QR CODES
A POINT OF VIEW
PREPARED BY EDWIN PHILOGENE FOR
2
QR codes, otherwise known as quick response codes, are the preeminent open standard
for a growing category of graphical ...
3
QR codes, or quick response codes, are two-dimensional barcodes that
can be created to hold small bits of data such as U...
4
•	 Transporting users from printed materials to mobile sites for a specific call to action,
involving information captur...
5
In Japan, where QR code use is widespread, there are a variety of ways they are found and used by
consumers, as reflecte...
6
MARKETING CASES
RECENT QR/2D CODE
More and more U.S. marketers are deploying QR and 2D code based programs. The followin...
7
DICK’S SPORTING GOODS
ALLURE MAGAZINE
UNILEVER/AXE
In September 2009, Dick’s Sporting Goods
became the first marketer to...
8
HSBC
In the summer of 2010, HSBC Bank USA N.A.,
the official banking partner of Wimbledon,
launched a campaign targeting...
9
HEINEKEN
ENTERTAINMENT WEEKLY
THE WEATHER CHANNEL
In activating its multichannel “Plug Into Summer”
campaign with a mobi...
10
STARBUCKS
NIKE
WARNER HOME VIDEO
Starbucks is testing payment by iPhone in sixteen selected stores in
Silicon Valley an...
11
NYC MEDIA
SELECT JAPANESE QR CODE CASES OF NOTE
On July 12 2010, NYC Media, in
partnership with Howcast, began
featurin...
12
To read a QR code, a person utilizing a camera-equipped smartphone or webcam-equipped computer
with the correct reader ...
13
The data embedded in a QR code can be numeric, alphanumeric or binary in nature.
Typically, the larger the QR code, the...
14
There are two basic types of QR codes: online codes and offline codes.
Online codes are codes that point to an Internet...
15
KAYWA NOKIA I-NIGMA
ACTIVE PRINT UPCODE QUICKMARK
SNAPMAZE BEETAGG NEOREADER
SCANLIFE MOBILETAG QUIQR
NOKIA RACO SNAPMA...
16
MICROSOFT TAG
Microsoft Tag is a 2D barcode that was introduced in January 2009 by Microsoft with an intended
utility a...
17
EZCODE
EZcode is a 2D barcode originally created by the ETH Zurich,
also known as the Swiss Federal Institute of Techno...
18
BOTH MICROSOFT TAGS AND EZCODES BRING SEVERAL ADVANTAGES AND DISADVANTAGES WHEN COMPARED TO THE OPEN STANDARD QR CODE:
...
19
QR CODE MS TAG EZ CODE
Size of code
Proportional to amount of
data embedded
Remains small regardless of
amount of data
...
20
As previously mentioned, the global beachhead for adoption of QR codes was the Japanese market.
However, Japan’s widesp...
21
To answer this, we need to examine the attractiveness of each of the four critical factors as it relates
specifically t...
22
UNIFIED 2D CODE STANDARD
WIDESPREAD PUBLISHER SUPPORT
•	 What is often critical for any new product innovation to gain ...
23
Several negative factors still prevalent in the U.S. market will create resistance to widespread adoption
of QR codes:
...
24
•	 Leveraging the global de facto open standard, QR codes (instead of proprietary codes
such as Microsoft Tags or Scanb...
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QR Codes: A Point of View

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A white paper presented by Edwin Philogene for the Digital Lab covering the origins, mechanics, applications and prospects of QR Code and 2D code...

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  1. 1. QR CODES A POINT OF VIEW PREPARED BY EDWIN PHILOGENE FOR
  2. 2. 2 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 increasingly being utilized by marketers across various industries to inform and engage with digitally savvy consumer 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 and Unilever have been experimenting with QR and 2D code campaigns within the 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 disadvantages. In our view, the positive alignment of four key factors – consumer value perception, technological readiness, widespread publisher support and a unified 2D code standard – is needed for successful deep adoption of QR/2D codes in the 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 unified 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 offline 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 the open QR code standard over proprietary ones. SUMMARY EXECUTIVE
  3. 3. 3 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). 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 globally (especially in Asia) as a means for brand marketers and publishers to engage with and provide information to consumers. A QR code can be produced on any surface with sufficient 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, including everything from 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 (standing 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 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. QR CODES? WHAT ARE Out of home Business cards OUT OF HOME Out of home Print Business cards Apparel PRINTOut of home Business cards BUSINESS CARDSOut of home Print Business cards Apparel APPAREL In-store QR codes have grown to take on a broad v HOW DO QR CODES WORK? To read a QR code, a person utilizing a equipped computer with the correct re takes a picture of it or “scans” the cod phone and/or user permissions enabled and activates an automated action, su phone’s browser, downloading content and storing data (e.g., business card in IN–STORE In-store On air QR codes have grown to take on a broad variety of applications. ON AIR QR CODES HAVE GROWN TO TAKE ON A BROAD VARIETY OF APPLICATIONS. USE YOUR QR CODE READER- EQUIPPED SMARTPHONE TO SCAN THIS CODE NOW!
  4. 4. 4 • Transporting users from printed materials to mobile sites for a specific call to action, involving information capture, promotional opt-in, etc. • Quickly delivering consideration- and loyalty-building information and multimedia on products and services directly to consumers’ phones for ongoing consumption. • Providing e-coupons to consumers to drive conversion, loyalty and/or repeat purchase. • Conveying a sense of exclusivity to selected target users as can be accomplished via direct mail campaigns, with QR codes leading to personalized URLs. • Facilitating e-commerce by directing consumers to specific m-commerce sites for on-the-move impulse transactions. • Enabling ticketing and time-efficient ticket processing. • Providing turnkey contest and promotion entry. Long popular in Japan, a global leader in handset 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. APPLICATIONS MARKETING SPECIFICALLY, FROM A PROGRAM DESIGN STANDPOINT, QR CODES HAVE BEEN LEVERAGED BY BRANDS FOR A VARIETY OF APPLICATIONS, INCLUDING:
  5. 5. 5 In Japan, where QR code use is widespread, there are a variety of ways they are found and used by consumers, as reflected in results below from a recent consumer survey taken there (based on research by IMC2): A major reason for broad QR code adoption in Japan is ready availability of the necessary software and consumer awareness, as reflected below: In contrast, the U.S. is a laggard when it comes to QR code reader software installations. WHERE USERS FIND QR CODES (MULTIPLE RESPONSES ALLOWED) ADOPTION RATES IN JAPAN HOW CONSUMERS USE SCANNED QR CODE DATA U.S. 2D CODE DATA 71.3% 65% PHONES HAVE BARCODE SOFTWARE HAVE CAMERAS ON THEIR PHONES (BUT NO SOFTWARE) ESTIMATES FOR 2D CODE SOFTWARE DOWNLOADS VARY GREATLY FROM 1% - 10% CONSUMERS HAVE SCANNED QR CODES WITH THEIR MOBILE PHONE (LESS THAN 5% DO SO OFTEN) 61% 70% 14.5% 12.9% 12.3% 4.5% 28.7% 90% 13.2% 10.6% 4.5% 4.3% 3.9% 2.4% 2.4% 1.9% 3.8% MAGAZINE ADS: 71.3% MAPS: 14.5% FOOD ITEMS: 12.9% POSTERS, LEAFLETS IN BUS/SUBWAY STATIONS: 12.3% BUSINESS CARDS: 4.5% CONNECT TO WEBSITE: 90.0% REGISTER BOOKMARK: 13.2% SEND EMAIL: 10.6% DISPLAY TEXT: 4.5% SAVE TO CONTACTS: 4.3% PLAYBACK OR SAVE MUSIC; DISPLAY OR SAVE GRAPHIC: 3.9% PASS TO APPLICATION: 2.4% MAKE TELEPHONE CALL: 2.4% COPY TO EMAIL: 1.9% Source: IMC2
  6. 6. 6 MARKETING CASES RECENT QR/2D CODE 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 CHEVY 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. At the SXSW Interactive Festival in Austin, TX, Chevy affixed 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. In July 2010, Calvin Klein Jeans launched a QR code billboard on the corn Houston in New York City. The code directs users to a provocative 30-sec Chevy At the SXSW Interactive Festival in Austin, TX, Chevy affix
  7. 7. 7 DICK’S SPORTING GOODS ALLURE MAGAZINE UNILEVER/AXE In September 2009, Dick’s Sporting Goods became the first 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 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. 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 specified number via SMS). Axe featured the codes across multiple media including print, handouts, sample packs, movie theaters and theme parks. Allure magazine is giving away more than $725,000 worth of beauty pro who scan a Microsoft Tag within its August 2010 issue. The publication 2D Tags in a multichannel contest that uses print, mobile Web and SMS Unilever/Axe In June 2010, Unilever’s Axe brand and proprietary 2D bar code provide Allure magazine is giving away more than $725,000 worth of beauty who scan a Microsoft Tag within its August 2010 issue. The publicati 2D Tags in a multichannel contest that uses print, mobile Web and SM Unilever/Axe In June 2010, Unilever’s Axe brand and proprietary 2D bar code prov they claim is the largest multichannel advertising program in the U.S codes. Jagtag delivers multimedia to both smartphones and standard p consumer to download an application prior to use (the user takes a pi a specified number via SMS). Axe featured the codes across multiple m
  8. 8. 8 HSBC In the summer of 2010, HSBC Bank USA N.A., the official banking partner 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. HSBC Bank USA N.A., the official banking partner of tennis fans in New York with print and out of home ad unlocked exclusive Wimbledon content as a teaser to t VERIZON WIRELESS In May 2010, Verizon featured its Scanbuy’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. film “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. In May 2010, Verizon featured its Scanbuy’s ScanLife code reader a campaign, using 2D bar codes to link Android users to applications recently, Verizon Wireless placed mobile 2D codes throughout a m
  9. 9. 9 HEINEKEN ENTERTAINMENT WEEKLY THE WEATHER CHANNEL In activating its multichannel “Plug Into Summer” campaign with a mobile 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, t-shirts and Fender guitars. In its annual summer preview issue in 2010, Entertainment Weekly leveraged Microsoft 2D Tags to allow users to view the official trailers of 16 films as well as other content featured in the issue directly on their smartphones. In February 2010, The Weather Channel began promoting download of its Android application by displaying the QR code for the application on-air. Android-based smartphone users could scan the code directly from the TV screen to download the application.   Heineken In activating its multichannel “Plug Into Summer” campaign with a mo with Universal Music Group and Fender Musical Instruments Corp, beer calls-to-action and Scanbuy’s ScanLife 2D bar codes on all packaging fo Light across the United States. Consumers who participated in the swee scanning a 2D bar code could win a free application or music downloads Entertainment Weekly In its annual summer preview issue this year, Entertainment Weekly leverage allow users to view the official trailers of 16 of the films as well as other con directly on their smartphones. The Weather Channel In its annual summer preview issue this year, Entertainment Week allow users to view the official trailers of 16 of the films as well as directly on their smartphones. The Weather Channel In February 2010, The Weather Channel began promoting downlo displaying the QR code for the application on-air. Android-based s code directly from the TV screen to download the application.
  10. 10. 10 STARBUCKS NIKE WARNER HOME VIDEO 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’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. 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.”   Starbucks is testing payment by iPhone in iPhone app displays a QR Code that can be Nike The Nike True City iPhone App used QR c from handpicked local “Nike Insiders” whi Warner Home Video   Starbucks is testing payment by iPhone in sixteen selected stores iPhone app displays a QR Code that can be used just like a Starbu Nike The Nike True City iPhone App used QR codes to provide unique from handpicked local “Nike Insiders” while also delivering the la Warner Home Video In February 2010, Warner Home Video Canada placed EZcodes on pizza boxes just in time for one the busiest pizza ordering days of the year – the Super Bowl – to promote new DVD and Blu-ray
  11. 11. 11 NYC MEDIA SELECT JAPANESE QR CODE CASES OF NOTE On July 12 2010, NYC Media, in partnership with Howcast, began featuring QR codes on the sides of 2,200 sanitation trucks to educate New Yorkers about city services and initiatives. The codes link to NYC Media informational videos on recycling. NYC Media is the official TV, radio and online network of the City of New York. 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 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, 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. 21   NYC Media On July 12 2010, NYC Media in partnership with Howcast, began featuring QR codes on the sides of 2,200 sanitation trucks to educate New Yorkers about city services and initiatives. The codes link to NYC Media informational videos on recycling. NYC Media is the official TV, radio and online network of the City of New York. Select Japanese QR code cases of note In Japan, McDonald’s has been using Q nutritional information by scanning th customers to view the amount of calo allergens in their meal. In Japan, McDonald’s has been using QR Codes on its packaging since 2006 so co nutritional information by scanning the package with their mobile phones. The Q customers to view the amount of calories, sodium, fat, and carbohydrates, as well allergens in their meal.   NYC Media On July 12 2010, NYC Media in partnership with Howcast, began featuring QR codes on the 2,200 sanitation trucks to educate New Yorkers about city services and initiatives. The codes NYC Media informational videos on recycling. NYC Media is the official TV, radio and onlin network of the City of New York. Select Japanese QR code cases of note Source: Mobile Marketer
  12. 12. 12 To read a QR code, a person utilizing a camera-equipped smartphone or webcam-equipped 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 specific 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). QR CODES WORK? HOW DO In contrast to traditional EAN/UPC barcodes, which are one-dimensional in nature (barcode scanners only scan the horizontal white space between the vertical stripes to extract embedded data, usually representing a unique European Article Number used for 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. Additionally, QR codes are 360-degree-reader 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 capability, which allows data to be restored even if the symbol is partially dirty or damaged. ANATOMY OF A QR CODE QR codes are scanned o only scanned on the hor Q QR codes are scanned on both the horizontal axis and vertical axis only scanned on the horizontal axis.QR CODES ARE SCANNED ON BOTH THE HORIZONTAL AXIS AND VERTICAL AXIS VS. STANDARD BARCODES THAT ARE ONLY SCANNED ON THE HORIZONTAL AXIS. BAR CODE QR
  13. 13. 13 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 phones that are 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 requirement 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. 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 barcode. This quiet area for QR codes is ideally four modules wide. Only a portion of the QR code contains actual data, including error correction information. The data in the following QR code is highlighted in dark green; the other components identified, which are typical of all QR codes, define the data format, version, positioning, alignment and timing. 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 requirement 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. 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. 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 identified, which are typical of all QR codes, define the data format, version, positioning, alignment and timing. QR CODE PDF 417 DATA MATRIX MAXI CODE Developer (country) Denso-Wave (Japan) Symbol Technologies (USA) RVSI Acuity CiMatrix (USA UPS (USA) 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 1,817 554 778 While the creator of the QR code, Denso-Wave, owns th trademark to the application, it has not chosen to exerc result, the use of the QR code is free of any license. TWO TYPES OF QR CODES There are two basic types of QR codes: online codes an Online codes: Online codes are codes that point to an In client/server interaction that requires an active Interne This typically involves the access of a mobile website, t or another action. Examples of service types include: Service Example In http: http://www.lowes.com B mailto: mailto: savingscoupon@lowes.com tel: tel: 8004456937 T sms: sms: 8004456937 S For online codes that employ service types, there are t followed for client/server interaction: the direct method WHILE THE CREATOR OF THE QR CODE, DENSO-WAVE, OWNS THE PATENT RIGHTS AND THE TRADEMARK TO THE APPLICATION, IT HAS NOT CHOSEN TO EXERCISE THE PATENT RIGHTS. AS A RESULT, THE USE OF THE QR CODE IS FREE OF ANY LICENSE. 5 QR code PDF417 DataMatrix Maxi Code Developer (country) Denso-Wave (Japan) Symbol Technologies (USA) RVSI Acuity CiMatrix (USA) UPS (USA) Type Matrix Stacked Barcode Matrix Matrix Data capacity: Numeric 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 1,817 554 778 Comparison of different code formats. Source: Denso-Wave 5 QR code PDF417 DataMatrix Maxi Code Developer (country) Denso-Wave (Japan) Symbol Technologies (USA) RVSI Acuity CiMatrix (USA) UPS (USA) Type Matrix Stacked Barcode Matrix Matrix Data capacity: Numeric 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 1,817 554 778 Comparison of different code formats. Source: Denso-Wave 5 QR code PDF417 DataMatrix Maxi Code Developer (country) Denso-Wave (Japan) Symbol Technologies (USA) RVSI Acuity CiMatrix (USA) UPS (USA) Type Matrix Stacked Barcode Matrix Matrix Data capacity: Numeric 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 1,817 554 778 Comparison of different code formats. Source: Denso-Wave 5 QR code PDF417 DataMatrix Maxi Code Developer (country) Denso-Wave (Japan) Symbol Technologies (USA) RVSI Acuity CiMatrix (USA) UPS (USA) Type Matrix Stacked Barcode Matrix Matrix Data capacity: Numeric 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 1,817 554 778 Comparison of different code formats. Source: Denso-Wave Comparison of different code formats. Source: Denso-Wave Source: Kaywa Source: ITVP Graphics
  14. 14. 14 There are two basic types of QR codes: online codes and offline codes. Online codes are codes that point to an Internet address and trigger a client/ server interaction that requires an active Internet connection or phone service. This typically involves the access of a mobile website, the sending of an SMS message or another action. Examples of service types include: From a standardization perspective, QR codes are established as an ISO (ISO/IEC18004) standard. Standards have also been accepted by other international bodies, including Japanese Industrial Standards (JIS) and Automatic Identification Manufacturers (AIM) International, thus assuring widespread acceptance of QR codes. For online codes that employ service types, there are two general process flows followed for client/ server interaction: the direct method and the indirect method. Simply put, a direct code routes a user straight to a site/destination, whereas an indirect code takes the user to a third-party server to be “resolved.” OF QR CODES TWO TYPES SERVICE EXAMPLE INSTRUCTION http: http://www.store.com Browse to a website mailto: mailto: savingscoupon@store.com Invoke an email message tel: tel: 800.445.6937 Telephone a number sms: sms: 800.445.6937 Send an sms message ONLINE CODES Offline codes are codes that do not need an Internet connection and are directly resolved on the phone. This includes data retrieved by the phone from the QR code itself, like addresses, text, and phone numbers. OFFLINE CODES Source: qrme.co.uk
  15. 15. 15 KAYWA NOKIA I-NIGMA ACTIVE PRINT UPCODE QUICKMARK SNAPMAZE BEETAGG NEOREADER SCANLIFE MOBILETAG QUIQR NOKIA RACO SNAPMAZE WINKSITE ZXING GOQR.ME I-NIGMA BEQRIOUS MAESTRO JAXO INVX KAYWA QR code reader software must be installed on the mobile phone client in order to for QR codes to be read at all. And while most Japanese phones today come equipped with a native QR code reader, in the United States, QR code reader installations are largely a smartphone-based phenomenon carried out by the phone owners themselves who actively download the software on their own (vs. preinstallations from the factory). Notably, research In Motion has preinstalled QR codes on BlackBerry Messenger 5.0 and Google’s mobile Android operating system supports the use of QR codes by natively including a barcode scanner (ZXing and Google Goggles in Version 2.2). However, most phone models are not QR code capable. The iPhone, for instance does not yet come preinstalled with a native QR code reader (although no less than 25 free or paid third-party iPhone-compatible readers are available via iTunes for download). Nokia’s Symbian operating system is also provided with a barcode scanner, which is able to read QR codes. It is relatively easy to create a QR code. There are several free QR code generators in the marketplace for the open standard QR code, as well as proprietary generators for the closed codes. READERS GENERATORS QR CODE QR CODE SOME OF THE MOST NOTABLE THIRD-PARTY QR CODE READERS COMPATIBLE WITH A VARIETY OF PHONE MODELS INCLUDE: SOME OF THE MOST NOTABLE QR CODE GENERATORS ARE FROM:
  16. 16. 16 MICROSOFT TAG Microsoft Tag is a 2D barcode that was introduced in January 2009 by Microsoft with an intended utility and use case similar to that of QR codes. Tag barcodes utilize High Capacity Color Barcode technology, which involves different symbol shapes in geometric patterns and multiple colors and tints to embed more information in less space than a QR code can. As a result, Tag barcodes can be much smaller than QR codes, yet hold the same amount of information. From a backend technological standpoint, Microsoft Tags also differ from QR codes in that they don’t actually store the data in the code itself. All the Tag contains is a unique ID, which the reader application sends to Microsoft’s servers. The servers then send back all of the linked requested information. This allows for more information or a wider variety of data to be applied to a very small code. Microsoft Tags are also unique in that they allow Tag creators to identify each mobile phone used to scan one of their tags by using a unique device ID. TO QR CODES PROPRIETARY ALTERNATIVES tints to embed more information in less space than a QR code can. As a result, Tag barcodes much smaller than QR codes, yet hold the same amount of information. From a backend technological standpoint, Microsoft Tags also differ from QR codes in that don’t actually store the data in the code itself. All the Tag contains is a unique ID, which the application sends to Microsoft’s servers. The servers then send back all of the linked request information. This allows for more information or a wider variety of data to be applied to a v code. Microsoft Tags are also unique in that they allow Tag creators to identify each mobile used to scan one of their tags by using a unique device ID. Microsoft Tag (right) in comparison to the other standard 2d codes. EZCODE Source: iphonebuzz
  17. 17. 17 EZCODE EZcode is a 2D barcode originally created by the ETH Zurich, also known as the Swiss Federal Institute of Technology Zurich, and was exclusively licensed to private company Scanbuy in 2006. Like QR codes, EZcode was created to allow data activation and transfer via cameraphones. But, as with the Microsoft Tag approach, EZcodes do not store most of the data in the code itself. Rather, the code reader decodes the image on the phone, uploads the code index to a server, sends it to a database and then returns the listed command and data back to the phone. As a result, the mobile phone must have an active data connection. This allows EZcodes to be comparatively smaller that a QR code and maintain its size regardless of the amount of data associated with the code. This also reportedly contributes to faster reading of the EZcode and more flexible scanning of the EZcode, when compared to a QR code. EZcode also allows for data analytics and tracking. Any code created by ScanLife and scanned by the ScanLife app will generate “most data 100 percent of the time; and income and zip date about 10-15% of the time,” according to a representative of Scanbuy1 . Aside from its technology, what is notable about EZcode is Scanbuy’s recent commercial success in establishing critical endorsements and partnerships that will be beneficial to the technology’s adoption moving forward. This includes Scanbuy’s agreement with Verizon in May 2010 to have its proprietary barcode scanner ScanLife made available for more than 30 of the carrier’s models as well as an endorsement from CTIA. In addition to EZcodes, Scanbuy’s mobile barcode reader also supports Datamatrix, QR codes, and 1D formats (UPC, EAN, etc.). Interestingly, although EZcode is a proprietary standard, in April 2009 Scanbuy announced intentions to make the specifications for the EZcode technology globally available to the public2 . This may be due to a strategy by Scanbuy to get the EZcode standard widely adopted while still maintaining a monopoly on backend gateway responsibilities. generate “most data according to a repre Aside from its techn establishing critical moving forward. Th barcode scanner Sca endorsement from C Datamatrix, QR cod Interestingly, althou to make the specifi due to a strategy by monopoly on backe Both Microsoft Tag open standard QR c Advantages • Due to the n size than tra                                       1  http://blog.greattv.c s‐marketers/  2  http://www.scanbuy generate “most data 100 percent o according to a representative of Sc Aside from its technology, what is establishing critical endorsements a moving forward. This includes Scan barcode scanner ScanLife made ava endorsement from CTIA. In additi Datamatrix, QR codes, and 1D form Interestingly, although EZcode is a to make the specifications for the due to a strategy by Scanbuy to get monopoly on backend gateway res Both Microsoft Tags and EZcodes open standard QR code: 1 http://blog.greattv.com/2010/06/top-10-reasons-scanlife-ezcodes-are-better-than-quick-response-qr-codes-for-u-s-marketers/ 2 http://www.scanbuy.com/web/press-kit/50-scanbuy-will-make-its-ezcoder-specifications-publicly-available-to-become-a-global-open-standard- QR EZCODE
  18. 18. 18 BOTH MICROSOFT TAGS AND EZCODES BRING SEVERAL ADVANTAGES AND DISADVANTAGES WHEN COMPARED TO THE OPEN STANDARD QR CODE: Due to the nature of its approach, both Microsoft Tags and EZcodes can be much smaller in size than traditional QR codes. The size of both Microsoft Tags and EZcodes can remain the same, independent of the amount of information associated with their codes. MS Tags and EZcodes allow for robust analytics and user tracking around codes produced with the technologies. Because of the small amount of information contained in Tags, errors can be handled easily. To encode one byte of information on a QR code, eight symbols are needed. To encode one byte in a Tag, only four symbols are needed. Microsoft and Scanbuy are investing significant funds and institutional resources to support their technologies through software development and business development. Several major marketers have experimented with MS Tags and/or EZcodes including McDonalds, American Airlines, Sears, Sprint, CitySearch, US Air Force, Time Warner, Allure magazine and Heineken, among others. Due to the server-only based approach behind MS Tags and EZcodes, code publishers have the freedom to publish a code before determining what the content to attach to it is or change the content on an ongoing basis. This cannot be done with offline QR codes. Microsoft Tags and EZcodes are effectively closed standards (vs. QR code which is a de facto open standard). As a result, the code reader on the phone has to be proprietary to Microsoft or Scanbuy to read the codes, in contrast to QR codes that are readable by virtually all 2D code readers. As more and more handset manufacturers opt to embed native QR code readers in their phone models from the factory, it is highly unlikely that all OEMs will choose to embed a reader solely compatible with a protocol that is closed, has a smaller footprint globally than QR codes and is controlled by a company that may be competitive with the OEM in other industries (i.e. HP/Palm, Apple, etc.). Microsoft Tags use three base colors (CMYK), while the QR codes need only two (black and white). As a result, the efficacy of Tags is much more sensitive to the quality of color printing than QR codes will ever be. The phone needs to be online to provide any functionality for Microsoft Tags or EZcodes. This differs from offline QR codes that can provide data embedded in the QR code itself without ever needing to access the Internet. Microsoft Tags and EZcodes are far newer technologies than QR codes that have been used since the mid-1990’s, and are simply not as proven as the widely accepted QR code. Privacy concerns may arise with the server-based requirement of Microsoft Tags and QR codes. ADVANTAGES DISADVANTAGES
  19. 19. 19 QR CODE MS TAG EZ CODE Size of code Proportional to amount of data embedded Remains small regardless of amount of data Remains small regardless of amount of data Tech Approach Offline and Online Primarily Online Primarily Online Reader Interoperability Interoperable with virtually all code readers Only readable on its proprietary reader Only readable on its proprietary reader Robust User Tracking Neutral High High State of Market Adoption Widely adopted (globally) Limited but growing Limited but growing A Comparison between QR Codes and Two Key Proprietary Codes OTHER 2D CODE ALTERNATIVES There is an increasing number of other competing proprietary 2D code standards emerging in the marketplace, including: Scientists at Edith Cowan University in Western Australia have developed a next-generation 2D code technology called Mobile Multi-Colour Composite (MMCC) 2D Barcode. The MMCC codes are high density codes that can store multimedia content such as ring tones, video clips and games in the codes themselves eliminating the need for mobile connectivity for server support. A provisional patent has been filed by the creators of the code, Dr. Alfred Tan and Dr. Douglas Chai, as they attempt to raise capital for mass commercialization of the standard. Jagtag is an emerging company and standard that 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 specified number via SMS. Shotcode is a special 2D barcode that was developed by Cambridge University. It is circular in shape and similar to a dartboard in appearance. The codes themselves do not store heavy data. Rather, 40 bits of data embedded in data circles around the code direct the Shotcode specific reader to retrieve data from a server. Semacode is both the name of a 2D code standard and the Canada-based company that created it. Semacodes resemble Data Matrix codes and primarily store Web URLs for data retrieval. BeeTagg is a proprietary 2D code system that allows businesses to embed their visual brand logo onto the code. BeeTagg has a free version of the software, which might show ads before redirecting consumers to the destination of the tag. BeeTagg offers built-in metrics and a tag management interface, similar to those of Microsoft Tag. MOBILE MULTI- COLOUR COMPOSITE JAGTAG SHOTCODE SEMACODE BEETAGG 3 http://www.gomonews.com/new-dense-mobile-barcode-stores-multimedia-content-no-need-for-net-access/ 4 http://interactivesnack.wordpress.com/2010/01/10/2d-codes-qr-code-datamatrix-code-microsoft-tag-bee-tag-and-resources/
  20. 20. 20 As previously mentioned, the global beachhead for adoption of QR codes was the Japanese market. However, Japan’s widespread adoption and market success with QR codes has not been easily duplicated in other markets. In our analysis, Japan was uniquely poised for QR code success due to positive alignment across four critical factors: In contrast to this perfect storm of environmental factors, in the U.S. carriers were relatively slow to advance the nation’s wireless infrastructure and introduce data-capable phones and mobile Internet services. This was due to lack of industry coordination, the capital expense implications related to infrastructure technology and spectrum licenses and fragmented wireless standards. It has not been until recently that a confluence of positive factors, including the introduction of high- speed wireless infrastructure; turnkey mobile internet access; smartphone-based innovation and a critical mass of cameraphones, has set the stage for the American market to even be in a position to adopt QR codes. So now that the environmental factors needed for QR code adoption are available in the American market, will it successfully be adopted en masse? OUR POV OUTLOOK FOR 2D CODES IN THE UNITED STATES: • Consumer Value Perception and Cultural Openness to innovation – Culturally, Japanese society was (and is) very receptive to technological innovation and QR codes proved a welcome substitute to typing in URLs with the complex and relatively broad Japanese language character set. • Technological Readiness (infrastructure, camera-ready handsets, mass pre-installs of reader software on handsets) – Japan was a first mover in terms of high speed Internet access via mobile phones and tightly integrated mobile carriers in Japan and Asia were proactive in installing 2D-code-reading-software in consumer cameraphones as a standard. • Unified 2D Code Standard – A home-grown Japanese company, Denso-Wave, introduced QR codes in 1994 and astutely allowed it to become an open standard. This, in turn, contributed to QR codes becoming the de facto market standard, making it easy for any publisher to activate against the space. • Widespread Publisher Support – Industry publishers, from restaurants to luxury goods manufacturers, readily welcomed QR codes as a means to augment their commercial messages and programs in market. JAPAN: THEN
  21. 21. 21 To answer this, we need to examine the attractiveness of each of the four critical factors as it relates specifically to the American market: CONSUMER VALUE PERCEPTION AND CULTURAL OPENNESS TO INNOVATION TECHNOLOGICAL READINESS • Early data points to robust smartphone and mobile application adoption and usage in America. Indeed, over 30% of Americans now have smartphones according to Advertising Age and Research and Markets predicts that over half of all mobile phones in the US will be smartphones as early as 2011. Also, according to the Pew Internet and American Life Project, six-in-ten American adults now go online wirelessly and use of non-voice data applications has grown significantly over the last year. • Our assessment is that, while the value add of QR code usage would not be as great for Americans as it was for the Japanese (Americans are already comfortable with inputting URLs into mobile devices and it is not as inconvenient as it was for the Japanese to input data from their Kanji character set, for instance), QR code usage does provide enough utility to be valued and American consumers will continue to integrate mobile data into their lives. • We see the environment for Consumer Value Perception and Cultural Openness to Innovation within the US as positive. • While America’s technological environment from both a data-ready infrastructure standpoint and a cameraphone penetration standpoint is more QR code friendly than it’s ever been, QR code reader penetration is still extremely low (hard figures are difficult to source but the latest data suggests penetration of QR reader software on American phones may be still as low as 1%). • A major issue is the inaction on the part of US carriers to require preinstallations of QR code readers from their handset OEM manufacturers. While several QR code readers are available in smartphone OS-based application stores, most phones do not come with code reader software preinstalled. However, Google is taking the initiative to pre-install QR reader software in its latest Android release, AT&T recently launched three mobile barcode services to push the technology and, increasingly, proprietary 2D code vendors, such as Scanbuy, are striking deals with carriers to pre-install their software onto new phones. • While the lack of QR code reader installs is a seemingly minor barrier to adoption in an otherwise technologically ready market that will lower in time, we see it as a nontrivial barrier nonetheless and assess the environment for Technological Readiness for QR code adoption within the US as neutral. 5 http://finance.yahoo.com/news/Research-and-Markets-bw-1529248141.html?x=0&.v=1 6 http://pewresearch.org/pubs/1654/wireless-internet-users-cell-phone-mobile-data-applications
  22. 22. 22 UNIFIED 2D CODE STANDARD WIDESPREAD PUBLISHER SUPPORT • What is often critical for any new product innovation to gain widespread market adoption is an established or de facto standard for the core technologies associated with that innovation. However, in the American market, the 2D code market is becoming increasingly fragmented with the introduction of competing proprietary standards from companies such as Scanbuy and Microsoft. In our view this will, in the near term, hinder the creation of a unified standard for 2D code activation which, in turn, will have negative effect on market and industry adoption. • Numerous proprietary codes will inevitably, in our view, bring about heightened confusion on the part of the consumer, increased market fragmentation and create an additional hurdle to adoption as not all readers are compatible with all codes. And while most readers are compatible with the QR code standard, proprietary readers are not generally compatible with other proprietary codes. • Due to these factors, we see the environment for Unified 2D Code Standard within the US as negative. • In the area of publisher support, brand marketers, ranging from Ralph Lauren, Nike and Ford to Heineken, HBO and HSBC, have been increasingly experimenting with 2D codes for marketing campaigns and adopting them for consumer programs. The relatively low costs associated with activating QR code efforts (not including any costs associated with multimedia content development, agency services, etc.) is likely supporting this trend. • Additionally, major Web services players in the market including Google (through its offline QR code-driven Android application downloads and QR code-based ‘Favorite Places on Google’ program) and reportedly Facebook, are putting their weight behind QR codes which is helping raise consumer awareness. Continued industry backing will effectively subsidize the (rather heavy) costs of educating the consumer en masse. • We are encouraged by the amount and quality of top brands in the US marketplace that have engaged in QR code related initiatives. As the breadth of these first movers appears to be rising, we see the environment for Widespread Publisher Support within the US as positive. US: NOW
  23. 23. 23 Several negative factors still prevalent in the U.S. market will create resistance to widespread adoption of QR codes: • Low levels of QR reader penetration • Lack of consumer education and awareness • Lack of preinstalled QR code readers • Lack of unified 2D code standard However, we believe early indicators point to positive momentum in the marketplace regarding eventual mass adoption. In particular, robust smartphone sales and application adoption as well as increasing experimentation by top brand marketers and support from industry combine for a strong union of factors that will contribute to continued adoption from a small but growing base. Specifically, we see experimentation with QR codes as a valid opportunity for marketers to: • Institutionalize learnings in the 2D code space quickly for competitive advantages against late-adopter competitors • Identify the most digitally savvy early adopters among their customer bases for continued engagement • Create buzz as tech-savvy operators within their respective industries • Educate their consumers around the subject of QR codes • Optimize use of pre-existing assets (i.e. multimedia content, CRM systems, etc.) In light of this, we recommend: • Using a limited “test and learn” approach that will be beneficial in not exposing material risk to mainstream marketing activities while still allowing for substantial knowledge gathering and non- traditional consumer engagement. • Complimenting any in-store, outdoor or print publication-based QR code promotion with a complimentary SMS option or mobile web (self-directed) option for engagement, where applicable. Due to the low levels of QR code penetration in the US, this dual pronged approach will ensure engagement by most mobile consumers. In contrast to QR codes, SMS is a mainstream function among mobile users: 96% of US cell phones are SMS capable (CTIA) and over 1 trillion text messages were sent in the US in 2009. Additionally, 70 million consumers use the mobile web regularly (CTIA). RECOMMENDATION CONCLUSION AND OUR
  24. 24. 24 • Leveraging the global de facto open standard, QR codes (instead of proprietary codes such as Microsoft Tags or Scanbuy’s EZcode), as it is the lowest common denominator among 2D code readers in terms of inter operability and there are inevitably extra costs associated with aligning with a proprietary code standard. Additionally, if both Google and Facebook put their collective resources behind QR codes, which they likely will as they enter the space, it will increase the odds of such a standard taking hold in the market. At the very least, under such a scenario, all competing proprietary standards would be forced to make their readers interoperable with QR codes, which most of them already are currently. Additionally, QR codes support data tracking through the indirect method and allows embedded data to be retrieved from the code without a wireless connection (unlike several proprietary standards). Lastly, if a proprietary standard does eventually become dominant in the marketplace, there will always be opportunity for marketers to make a transition to that standard as switching costs from the QR standard to a proprietory one should remain relatively low for publishers in the near to medium term. Before embarking on a QR code-centric campaign, marketers must understand that any QR campaign in the U.S. market at this stage in its adoption will not be effective for mass market initiatives where broad reach is a goal. Instead, it will likely only be relevant towards a small base of early adopter/ influencer audiences. However, marketers’ efforts in this space will provide a value added experience for the tech savvy among their audience bases, help elevate the technology’s exposure among consumers and likely spur the technology’s adoption overall. In conclusion, we view QR codes as a promising technology that, if adopted in earnest in the U.S. market, would provide marketers in the world’s #1 economy with a unique channel for bridging offline and online consumer behavior for incremental brand engagement. However, the 2D code consumer market, while highly developed in Japan, is still in its very nascent stages in America. It will require time and continued commitment from industry to evolve. Thoughtful, cost-effective and limited experimentation for early learnings and buzz are recommended for marketers’ first forays into the space. PREPARED BY Edwin Philogene VP, Associate Director, Business Planning and Digital Strategy BBDO For The Digital Lab

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