Originally developed for tracking vehicle parts during assembly in Japan, Quick Response codes are two dimensional barcodes with many applications. Denso Wave first pioneered them in 1994, but after the iPhone release in 2006 they found a new purpose. Simply scanning with a smartphone allows access to all kinds of content. In the last few years QR has become a buzzword; marketers were told that they were vital to bridging the physical and digital worlds. This led to many companies using QR codes just for the sake of it, not providing any value to the customers or the companies themselves. QR’s reputation was damaged, perhaps irrevocably, with many media sources declaring them dead.
Several difficulties with the platform prevented it from exploding. A scanning app is required, and smartphones have not come with a one pre-installed. Many marketers do not like using them because they find they ruin a beautiful image, or don’t fit the overall theme of their products. Unquestionably though, the worst problems have come from poor usage. QR codes leading you to desktop sites when you’re on mobile, codes printed where you cannot scan them, codes on desktop sites where a hyperlink will do and printing codes at poor quality so the apps can’t even read them. The list goes on. Websites exist just with examples of rubbish QR campaigns and there is a book called “QR codes kill kittens.” This has blown a hole in the high-tech reputation the brand once had.
With an innovative approach, QR based marketing can be fantastic. Tesco used QR codes in South Korea to boost their online sales. Posters of shelves of goods were put up in subways, allowing people to scan what they wanted with their phones. When they got home, the food would be delivered. This provides value by allowing previously wasted time to become productive, and customers responded; Homeplus, Tesco’s South Korean arm, became the number one online food retailer. Verizon, meanwhile, used QR codes in store to enter customers into a competition; when someone scanned a QR code it would share a Verizon advert on Facebook. If someone clicked on the ad and bought a Verizon phone the original customer would get a free smartphone. Customers benefited by potentially winning a phone, and Verizon gained highly visible marketing spots on Facebook. The campaign cost $1,000 and brought in $35,000 in increased sales, huge value for money. One of the greatest advantages of QR codes is that they can be printed on mass produced items, and companies like Heinz have used this effectively, whereas other technologies may need chips to be included, or beacons placed nearby.
There is now competition in this sector however, with technologies like Automatic Content Recognition (ACR). While still needing work to make it quicker and more accurate, ACR would allow you to just point your phone at an item and receive content. No codes would need to be printed at all, and software updates to the reader app would allow a company to optimise its campaign without altering the product itself. Then again, items would have to have a sign somewhere though telling people to scan it unless they expect you to just walk around scanning everything. Is this any better than having a QR code printed?
QR codes can also be used for mobile payments, and are currently leading this area. According to Statista, 45% of mobile payment users have presented a barcode/QR code and 29% have scanned a barcode/QR code to pay for goods or services. This compares to 37% for NFC (Near Field Communication) and even lower for other methods. QR-based systems have been supported by all sorts of companies including PayPal and Barclays. A new system called CurrentC made by MCX, a group of some of the U.S’s biggest retailers like Walmart and Best Buy, is being rolled out at the moment and could lead to further growth. NFC payment is the rival technology which so far has struggled to ignite, but Apple Pay will be the strongest system using it. A standoff between retailers supporting QR code payment and those supporting NFC payment is forming. Apple Pay likely has more end user support than systems like CurrentC, but merchants want to use a system without credit card fees like their own provides. The cost of installing NFC equipment is also high and so are running costs; Best Buy stopped using it in 2011 because it was too expensive. On the other hand, Apple Pay has strong support from credit card companies formed from long negotiations and offering them a good deal. These companies are pushing retailers to upgrade payment terminals in the U.S already, and many merchants may be convinced to adopt NFC in the process. Everyone wants using their technology to become a habit and part of everyday life, and right now it is very difficult to call the end result. However, if enough of the iPhone 6 users adopt Apple Pay then the combination of pressure from consumers and the credit card companies will likely convince the rest of the retailers.
QR codes had fantastic potential, but poor use has prevented them from reaching this. With new technologies arriving which are superior, or just more fashionable, it is hard to see the use of QR codes not declining in a couple of years. Their use in payment systems will probably increase before NFC gains full support, and then sharply decline. Their use in marketing is harder to predict but will likely persist longer. ACR needs to be more reliable than it is right now, and with more innovative QR code usage marketers will feel less need to move to another technology. QR codes are not dead like some claim, and they will not die soon, but certainly their time in the sun is up.
This article was written by Tom Collard.