Digital Media Buzz > Tag, You’re It: RFID Technology Grows Up

Tag, You’re It: RFID Technology Grows Up

Next Page « 1 2 3 »

By Jon Donley

Coca-Cola this summer is testing a new drink-dispensing machine called the “Freestyle,” packed with cutting-edge technology that tracks everything from supplies to consumer habits, reporting continually back to centrally located controllers.

The Freestyle — located initially in fast-food restaurants in the Atlanta area and several other markets — allows customers to mix their own flavors by selecting from multiple company beverage flavors. There are about 100 combinations available. But the customer fun factor is just a part of the picture, as described in a recent article in Information Week. Inside the machine, instead of the normal bags of flavor syrup mixed with carbonated water, the dispenser uses printer-style cartridges packed with highly concentrated flavoring. Each cartridge is embedded with a Radio Frequency Identification (RFID) chip, an information-emitting tag that reports empty flavor packs, mechanical problems and other status updates.

More importantly, the system also collects real-time information on user preferences — their favorite drinks, the way flavors are mixed and trends in use. While producing efficiencies in supply and stocking, the system is also expected to greatly speed up the traditional process of developing and test-marketing new beverage flavors, as tests can be rolled out through Freestyle and monitored on the fly.

RFID is a technology that’s widespread, but is growing exponentially as the capability of chips goes up and the price goes down.
It’s possibly the ultimate tool for behavioral marketing.

Dairy Queen has been testing RFID-powered behavioral marketing in the Indianapolis area, based on technology developed by a company called Tetherball. Dairy Queen uses traditional marketing methods to get customers to sign up for a mobile loyalty discount program. Enrollees get an RFID chip called a “Tetherball Tag,” which they stick on their mobile phones. The tags label the customer, through a unique ID number, and tracks their buying behavior — what time of day they visit, what they order, etc. The company can then text message the customer’s phone with personalized coupons, which can be redeemed at RFID readers at the store. At the back-end, a real-time reporting system analyzes data on the performance of the program.

Tetherball says its approach “helps clients ‘tether’ their brand to target audiences by identifying what their customers want and delivering mobile campaigns that interact with the ultimate call to action through permission-based mobile coupons, mobile rewards, mobile sweepstakes and mobile notifications.”

The use of RFID is in widespread use in some industries, especially in the medical field, where it helps track records and medication, and in shipping, such as military supply chains, but its adoption by marketers is in its infancy.

That may change, however, as marketers explore new technologies and strategies to hone the effectiveness of their campaigns, while dodging the lurking specter of federal regulations or legislation that may curb current behavioral tracking methods.
In the end, permission-based targeting may be the strongest weapon in the marketers’ arsenal, whatever technology empowers it.

Survival of the Internet?
Behavioral advertising currently accounts for only a minor portion of total online advertising expenses. But the promise of more efficient ads driving a higher return on investment is expected to push BT ahead of search engine marketing in the next decade.
And current global economic setbacks are providing a strong push for targeted ads.

But the future of behavioral targeting on the web isn’t guaranteed, especially to the extent that it depends on the current default practice of placing cookies on users’ computers to track web surfing habits and transactions over time, building detailed profiles of the user.

The Federal Trade Commission recently issued guidelines allowing continued self-regulation by advertisers and marketers, but the federal agency has let the industry know it’s on probation.

Everyone, from the industry to regulators, lawmakers and even privacy advocates, recognizes that the ability to efficiently deliver advertisements to match particular consumers is crucial to the growth and health of the global media that has become so entwined in our lives.

But industry critics have drawn a line in the sand at emerging web tracking practices, as well as some already in common use. They demand an end to tests of software that allow Internet service providers to cash in on their unique position by using “deep packet sniffing” to track web surfing habits. They also want a clamp down on the use or sale of data by third-parties, default tracking practices that force consumers to “opt out,” and hard-to-locate privacy policies couched in lengthy legalese.

The inventor of the web, Tim Berners-Lee, earlier this year added his support to the general principle of behavioral targeting, even as British officials debated an advertising delivery system developed by ad services technology firm Phorm, which is based on deep packet inspection of consumers’ surfing habits. Tests of the technology by British Telecom raised an uproar among privacy advocates.

“I don’t have a problem with behavioral advertising, I think it’s an improvement,” Berners-Lee told BBC News, “but there are so many ways to do it without IPS snooping.”

“[My web surfing history is] mine — you can’t have it. If you want to use it for something, then you have to negotiate with me. I have to agree, I have to understand what I’m getting in return.”

Industry representatives are concerned that changing the system so that cookies can only be planted with the user’s permission — a default “opt-in” setting – would result in customers automatically rejecting the request.

Studies show that might be the case — but it might not. And if customers do give their permission, the payoffs could be tremendous.

Next Page « 1 2 3 »