There Are Nearly Three Times as Many ‘Smart Chips’ in Stores Than There Are Internet Users

The first commercial use of the Universal Product Code appeared on a ten-pack of Wrigley’s Juicy Fruit chewing gum in Ohio back in 1974. Since then, the bar code has saved millions of dollars annually and brought valuable consumer insights to brands. Bar codes save on efficiencies, which ultimately impacts price. So if I told you that traceable technology also translates into cost savings for the consumer, would you opt in? It’s not just about advertising, it’s a way of tailoring incentives and increasing relevancy for the end user.

Today, the cookie, a digital cousin of the bar code, is vilified out of fear and ignorance about consumer privacy. The EU government, likely followed by the U.S., seeks to enforce opt-in for the storage of any information on consumers’ machines. Actually, cookies rarely contain personal identifiable information. If consumers’ right to privacy were truly the issue, would it not also apply to the rich vein of commercial data collected by Visa, Time Warner and even your local grocery store? So why fuss about cookies? Without cookies, navigating the internet would be a painful experience full of repetitive tasks and irrelevant messages.

An addressable era

In 2010, we enter a world of addressable advertising that delivers highly personalized, relevant messages to consumers in a value exchange with advertisers. Addressable advertising harnesses behavioral and purchase data to assess buying intent and customization of messages, much like Amazon recommendations. The end results are less intrusive ads and more valuable information being delivered. The topic of data collection has an unparalleled ability to raise the blood pressure of advocacy groups focused on privacy issues, for good reason. But consumers are innately aware of the value of personal information and are willing to exchange small details for ease of use, or in pursuit of a deal. Amazon has made a science of this by applying this concept to advertising. Increasing relevancy and eliminating the intrusiveness associated with advertising is a direct benefit to both the consumer and the advertiser. Personally, I would welcome never having to see a feminine hygiene ad on my TV again.

Until now, addressable advertising has flown under the radar. In the U.S., Sprint developed applications to identify consumers as they move through a store and pass within eight feet of an RFID (Radio Frequency Identification) reader. Similarly, Mini Cooper used personalized billboards aimed at drivers in major U.S. cities, and Coca-Cola has launched new freestyle vending machines with 100 choices of soda in real-time to consumers. In Japan, McDonald’s targets consumers with special offers via mobile phones and enables them to order and pay for food wirelessly. In turn, McDonald’s captures data and sends consumers personalized offers. To put this into context, by 2004, Walmart, a pioneer in RFID product tracking, collected 460 terabytes of data from RFID tags, twice as much as the internet.

Science fiction vs. science fact

NFC (near field communication) technology is not new, but it is almost mainstream as mobile phone manufacturers in the West adopt built-in RFID readers to follow their Asian counterparts. Simply put, RFID are wireless micro-computers that contain memory storage. RFID replaces bar codes on products, facilitating a world where we check information or prices online by scanning mobile phones over a product in-store and even wave-and-pay as consumers make transactions. American Express, Visa and MasterCard have created contact-less credit cards using RFID with brands like Arby’s, McDonald’s and KFC already on board. In other markets, RFID enables “smart” home appliances to adjust things like temperature via an internet connection, or turn on the oven from your mobile device. Each consumer action produces data, most of which is valuable when it comes to addressable marketing.

Ultimately, digital marketing with RFID would mean identifying individuals or groups to deliver uniquely targeted messages to through advertising and POS. Any digital screen would be available to serve targeted ads in or out of the home through “location-aware” sensors afforded by NFC. This assumes that a unique identifier has been given to every single individual and is linked to his/her purchasing behavior via tagged items.

Today, there’s nearly three times the amount of RFID “smart chips” operating compared to internet users. Big Brother or not, tracking behavior and collecting data to deliver more targeted messages benefits both advertisers and consumers. The tipping point will come when the fear of tracking is outweighed by the benefits to the consumer. In the meantime, let’s try to keep the cookie from crumbling and watch closely as we move into RFID territory.

This article first appeared on AdAge