QR CODES A POINT OF VIEW
PREPARED BY EDWIN PHILOGENE FOR
EXECUTIVE
SUMMARY QR codes, otherwise known as quick response codes, are the preeminent open standard for a growing category of graphical 2D (two-dimensional) codes that are i ncreasingly being to inform and engage with digitally savvy sav vy consumer utilized by marketers across various industries to
audiences around the globe. QR codes can be quickly read with camera-equipped mobile phones (usually smartphones) loaded with the proper code-reading software. Once read, data embedded in the QR codes can
instruct the phone to automatically execute a number of tasks, such as download data from the code itself, retrieve a mobile Web page or make the request from a remote server to download a video. As a result, QR and 2D codes are generally used for a variety of applications, from advertising and lead generation to ticketing and couponing.
First appearing in Japan in the mid-1990’s, QR codes have since been widely adopted in the historically advanced mobile market for a variety of commercial uses. Although QR code adoption has traditionally not been as robust outside of Japan and Asia, due to recent advances in mobile infrastructure and handsets in the American market, a new wave of commercial interest in 2D codes has taken hold in the U.S. In line with this, a growing number of marketers ranging from Calvin Klein and Chevy to Starbucks S tarbucks and Unilever have been experimenting with QR and 2D code campaigns within the t he past year. While QR codes are the most widely adopted open standard for 2D codes globally, in the U.S., several proprietary 2D code standards are being introduced and promoted by their parent
corporations, including Microsoft Tag from Microsoft and EZcode from Scanbuy. Compared to QR codes, proprietary codes hold both distinct advantages and disadvanta disadvantages. ges. In our view, the positive alignment of four key factors – consumer value perception, technological readiness, widespread publisher support and a unied 2D code standard – is needed for successful deep adoption of QR/2D codes in t he American market. While we
assess the current environment for consumer value perception and widespread publisher support as positive in the U.S., we see further progress is needed on the tech readiness and unied 2D code standard fronts, which we see as neutral and negative, respectively. QR codes, and the overall category of 2D codes, have proven their value in Japan but are still a nascent and promising technology in America that, if adopted in earnest, would provide marketers with a novel channel for bridging online and ofine behavior for consumer engagement. As the technology’s story continues to unfold in the U.S., we recommend in-market experimentation through a limited “test and learn” approach that leverages other technologies, such as SMS and mobile Web, and favors favors the open QR code standard st andard over proprietary ones.
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USE YOUR QR CODE READEREQUIPPED SMARTPHONE TO SCAN THIS CODE NOW!
WHAT ARE
QR CODES?
QR CODES HAVE GROWN TO TAKE ON A BROAD VARIETY OF APPLICATIONS.
QR codes, or quick response codes, are two-dimensional barcodes that can be created to hold small bits of data such as URL strings, phone numbers, e-mail addresses or service commands that are activated on mobile phones. First created and introduced by Japanese corporation Denso-Wave in 1994, the QR code was originally used to track vehicle parts in vehicle manufacturing (Denso-Wave is a member of the Toyota group of companies and is also the original patent holder). holder). QR codes can be read by cameraphones (typically smartphones) with QR code readers that capture the image of the codes and synthesize the data instruction embedded in the code. Over the past several years, they have gained traction traction globally (especially in Asia) as a means for brand marketers and publishers to engage with and provide information to consumers. consumers. A QR code can be produced on any surface with sufcient contrast. On a geographical basis, Japan is the largest user of QR codes, as it has long been in use in the market for a number of applications, both commercial and consumer in nature, on a widespread basis. QR codes are also utilized in parts of Europe and have been adapted for use in a number of applications applications,, including everything from f rom advertising and business cards to ticketing and apparel. Technically, the term “QR code” refers to the de facto open standard for the broad high-level category of codes known as 2D codes (standin (standing g for two dimension codes). In addition to QR codes, there are other proprietary code standards, with various levels of adoption, currently found in the marketplace. With the recent surge in growth in smartphone adoption in the U.S., QR and 2D codes are increasingly being adopted and experimented with by marketers market ers for consumer engagement campaigns in the American market. Overall, however, awareness of QR code technology and ownership of QR-code-reader-equipped phones in the U.S. remains low.
OUT OF HOME
PRINT
BUSINESS CARDS
APPAREL
IN–STORE
ON AIR 3
MARKETING
APPLICATIONS Long popular in Japan, a global leader in handset innovation, innovation, QR and 2D codes have realized very little adoption in the U.S. over the past several years. However, within the past one to two years, more and more QR code-based marketing campaigns are being experimented with in the U.S. by marketers who are seeking to capitalize on the growing level of handset sophistication and consumer smartphone application adoption in the market. QR codes and 2D codes have been utilized by companies as varied as Best Buy, Ford, McDonald’s, Nike, Starbucks, Time Warner, Heineken, The Weather Channel, Ralph Lauren and Calvin Klein, among a growing number of other brands as buzz and visibility increase in the space.
SPECIFICALLY, FROM A PROGRAM DESIGN STANDPOINT, QR CODES HAVE BEEN LEVERAGED BY BRANDS FOR A VARIETY OF APPLICA APPLICATIONS, TIONS, INCLUDING: •
Transporting users rom printed printed materials materials to mobile sites or a specifc call to to action, involving inormation capture, promotional opt-in, etc. etc.
•
Quickly delivering consideration- and loyalty-building inormation and multimedia on products and services directly to consumers’ phones or ongoing consumption.
•
Providing e-coupons to to consumers to drive conversion, loyalty and/or repeat purchase.
•
Conveying a sense o exclusivity to selected target users as can be accomplished Conveying via direct mail campaigns, with QR codes leading to personalized URLs.
•
Facilitating e-commerce by directing consumers to specifc m-commerce sites or on-the-move on-the-mo ve impulse transactions. trans actions.
•
Enabling ticketing and time-efc time-efcient ient ticket processing.
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Providing turnkey contest and promotion entry.
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In Japan, where QR code use is widespread, there are a variety of ways they are found and used by consumers, as reected in results below from a recent consumer survey taken there (based on research by IMC2):
90%
71.3% MAGAZINE ADS: 71.3%
CONNECT TO WEBSITE: 90.0%
MAPS: 14.5%
REGISTER BOOKMARK: 13.2%
FOOD ITEMS: 12.9% POSTERS, LEAFLETS IN BUS/SUBWAY STATIONS: 12.3%
SEND EMAIL: 10.6%
BUSINESS CARDS: 4.5%
PLAYBACK OR SAVE MUSIC; DISPLAY OR SAVE GRAPHIC: 3.9%
DISPLAY TEXT: 4.5% SAVE TO CONTACTS: 4.3%
28.7%
PASS TO APPLICATION: 2.4% MAKE TELEPHONE CALL: 2.4%
14.5%
COPY TO EMAIL: 1.9% 12.9%
12.3%
13.2%
10.6%
4.5%
4.5 .5% % 4.3 .3% % 3.9% 2.4% 2.4 .4% % 1.9% 3.8%
WHERE USERS FIND QR CODES
HOW CONSUMERS USE SCANNED QR CODE DATA
(MULTIPLE RESPONSES ALLOWED)
A major reason for broad QR code adoption in Japan is ready availability of the necessary software and consumer awareness, as reected below:
In contrast, the U.S. is a laggard when it comes to QR code reader software sof tware installations. installations.
70% 65% PHONES HAVE BARCODE SOFTWARE
HAVE CAMERAS ON THEIR PHONES (BUT NO SOFTWARE)
61% CONSUMERS HAVE SCANNED QR CODES WITH THEIR MOBILE PHONE (LESS THAN 5% DO SO OFTEN)
ESTIMATES FOR 2D CODE SOFTWARE DOWNLOADS VARY GREATLY FROM 1% 10%
ADOPTION RATES IN JAPAN
U.S. 2D CODE DATA Source: IMC 2 5
RECENT QR/2D CODE
MARKETING CASES More and more U.S. marketers are deploying QR and 2D code based programs. The following provides samples of such efforts (as well as some international efforts).
CALVIN KLEIN In July 2010, Calvin Klein Jeans launched a QR code billboard on the corner of Lafayette and E. Houston in New York City. The code directed users to a provocative 30-second branded video.
CHEVY At the SXSW Interactive Festival in Austin, TX, Chevy afxed QR codes on pre-production models of the Volt and Cruze, two new car models that the company hopes will drive new growth for the brand. The codes, when photographed with a camera phone, launched a microsite highlighting key vehicle features.
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DICK’S SPORTING GOODS In September 2009, Dick’s Sporting Goods became the rst marketer to use a QR Code on a stadium JumboTron during a football game when they ran a QR campaign on the world’s largest HDTV screen at the new Dallas Cowboys Stadium. Fans were instructed to take a picture of the QR Code with their phone and were then connected to Dick’s Sporting Goods’ mobile website and given an exclusive offer of $10 off a $50 purchase.
ALLURE MAGAZINE Allure magazine gave away more than $725,000 worth of beauty products to smartphone users who scanned a Microsoft Tag within its August 2010 issue. The publication incorporated Microsoft’s 2D Tags in a multichannel contest that used print, mobile Web and SMS technology.
UNILEVER/AXE In June 2010, Unilever’s Axe brand and proprietary 2D bar code provider Jagtag collaborated on what they claim is the largest multichannel advertising program in the U.S. market using mobile 2D bar codes. Jagtag delivers multimedia to both smartphones and standard phones without requiring the consumer to download an application prior to use (the user takes a picture of the code and sends it to a specied number via SMS). Axe featured the codes across multiple media including print, handouts, handouts, sample packs, movie theaters and theme parks. 7
HSBC In the summer of 2010, HSBC Bank USA N.A., the ofcial banking partner par tner of Wimbledon, launched a campaign targeting tennis fans in New York with print and out of home ads featuring QR codes. When scanned, the codes unlocked exclusive Wimbledon content as a teaser to the event.
VERIZON VERIZ ON WIRELESS In May 2010, 2010, Verizon featured its Scanbuy’s Scanb uy’s ScanLife code reader as part of its “Droid Does” campaign, using 2D bar codes to link Android users to applications in Android Market. And more recently, Verizon Wireless placed mobile 2D codes throughout a multichannel campaign to promote its Droid devices and the Warner Bros. lm “Inception.” In just over three months, the campaign drove more than 175,000 scans, which Scanbuy claims is the most successful ScanLife campaign in North America to date. date.
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HEINEKEN In activating its multichannel “Plug Into Summer” campaign with a mobile sweepstakes sweepstakes in partnership with Universal Music Group and Fender Musical Instruments Corp, beer giant Heineken placed SMS calls-to-action and Scanbuy’s ScanLife 2D bar codes on all packaging for Heineken and Heineken Light across the United States. Consumers who participated in the sweepstakes by texting in or scanning a 2D bar code could win a free application or music downloads, downloads, t-shirts and Fender guitars.
ENTERTAINMENT WEEKLY In its annual summer preview issue in 2010, Entertainment Weekly leveraged Microsoft 2D Tags to allow users to view the ofcial trailers of 16 lms as well as other content featured in the issue directly on their smartphones.
THE WEATHER CHANNEL In February 2010, The Weather Channel began promoting promotin g download of its Android application by displaying the QR code for the application on-air. Android-based Android-bas ed smartphone users could scan the code directly from the TV T V screen to download the application.
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STARBUCKS Starbucks is testing payment by iPhone in sixteen selected stores in Silicon Valley and Seattle. The iPhone app displays a QR Code that can be used just like a Starbucks Card to make purchases.
NIKE Nike’s True City iPhone App used QR codes to provide unique insight into six European cities from handpicked local “Nike Insiders” while also delivering the latest premium content.
WARNER HOME VIDEO In February 2010, Warner Home Video Canada placed EZcodes on pizza boxes just in time for one of the busiest pizza ordering days of the year – the Super Bowl – to promote new DVD and Blu-ray releases. Once scanned, the ScanLife codes directed the consumer’s mobile browser to a URL to view video clips of “Halo Legends” or “Justice League: Crisis on Two Earths.”
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NYC MEDIA On July 12 2010, 2010, NYC Media, in partnership with Howcast, began featuring QR codes on the sides of 2,200 sanitation trucks to educate New Yorkers Yorkers about city services and initiatives. The codes link to NYC Media informational videos on recycling. NYC Media is the ofcial TV, radio and online network of the City of New York. Source: Mobile Marketer
SELECT JAPANESE QR CODE CASES OF NOTE In Japan, McDonald’s has been using QR Codes on its packaging since 2006 so consumers can access nutritional information by scanning the package with their mobile phones. The QR Codes allow customers to view the amount of calories, sodium, fat, and carbohydrates, as well as identify potential allergens in their meal.
N Building is a commercial structure structure located near Tachikawa station in Tokyo, Japan with a QR code covered facade. The project is a collaboration between Qosmo and Teradadesign. Any mobile device that can read QR codes can access shop information, information, but more in-depth content like tweets (located by GPS tagging), coupons, and reservations can be seen through a dedicated iPhone app that is available only by request.
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HOW DO
QR CODES WORK? To read a QR code, a person utilizing a camera-equipped smartphone or webcam-equipp To webcam-equipped ed computer with the correct reader software installed points at the code and takes a picture of it or “scans” the code. This action, depending on the QR code reader, phone and/or user permissions enabled, typically triggers an interpretation of the code and activates an automated action, such as calling up a specic mobile website on the phone’s browser, downloading content to the phone (e.g., mobile coupon) or reading and storing data (e.g., business card info).
ANATOMY OF A QR CODE In contrast to traditional EAN/UPC barcodes, which are one-dimensional in nature (barcode scanners only scan the horizont horizontal al white space between the vertical stripes to extract embedded data, usually representing a unique European Article Number used for inventory inventory tracking), QR codes contain information in both the horizontal and vertical axis. Compared to one dimensional barcodes, this allows for much larger amounts of raw data to be embedded.
QR
Additionally,, QR codes are 360-degree-reader Additionally capable and can be read in any direction. This is made possible by position-detection patterns located at the three corners of the symbol, which help guarantee stable high-speed reading.. QR codes also employ data correction reading capability, which allows data to be restored even if the symbol is partially dirty or damaged.
BAR CODE QR CODES ARE SCANNED ON BOTH THE HORIZONT HORIZONTAL AL AXIS AND VERTICAL VERTICA L AXIS VS. STANDARD BARCODES THAT ARE ONLY SCANNED ON THE HORIZONT HORIZONTAL AL A XIS.
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QR CODE
PDF 417
DATA MATRIX
MA XI CODE
Denso-Wave (J (Japan)
Symbol Te Technologies (U (U S A )
RVSI Ac Acuity Ci CiMatrix ( US USA
UPS (U (U S A )
Type
Matrix
Stacked Barcode
Matrix
Matrix
Data capacity: Numberic
7,089
2,710
3,116
138
Data capacity: Alphanumeric
4,296
1,850
2,355
93
Data capacity: Binary
2,953
1,018
1,556
Data capacity: Kanji
1,817
55 4
778
Developer (c (country)
Comparison of different different code formats. Source: Denso-Wave
The data embedded in a QR code can be numeric, alphanumeric or binary in nature. Typically, the larger the QR code, the more data is embedded within it. The minimum size dimensions of a barcode depend upon the resolution capabilities of the phone that is being used to scan the code. This results in a recommended minimum of 32 mm x 32 mm, or 1.25 inches x 1.25 inches for QR codes in the U.S. that contain a URL. This requiremen requirementt guarantees that all cameraphones on the market can properly read the code. In contrast, within Japan (an early innovator in mobile phone technology) average mobile phones can handle much smaller QR code sizes (.75cm) to extract information. Below are examples of QR codes (provided by Kaywa) with different amounts of data. The sizes of the codes are proportional to the amount of data they have embedded.
Source: Kaywa
Source: ITVP Graphics
The smallest square dot, or pixel element, of a QR code is called a module. Just as for other types of barcodes, it is recommended to have an empty area around the graphic, called the quiet area, which allows for easier reading of the QR code. This quiet area for QR codes is ideally four modules wide.
WHILE THE CREATOR OF THE QR CODE, DENSO-WAVE, OWNS THE PATENT RIGHTS AND THE TRADEMARK TO THE APPLICATION, IT HAS NOT
Only a portion of the QR code contains actual data, including error correction information. The data in the QR code to the right is highlighted in dark green; the other components identied, which are typical of all QR codes, dene the data format, version, positioning, alignment and timing.
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CHOSEN TO EXERCISE THE PATENT PA TENT RIGHTS. AS A RESULT RESULT,, THE USE OF THE QR CODE IS FREE OF ANY LICENSE.
