NFC in Direct MailShould you use near field communications

in your next campaign?

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IntroNear field communications, or NFC, is a buzz word that has gained popularity over thepast few years, especially in the retail space. NFC helps to connect the physical andvirtual worlds through short-range wireless communication technology. Although thistechnology has been around since the 1980s, it took the rise of smartphones andmobile payments to launch NFC to today's status of "the next big thing.” However,roadblocks, such as the late addition of NFC to Apple devices, slowed its adoption inthe marketplace. But now that businesses are beginning to embrace the technology,marketers are finding clever ways to use the technology across many platforms,including direct mail.

In this document we’ll explore the pros and cons of using NFC in direct mail todetermine if it is right for your next direct mail campaign.

About NFCNFC is a wireless communicationtechnology in which two NFCdevices communicate with oneanother using radio frequencies toexchange information. Manysmartphones manufactured todayinclude an NFC chip that can beused with either another NFCenabled device or an NFC tag. AnNFC tag can be a sticker or smallitem, like a key fob, that isembedded with a chip andantenna. There are two NFCmodes, active and passive.

Active

Passive

Both devices generate a radio frequency field andexchange data. This mode is also calledPeer-to-Peer (P2P) and an example is two phonestapping and sharing information. Unlike Bluetooth,there is no pairing required.

The passive mode includes one active device(generating an RF field) and one passive device,which uses that field to exchange information. Thereis no power source in the passive device, butoperates off of the field the active device is emitting. And example of this is a smartphone and an NFC tagor smartposter (with an embedded NFC tag).

Direct mail utilizes the passive mode since the recipient would use their smartphone(active device) with an NFC tag (passive device), that can be either embedded within thepaper or used as a sticker.

About NFCAlong with the different modes, there are also several types of NFC tags (Type 1,2,3,4) and each has its own distinct capacitiesand capabilities. Memory load and read & write capabilities differentiate each tag type, therefore, the direct marketer mustunderstand the differences and how they will be used prior to launching an NFC direct mail campaign. Unlike QR codes, NFC tagscan be re-writeable.

Type 1 Type 2 Type 3 Type 4

Read & writecapabilitiesCan be configuredread-only96 bits of memory

Read & writecapabilitiesCan beconfiguredread-only96 bits ofmemory

Configured atmanufacturer to beread andre-writeable orread-only1 MB of memoryMore expensive thantype 1 & 2

Configured atmanufacturer to beread andre-writeable orread-only32K of memory

A Short History of NFC

1983 2004 2006 2010 2012 2015

The first patent onRFID technology

(NFC derives fromradio frequency

technology)

Nokia, Sony &Philips created theNFC Forum - an

associationdedicated to the

promotion of NFC

First set ofspecifications for

NFC tagsestablished by NFC

Forum

The Nokia 6131 isthe first NFC-

enabled phone

NFC grows from apayments solutionto sharing content

Samsung Nexus Sbecomes firstNFC-enabled

Android phone

Sony and Samsungeach develop

programmable NFCtag products

Apple adds NFC toiPhone 6 & 6 Plus,but is limited to use

with Apple Pay

Other NFC Uses

content transfer

mobile payments

transportation

home automationretail beacons

smart posters

outside of direct mail

of using NFC in direct mail

It's contactless. It's versatile. It's personal.

It's trackable.

It's "tap-n-go" technology helpsturn your direct mail into aninteractive piece with just a tap.No app or software required.Tapping is easier than scanning.

With NFC you can create verypersonalized experiences foryour recipients, providing themwith relevant and targetedcontent.

When you add campaign tags tothe NFC links, you can easilytrack your mobile conversions.

NFC can be used across an entiremarketing program. For example,a retailer can use NFC to drivecustomers into their brick & mortarthrough a direct mail piece, trackthem upon entering the store, anduse tags on products to provideinformation or coupons, which canhelp boost sales.

Beyond direct mail, NFC can beused in a variety of ways,including home automation,access control, inventory control,and more!

It's savvy.Want to look like you're on thecutting edge of technology? NFC helps companies andbrands appear to be tech-savvy.

The Pros

of using NFC in direct mail

It's costly.

It's secure.

It's new. And whatabout ROI?

It's limited.

Embedding NFC into direct mail can becostly, plus if you need to adhere the tagto the printed piece, that also comes witha price. It will take some time for pricingto come down to an affordable level.

Being secure is not usually a bad thing,however, some phones will have securityfeatures that require the NFC to beturned on before being able to use. Thiswill add another step to the process,making it similar to a QR code, whichtypically requires one to open an app.

As with any new(er) technology,there is a learning curve. Marketerswill need to become educated onthe different types of tags and howto use them.

Although it is easier to trackROI with NFC, is it going toimprove your ROI?

The additional cost of thetechnology coupled withthe absence of NFC in allphones may leave you witha less than stellar ROIinitially.

This is a new marketingtactic that hasn't beentested enough to ensuresuccess.

Only 39% of phones are enabled withNFC. Plus, the newest iPhones arelimited to using NFC with Apple Pay only.Therefore, a large chunk of youraudience will not be able to interact withyour mail piece until more phonesbecome enabled.

The Cons

What About QR Codes?When considering NFC for direct mail, it would be prudent to compare it to QR codes before jumping in. After all, QR codes willprovide a similar experience and have been used for a number of years with good results. Here's what to consider:

QR codes are cost effective. Compared to the technology used in NFC, QR codes don't require special paper or a tag thatneeds to be attached to the direct mail piece. QR codes are simply printed, and there are many websites that will generate aQR code for free or at a very low cost.

QR codes are not new, which means they have been tested and people understandhow to use them already. They have been widely adopted for many applications,including direct mail. Plus, you can personalize them with your brand's colors or logo.

Unlike NFC, QR codes don't require an NFC enabled device. Older smartphones are not NFC-enabled and the newestiPhones' NFC chip can only be used for Apple Pay. Virtually any smartphone with a camera can scan a QR code, as long asthe phone has a QR code scanner built-in or an app. There are many free QR code apps on the market and since QR codeshave been used in many applications, it is very likely that most people already have an app on their phone.

QR codes have similar capabilities of NFC, but without the additional cost or learning curve.Yes, you must open up an app to use, however, many NFC enabled smart phones will beequipped with security features to prevent eavesdropping technology. Therefore, users will stillneed to "turn on" the NFC before using, so the same number of steps is required.

In ConclusionAlthough NFC has the potential to change the way we receive and share information, it is still very new fordirect mail purposes. Currently, cost is a limiting factor since there are not many companies that massproduce NFC tags for direct mail use. Plus, the number of NFC-enabled smartphones is relatively low,which limits your audience. In time, as pricing stabilizes and more phones are manufactured with the NFCchip, NFC may very well be a direct marketer's most powerful tool. Until then, the QR code is still aneffective and efficient alternative that has proven to be successful for several years.

CPS Cards is a leading provider of integrated card marketing solutions for the retail, pharmaceutical, insurance,healthcare and telecommunications industries. As your direct mail partner, we provide card production andpersonalization, carrier printing, fulfillment, kitting and mailing. We also specialize in gift, membership, loyalty,healthcare, pharmaceutical and insurance cards. We have the capabilities and capacity to handle even themost challenging jobs, and take extra steps to ensure that even the most difficult orders are completedaccurately and on time.