One of the more interesting discussions I had with attendees at the ReadWriteWeb Mobile Summit a few weeks ago was about the future of location-based mobile advertising and why it has so far failed to take off. The speed-bumps we uncovered during that session included the burden of building an ad network and finding unique ways of engaging users, but one other key hurdle that stands in the way is the physical interaction at the point-of-sale.
Nic Brisbourne, an investor at DFJ Esprit, hit the nail on the head this morning with his blog post, “Point of sale redemption is key to mobile vouchers/codes.” As he points out, mobile coupons have been a common idea for startups over the last decade, but it hasn’t been until now with current smart-phone technology that the idea has seemed relatively viable. The other factor that he says is pushing the mobile voucher market is support from major vendors.
“US retailers Kroger and Target have begun issuing money off ‘digital coupons’ that can be downloaded to mobile phones and scanned against purchases at the store check out,” writes Brisbourne. “Similarly in Japan at McDonald’s users can download a coupon and then wave the phone over a reader at the till to receive a discounted price, and if they are on the right network they can even have the cost of the meal added to their mobile bill.”
Another large retailer using mobile coupons is JCPenny, which teamed with coupon provider Cellfire last year. Users can sign up at the Cellfire site to receive coupons directly on their phones which can be scanned at JCPenny stores using a special Motorola image scanner.
With support from these large corporations, mobile vouchers may be set to take off into the stratosphere, but there are a few other things standing in the way. It takes more than just a vendor agreeing to support the coupons; they must also update their point-of-sale systems to support the various types of scannable codes that could be used, such as quick response (QR) codes.
“The obvious consumer oriented startup opportunity lies in driving people into real world stores […] and then taking a slice of the transaction.”
– Nic Brisbourne
There is also the human aspect of the equation. While a large store like Target may be open to this type of marketing, they are tasked with informing and educating their entire staff of check-out clerks and managers on the new technology. I’ve heard more than a handful of people tell me they have had to convince a store clerk of the validity of their coupon when attempting to use a mobile voucher. Fortunately, as time goes by and more people begin using these coupons, the clerks working the point-of-sale will be more aware of them, but for now, this is still a significant obstacle to their success.
With this market seemingly ripe for the taking, there is a huge opportunity for startups to provide either software or hardware to ease this transition and make it widely available. Brisbourne points out that the software side is a new spin on an old online business model.
“The obvious consumer oriented startup opportunity lies in driving people into real world stores by getting them to download coupons onto their mobile phones, and then taking a slice of the transaction – this is in many ways a real world parallel to the online affiliate network opportunity,” he says.
I also agree with Brisbourne that the point-of-sale is the single most important factor of the mobile coupon market. All the partnerships and ad networks in the world are useless if the technology isn’t in place to make the process simple and easy for both the customer and the clerk working the register.
