With the introduction of mobile barcodes for content rich advertisements over cell phones, the telecommunications industry is once again facing the challenge of how best to structure itself to support this new application and market segment. The key for any new industry segment is to ramp revenues fast enough so that all the participants in the value chain are able to quickly grow their businesses. In the case of mobile barcodes, the key to early and broad market acceptance is ease of use by subscribers, and that means that it must work the first time and every time the consumer tries to use it. With one or two failed experiences, the consumer will quickly abandon the feature and move on to the next latest technology feature. With the Mobile Barcodes Pilot Program, Neustar, NeoMedia, 3GVision (News - Alert), Mobile Data Systems, and Mobile Discovery are proposing an industry structure around open 2D barcode standards implemented indirectly through a clearinghouse model for the greatest overall coverage, security, and user experience.

 

In an effort to predictably enhance the customer’s experience and maximize revenue potential, service providers may be inclined to implement a variety of barcode solutions unique to their network, but when looking across the industry, one quickly discovers the reverse result may be more likely.   Two potential implementation configurations that could be problems for the industry are proprietary encoding and those that are limited to the carrier’s network in either a direct or indirect model. In the proprietary implementations, consumers who do not have the proprietary reader on their cell phone will not be able to translate the code data, and with implementations limited to a carrier’s network, consumers who are not on the same network may not have access to the content. Both could lead to customer experience problems when looking from an industry perspective. And, in both cases, consumers of the advertisers’ products will suffer a negative experience if they are not able to download the advertisers’ content, which becomes a negative experience for the advertisement sponsor as well as the network. There are other limitations with a direct implementation, whereby the barcode is directly translated to a URI associated with that service target content. These include security issues, longer addresses, meaning larger barcodes, and limited ability to change the content destination, which can be preferable for a variety of reasons.

 

In order to expand coverage for their advertisements, carriers may opt to peer with other carriers to make the Web content from their advertisements available to mobile subscribers on each other’s networks, but this still limits access to only those peered networks and only works if the peered networks use similar technology. It also adds unnecessary cost and complexity for the carrier. In a clearinghouse configuration a trusted third party provides the data normalization and registry look-up, which resolves security, network reach, and technology translation issues for carriers and advertisers. The clearinghouse model is well established in the telecommunications industry with routine registry lookups and destination resolutions for local telephone numbers, toll-free telephone numbers, domain name servers (DNS) for web addresses, and ENUM databases for VoIP address translations, and companies providing such services include Neustar, Telcordia, XConnect (News - Alert). 

 

Another key advantage for the clearinghouse model for 2D mobile barcodes is the ability to facilitate advertisements from a large number of advertising agencies and campaign managers across the same carrier networks to reach the consumers. While carriers may establish themselves as campaign managers or form relationships with existing campaign managers to manage the 2D mobile barcodes advertisements on their networks, each carrier can effectively establish and manage only a limited number of relationships. Given that the advertising industry is well established with existing relationships between clients, media companies, advertising agencies, and campaign managers, the telecommunications industry’s 2D mobile barcode segment must have the flexibility to support the existing relationships as well as new ones. Without that flexibility, carriers will greatly restrict their ability to participate in the advertising segment since most brand managers will be reluctant to risk their brand in new untested relationships. And, with Forrester Research (News - Alert) forecasting that less than 15 percent of the total advertising budgets will be spent on interactive advertising in 2010 and less than 2 percent on mobile marketing, the upside potential for the 2D mobile barcode segment is significant as long as it is structured correctly to tap into those relationships.

 

The clearinghouse model provides the greatest opportunity for the industry segment to ramp overall revenues the fastest by resolving the common problems of limited reach, interoperability, and security concerns of point solutions, and by providing the greatest flexibility to support an established advertising industry. As Diane Strahan, Vice President of Mobile Services at Neustar, says “Every mobile application provider could become a distributor of barcodes, and we want them to.” According to Diane, participants in the Mobile Barcodes Pilot Program will be able to work through details and fine tune the industry model, including the business model.