Marketers Say Hello to Long-Awaited Mobile Technology

Qdoba, Others Use 2-D Barcodes to Feed Consumers Content Such as Coupons

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SAN FRANCISCO (AdAge.com) -- When Peter Shipman, a franchise owner of the Qdoba casual Mexican restaurant chain, was launching his third outlet in the college town of Ann Arbor, Mich., he needed a way to draw students to the new location -- and he wanted to speak their technological parlance. So he bought ads in the campus newspaper and posted promotional posters, each with a code kids could scan with their phones to get a mobile coupon for a buy-one-get-one-free burrito.

Analysts and Jagtag competitors agree that for 2-D barcodes to gain any meaningful traction, the code reader must come preloaded on cellphones -- and only the wireless carriers can make happen, as they dictate the specs to handset makers.
Analysts and Jagtag competitors agree that for 2-D barcodes to gain any meaningful traction, the code reader must come preloaded on cellphones -- and only the wireless carriers can make happen, as they dictate the specs to handset makers.
The campaign, which ran on technology from a company called Jagtag, netted a 52% redemption rate with about 400 scans* , roughly 1% of the total target student population.

"You use different media for different applications, and for a grand opening, this was appropriate," Mr. Shipman said, adding he would consider using the technology for future promotions.

For Qdoba, it was a digital version of clipping coupons. But these codes -- known as 2-D barcodes, since they're scanned both horizontally and vertically -- can also deliver product reviews, video demos or any other tool a marketer has in its digital arsenal. They can also help marketers track static ads and product performance in retail channels: Did the print ad get more scans in the men's lifestyle glossy or the outdoor-enthusiast magazine?

Small but growing group
Qdoba joins small but growing group of marketers warming to the long-promised technology. In fact, among three vendors working to make this a reality -- Scanbuy, Jagtag and Clic2C -- there are at least 15 initiatives involving national brands in the retail, fashion, food and beverage categories that should hit next quarter.

Nike 6.0, the action-sports division of the footwear maker, recently deployed 2-D barcodes at several sporting events it sponsored late last year, delivering content about Nike athletes to fans who sent in images of Jagtag codes. While Nike won't disclose campaign metrics, Butch Bannon, a business-development exec at its promotional-marketing agency, TAOW Productions, said Nike will look at other ways of integrating 2-D barcodes in future venues.

Microsoft will be slapping 2-D barcodes on the next round of packaging for its Xbox games, said Larry Harris, CEO of Ansible, which worked with Microsoft on a 2-D-barcode campaign to promote an enterprise server.

This kind of one-to-one exchange between brand and consumer is already well-entrenched in Japan, where they're known as QR codes and where readers come preinstalled on about 70% of all mobile phones. But stateside only a few brands have flirted with the technology, mostly because consumers don't want to bother downloading the applications required to read the codes. Plus, there are no standards for 2-D barcodes in the U.S., meaning the codes employed in one-off campaigns are proprietary, and each require their own reader and decoder.

"Everyone agrees on the category," said Dudley Fitzpatrick, CEO of Jagtag, the technology behind the Nike campaign. "But brands don't bet against consumer behavior."

Making it easier
Jagtag is trying to solve that problem by making it easier for consumers. Rather than downloading an application, they take a picture of Jagtag's 2-D barcode and send it to a short code, and Jagtag sends back a URL, coupon or other media via multimedia messaging service.

But analysts and Jagtag competitors agree that for 2-D barcodes to gain any meaningful traction, the code reader must come preloaded on cellphones -- and only the wireless carriers can make happen, as they dictate the specs to handset makers.

Jonathan Bulkeley, CEO of Scanbuy, a Jagtag competitor, said he expects his code reader to be preinstalled on 10 to 12 handsets sold by Sprint and Alltel, which Verizon has acquired, by this spring. But consider there are 250 different handsets in the U.S., and they run on several different operating systems. That's a long way to go.

The wireless carriers are slowly coming onboard as they look to transactions and commerce to help drive revenue. Scanbuy has been chasing AT&T and Verizon for at least 18 months; late last year, it got Sprint to approve its application, so users can download it on 40 handsets sold by the carrier. The No. 3 U.S. carrier began promoting Scanbuy's application on its website late last year. Jagtag's service works with AT&T and Verizon. "Carriers need to figure out how to make money on navigation, transaction and advertising," Mr. Bulkeley said. "On mobile, consumers are going to go directly to what they're interested in, not go search for it."



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CORRECTION: An earlier version of this story incorrectly credited Scanbuy with the Qdoba campaign. Jagtag ran the program. Four hundred customers, not 4,000, scanned the Qdoba coupons.

In Japan, They're Called QR Codes

HONG KONG (AdAge.com) -- Quick-response codes are well-entrenched in Japan, where consumers routinely use their cellphones to check e-mail, download movie trailers, navigate Tokyo's labyrinthine streets, pay water bills, buy Cokes from high-tech vending machines, download e-coupons and even have their fortunes told.

They also use their phones to scan QR codes on magazine and outdoor ads. The digital codes are read by the phones' cameras and redirect them to designated mobile sites.

Northwest Airlines, for instance, has used QR codes on large outdoor posters in high-traffic areas in downtown Tokyo to send e-certificates for travel deals and award frequent-flyer bonus miles through its WorldPerks program. The campaign was created by Mindshare's Tokyo office.

Nestle used the technology to launch a canned drink called Nescafe Shake. A QR code on promotional materials led cellphone users to a mobile site where they could download two 15-minute films created by WPP's JWT, Tokyo. Users could also download the films' original music as songs or ringtones.

QR codes have moved beyond Japan into other Asian markets, including China. The latest generation of QR technology lets marketers and retailers fine-tune their messages, making the experience more personal.

The codes have improved, too. A Hong Kong-based company called MyClick Media has pioneered image-recognition mobile marketing in North Asia. Instead of photographing bar codes, users click on logos, objects and images selected by marketers. The photos grant users one-click access to mobile-based internet content, services, rewards and gifts via e-mail, text and multimedia messaging service.

Since the technology is limited to high-end phones and requires a software download, MyClick hasn't been a success for mass-market campaigns. But marketers such as Coca-Cola and Adidas have scored points with consumers in smaller promotions such as sporting events. China Mobile used MyClick to encourage subscribers to share good wishes for athletes during the Olympic Games last year in Beijing.

-- Normandy Madden

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