NFC – now in Singapore.

Clear Channel has announced that a network of smart posters will include six-sheet, 12-sheet and Media Portal panels at bus shelters across the island. NFC phone users will be able to tap on any of the advertisements to receive music, videos, applications, brochures or other information directly to their phone. Advertisers will then be able to mine actionable consumer data based on interactions with the posters, such as the number of users and overall response rates.

E.g. of how this can work in bus-stop or any OOH.

Now a technology roll-out of this scale should certainly require our attention. But first let’s get to know what NFC is and why it’s important.

NFC, Near Field Communication, is a short-range, low-power communications protocol between two devices. The protocol uses magnetic induction to create a radio-wave field allowing small amounts of data to be transferred wirelessly or less than 4 inches. Compared to Bluetooth, NFC is very slow. But the power it consumes is practically nothing by smartphone standards and does not require any pairing or configuration. NFC is completely effort-free, requiring nothing more than a tap.

Here’s a simple video on the use of NFC.

What Can You Do With NFC?

The three main concepts are “sharing, pairing, and transaction.”

Transaction is the most obvious of the three, and the one we’ll probably start seeing first. A smartphone with an NFC chip could very easily be configured to work as a credit or debit card. Just tap your phone against an NFC-enabled payment terminal, and bam, money spent, consumerism upheld, everyone’s happy.

NFC could work well for public transit passes, library cards, hotel room keycards, and office building passcards. Even government-issued IDs like driver’s licenses and passports can be replaced or augmented with NFC, though the security concerns there could push such applications further into the future. But the point is, it’s all possible, and relatively easy. Even keys could someday become a relic of the past, replaced by the tap of a phone to a lock.

“Sharing” is a little bit trickier, due to the limitations of the tech. Mostly, it’ll be used much like QR codes- but without the need to open an app and take a picture. A print ad that provides a URL doesn’t require power, and relying on the radio frequency field created by your NFC phone, you can just tap and have information beamed to your phone.

Sharing of large files is still cumbersome today. Which is where the “pairing” concept comes into play. Tap your phone to another phone to instantly configure a Bluetooth or Wi-Fi connection, without the need for passwords. Or tap one phone to another to instantly exchange contact information, even when there’s no available 3G connection.

Why Are Gadget-Makers, Bankers, Merchants, and Wireless Carriers So Gung-Ho About It?

NFC has some pretty amazing possibilities, but the reason every company from Google to DBS to SMRT to StarHub is singing its praises is all about direct response, direct advertising and real-time customer data. Pay for a purchase with your NFC-enabled phone, get a coupon. Tap your phone to an NFC-enabled movie poster, get a special offer for a 1PM Tuesday showing of Smurfs. Use NFC’s mobile payment capabilities, and you’re likely to get coupons, promos, samples, or other various digital perks beamed back to you in response.

But that doesn’t explain why the business types are quivering in their business suits about NFC. The answer: It’s all about advertising.

Google, let us recall, is in the business of ads and customer data. When you make an NFC purchase, your phone isn’t just transmitting your bank numbers for payment. It can also transmit your buying habits and demographic information. That sounds terrifying, but for the most part that kind of information is already out there and being used every time you buy an app, or anything from Amazon, or search for a product on Google. NFC just has the potential to make that data available instantly and in real time, which is exceedingly valuable to marketers and retailers. And instead of coupons, you might get beamed advertising instead–intensely targeted ads tailored to your latest purchase. So cookie is really the new currency.

What About Infrastructure?

It’s generally assumed that the introduction of NFC into smartphones will require a massive infrastructure overhaul, but that may not be the case. NFC, as an evolved form of RFID, is actually compatible with existing RFID terminals, which are distributed by companies like Visa and MasterCard and are present in businesses from McDonald’s to taxis, so no fancy new hardware will be necessary.

Of course, those businesses that want to take advantage of NFC’s more ad-friendly two-way abilities will need to install new NFC-powered point-of-sale devices.

In terms of phone hardware, you can expect to see NFC in the next generation of smartphones–basically, the ones after the ones that are about to hit the market. Google built some pretty elaborate NFC capabilities into the latest release of Android (version 2.3 Gingerbread), and the NFC Forum counts such high-profile companies as Apple, Sony, Nokia, LG, Motorola, Qualcomm, and RIM (BlackBerry) among their principal members.

Is This, Well, Safe?

Ah, security. NFC is inherently worrisome in that it promotes the transmission of very sensitive data through the air, like magic, and that data could theoretically be snatched. However the 4-inch transmission zone would theoretically make it a challenge to steal data wholesale without a crafty plan. There’s also the ability to simply turn NFC off when you’re not using it, which could stem some piracy, if you remember to do it each time. But that’s not really enough; it’s like declaring a wallet generally safe just because it’s difficult for a pickpocket to get close enough to snatch it undetected.

The NFC standard leaves any kind of advanced protection, like encryption or password protection, up to whoever uses it. You’ll have to trust your bank to encrypt your bank info, you’ll have to trust Google, Apple, or RIM to encrypt your account info, you’ll have to trust your digital locksmith to encrypt your new space-age virtual house key, and so forth. It’s relatively easy for any of these companies to embed encryption or a password, but they still have to do it.

Will It Succeed?

NFC has tons of potential, and with backing from banks, hardware makers, and retail shops, it’ll likely be widespread before long. Whether it’s embraced smoothly will depend in large part on the implementation–Android’s NFC functionality, from the brief glances we’ve seen, look kind of obtuse and complex, and NFC needs to be super simple for the public to understand and use it. But if it’s done right, the days of crammed wallets and forgotten passwords may be coming to a close.

How NFC can be integrated into an on-ground campaign…or retail outlet.

Thanks to Dan Nosowitz.


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