (PAY) at merchant locations, said one of the people, who requested anonymity because Google’s plans haven’t been made public. ViVOtech Inc., a provider of mobile-payment technology, will also play a role in the tests, which will include Los Angeles, Chicago and Washington, D.C., one of the people said.
Now the WSJ fleshes the Bloomberg story out a bit and reveals (according to various sources) that it’s about much more than payments for Google. Payments may be the least of it for Mountain View.
Google reportedly is seeking to leverage NFC for consumer analytics data and ad targeting. Here’s what the WSJ said:
The Internet giant is aiming to make mobile payments easier in a bid to boost its advertising business. The planned payment system would allow Google to offer retailers more data about their customers and help them target ads and discount offers to mobile-device users near their stores, these people said. Google isn’t expected to get a cut of the transaction fees . . .
These phone users also would be able to get targeted ads or discount offers, which Google hopes to sell to local merchants. They also could manage credit-card accounts and track spending through an application on their smartphone, the people said.
The Holy Grail of Analytics
All this is very forward looking and still speculative. However if successful and adopted on a mass scale — with Android devices on track to be the dominant smartphone platform there’s already an installed user base of millions — Google would get valuable data about consumer behavior in the real world. And advertisers would get a kind of “closed loop” dataset, connecting online, mobile and offline.
The notion that Google would be able connect the dots between online ads and the point of sale and deliver all that information back to marketers would be a dream come true for many. There might even be a capacity to track individual search keywords (or display ad creative) all the way to purchases at the point of sale.
This would be a kind of “Holy Grail” of analytics. Indeed, the “transparency” around consumer behavior this would bring to retailers, brands and marketers generally would be radical and potentially transformative. Yet it would also be a nightmare scenario for most privacy advocates.
Consumer Convenience or Privacy Nightmare?
Paying for things with your smartphone strikes me and many others as a great convenience. However even the mere hint of a suggestion that Google would be able to connect online or mobile query behavior directly to individuals’ purchase histories would be very unsettling to many people.
Retailers and others have tied credit card and purchase data to marketing for years without an uproar. However what goes on behind the scenes with consumer data offline is more shadowy and has attracted less scrutiny than online marketing practices.
The pending privacy initiatives brewing in Washington DC aspire to equally address digital and traditional marketing and consumer data collection. Meanwhile the Europeans are already implementing new, strict privacy rules.
Starting in late May, marketers in Europe are required to gain “explicit consent” from users being tracked by cookies for behavioral targeting or retargeting. While the practical details are being worked out, it may spell the end of cookies there.
By the same token it’s probably unlikely, because of privacy concerns, that the NFC-supported analytics and marketing scenarios I’ve sketched out above will come to pass exactly as described. But NFC-enabled mobile payments are coming, whether from Google and partners or others, such as carriers and all the major credit-card issuers.
For better and for ill NFC is a “Pandora’s Box” that will potentially reshape the way that consumers conduct transactions and the way that merchants and advertisers conduct their marketing.