When last we saw QR codes -- two-dimensional "quick response" bar codes that can be scanned to provide geographic and behavioral-targeting data to an advertiser -- it was in the form of the CueCat, a bar code-scanning device that debuted in 2000 from Digital:Convergence. After the CueCat died in an outburst of controversy over privacy issues, QR codes effectively disappeared from the U.S. ad market, instead cropping up in wide deployment across parts of Japan and the U.K.
Now Google; a research group at Case Western University; and QVC, the home-shopping network, are all betting on 2008 as the year marketers will finally help crack the QR code.
Learning from CueCat
For Google, the technology represents a second chance at bringing QR codes to the newspaper industry, with a few tweaks along the way. Spencer Spinnell, head of sales strategy for Google Print Ads, a division of the AdWords platform, said the ultimate reason CueCat never took off was because consumer adoption of bar code scanning never caught up with the technology. "It was way ahead of its time," he said. CueCat relied on consumers using a scanning tool given away free by the newspapers. Google's effort relies instead on technology consumers have already widely embraced.
The CueCat was a handheld, cat-shaped device. Publications like Parade and The Dallas Morning News were involved in early trials of the technology, while Forbes and Wired were among the magazines to offer free samples of the device to subscribers. However, in the pre-Google, pre-wireless era, the CueCat was a bit cumbersome.
"It was tethered to the PC, so not a lot of people found it to be convenient to have a newspaper in one hand, a CueCat in the other and a computer in front of them," said David Miller, CEO and founder of the mobile-technology firm Mobile Discovery. Rather than create another device to complicate the scanning process, QR codes 2.0 were designed to be cellphone-compatible. "That's the beauty of 2D codes: They enable people to go about their daily lives," Mr. Miller said.
The barrier for Google, or any other marketer or mobile company looking to enter this space, is to change the consumer's perception of the mobile phone before a major new function can be rolled out. "The obvious bridge here is the fact that every consumer has a phone and a very small percentage of those phones have a camera," he said. An even smaller percentage of U.S. phones have the scanning technology required to read the codes -- fewer than 5%, to be precise. Although Google's forthcoming Android platform is likely to have scanner-friendly applications, the usage will need to be encouraged well in advance.
Case Western turns Japanese
Enter Case Western University's Institute for Management and Engineering, which began using its own 2D codes, called EZcodes, around Case Western's Cleveland campus in February. The codes are found everywhere from transit stops, where students can scan them to see when the next bus would arrive, to applications on Facebook and MySpace, to the student newspaper where QVC recently began rolling out its own marketing campaign with Mobile Discovery. As QVC's CMO Jeff Charney said, "We wanted to make the Case campus look like downtown Tokyo."
Yet convincing consumers to pay for accessing ads on their phones may be an even bigger task. Each scanning of an EZcode at Case costs the user 2 cents or more per interaction. "What we've found is people are afraid of charges on their wireless bill," Mr. Miller said, adding that only 30% of Americans have an unlimited-use data plan for their phones. "There's a certain amount of apprehension with enhancing the mobile experience. So figuring out what is easy to do, with the right type of promotion, is a challenge. It takes a little bit of experience and a little bit of time to get that education out."
Mr. Miller has modest objectives for the Case Western experiment, the findings of which will be analyzed in a symposium at the university in May.
For QVC, the campaign also presented an opportunity to own the letter "Q," part of a larger objective of the network's rebranding around the alphabet's 17th letter. "It's a natural fit for us, and from my perspective, it's the next killer app in advertising. We can take it to the next level, in a friendly, opt-in way. It's not a push technology, it's a pull technology," said Mr. Charney.
Google has already seen results from a recent test campaign conducted in three markets with jewelry retailer Blue Nile. Each ad contained a QR code and a response tag, and was tested against the same ads without the tags. The code-enhanced ads ended up driving 6.5 times more revenue than the ads without. Mr. Spinnell added that the majority of the web traffic to the ads' micro-site was also enhanced by search, which is the ultimate proxy at Google in determining how traditional media is performing. "Aside from the fact that it was a great way to bridge the gap and make these newspaper ads clickable, aggregating these calls-to-action will really benefit the end user."