2D Barcodes Revisited

Two years ago I wrote an article about 2D barcodes and my opinion of their viability. I thought it would be worthwhile to revisit the subject given all of the recent discussions surrounding the topic.  Before I give you my latest views however, I think it may be worthwhile to look back at what I wrote about 2D barcodes in 2009.

Here’s what I said in 2009:

There has been tremendous discussion of late about 2D barcodes and their use as a mobile marketing tool.  Before one decides to jump whole-heartedly on the 2D bandwagon, it may be useful to get a baseline perspective of what they are and how they work.

2D barcode uses graphical patterns to convey information as compared with 1D barcodes that use vertical bars.  The purpose of 2D barcodes is to deliver more information than can be conveyed in a 1D barcode.  But just as a 1D barcode must be read by scanner technology, a 2D barcode must be read by  pattern recognition technology.

There are over 60 encoding schemes for 2D barcodes.  For a 2D barcode reader to interpret a 2D pattern, it must support the encoding methodology of the barcode being displayed.   In the late 90’s, a Japanese company created what is now one of the most commonly used encoding schemes, which is called the QR (Quick Response) Code.  The QR format is frequently used for delivering messages to camera-equipped cell phones.  It should be noted however that the QR Code is not the only encoding scheme that can be read by mobile devices.

The process for reading a 2D barcode via a cell phone works as follows:

A 2D barcode is affixed to an object or shown on a digital sign.  The viewer launches a reader application on their cell phone.  (Note: These applications can typically be downloaded for free.)  The viewer uses the application to capture (flash) a picture of the barcode via their phone’s camera.  The reader application then interprets the barcode.  Depending on the sophistication of the reader application and the contents of the barcode, the application will perform a specific function: e.g. present the information, transfer the information into another application, download an application, access a web page, dial a number, show a map, etc.

The Japanese have been using cell phones to read QR Codes since the late 90’s and European adoption has been increasing in recent years. In the U.S. however, neither companies nor consumers have readily embraced 2D Codes in any meaningful way, but many believe that the day is coming.

A recent discussion with several technology experts produced a consensus that 2D barcodes will become ubiquitous in the U.S.  A strategist for a major handset manufacturer, who by way of example had a QR Code on his business card, felt that the future was very bright for this type of technology.  He said that he saw a day when every product and location would have a barcode attached.  This sentiment was echoed by the CEO of a company that develops location-identification products for mobile phones.    A technologist with a leading digital signage company suggested that 2D barcodes would become a common fixture in digital signage content.  It was even suggested that 2D’s future was secure because of Google’s interest in the technology.  Google has been aggressively advocating the use of the technology and even been providing businesses tools to print 2D barcodes for display on their brick and mortar storefronts.  As one person in the group said: “You can’t argue against something that Google gets behind.”

Although I personally like the concept of 2D barcodes — especially when the reading process works smoothly, I do not share the same enthusiasm for the commercial prospects of 2D barcodes as my peers.   My reasons are as follows:

  • First, 2D barcodes will be supplanted by easier to use technology, e.g. Common Short Codes.  I have found it vastly easier to text a keyword to a short code than “flash” a picture of a barcode.  If you’ve ever tried photographing a barcode, you’ve likely found that it does not work well in low light conditions or in places where you are walking or moving.  In addition, it is in many cases a relatively cumbersome process to execute.
  • Second, there are no standards for 2D barcodes.  Although the QR Code is the most common barcode for mobile applications, there are 12 other encoding schemes that are targeted at mobile devices.  This lack of standards means that it is possible that consumers will likely encounter 2D barcodes that cannot be interpreted by their phone’s reader software.  There are however standards setting bodies working on this problem, but one has to wonder whether the standards will be set before other technologies make 2D barcodes irrelevant.  Remember, it took almost 30 years following the invention of the 1D barcode for Uniform Product Codes (UPC) to be deployed on a mass scale.
  • Third, 2D barcodes are generally static (see note herein). Once you print the information, it’s there for the duration. Market trends have people moving away from static information. Market and technology trends are gravitating towards a model in which information is delivered wirelessly, based upon location, time of day and, ultimately, direction. NOTE: There are dynamic 2D barcodes on the market (e.g. Scanbuy’s Scanlife via EZCodes and Microsoft’s Tag codes) where a flash of the barcode prompts the reader software to use an index stored in the barcode to access a remote server to retrieve information from a database. Server-based 2D solutions require that a third party registrar manage the assignment of the barcode/index and host the information. It remains to be seen if the market will unanimously endorse a registry- based solution as the most well known are proprietary.
  • Fourth, there is no way to get critical mass in a timely manner. Although it is easy to run some 2D trials, it is another thing to begin deploying a specific coding scheme on a universal basis. Very few companies will be willing to invest in a technology that has no standards and can be easily supplanted by new technologies that are on the horizon, e.g. RFID and other near field communications (NFC) technologies. Very few consumers will be interested in embracing a technology that they don’t understand and requires a change in their existing habits. NOTE: At the writing of this article, there are quite a few 2D barcode trials in progress. It should be noted however that some of these trials are using QR Codes, some Scanbuy codes, some Microsoft’s Tag codes and others are using a mix of various encoding schemes. It will be tough to build critical mass in this type of environment
  • Fifth, it is a difficult model to monetize.  Although it took UPC barcodes many years to catch on, at least there was a very clear value proposition connected with them:  A company could increase sales and reduce labor costs at the checkout line.  UPC codes introduced tremendous efficiencies into the retail industry.  Fewer checkout personnel could process more customers in less time.  This provided clear financial benefit to those who adopted the technology.  In terms of 2D, the application must be identified that will make the value proposition for 2D as clear and compelling as the UPC code otherwise it will be unlike companies will embrace the technology in mass.

In summary, some believe that 2D barcodes will be widely used in digital signage.  It is true that it is a workable technology for delivering information to a mobile phone, but it has limitation — primarily the lack of standards and the lack of measurable value.  The question is therefore this: Will we see it used in digital signage?  The answer is yes, but I predict on a limited basis.  Most signage operators will find it onerous to manage the extension of content that comes via 2D barcodes and without a clear value proposition, few will want to expend the effort.

Here’s what I have to say two years later:

2D barcodes – particularly QR Codes – have experienced a dramatic increase in deployment.  A study in 2010 showed that 2D deployments had seen a 1200% year over year increase.  Utilization however is quiet another matter.

By and large, consumers are still confused by the value of 2D codes.  According to a recent study by a leading retail analyst, 2D barcodes are only used by 6.3% of store patrons.  It would appear that consumer adoption has been so low that Google, an early and highly visible leader in the field, has withdrawn their active support and has diverted their attention to NFC (Near Field Communications).

After following the subject fairly closely over the past two years, I have come to the following conclusions:

  1. 2D barcodes will survive — for a while.  They are not going away anytime soon, but they will eventually go away.  Consumers will learn to use them and they will provide value.  I do not believe however that they will be the marketing panacea that many had envisioned.  I believe they will be used to augment the entry of information such as contact information, URL’s, etc. but they will not be the primary means for engaging a consumer via their mobile device.
  2. NFC will quickly pass 2D barcodes as a means to deliver customer engagement.  The NFC model will be more conducive to customer technology usage patterns.  It will be much easier for a consumer to wave their phone over an item than open a barcode reader, position their camera over the barcode and let the reader interpret the code.
  3. NFC will become ubiquitous much more quickly the 2D – even though 2D has had a nearly 15 year head start.   NFC will become technology that consumers will use to pay for products and services at the physical point of sale. NFC will therefore be more rapidly embraced.
  4. NFC can be interactive. Interactivity will boost the number and types of applications where NFC can add value.  2D codes do not support that same level of interactive.

In summary, 2D barcodes are here for the time being.  As NFC tags get cheaper, NFC will supplant 2D deployments.  In 5 years, 2D will begin the process towards its eventual demise.  In 10 years, I believe 2D barcodes will be almost gone – totally and fully supplanted by better approach and technology.  It would appear at this time that NFC will be that technology.

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4 Responses to “2D Barcodes Revisited”

  1. Lots of great data in this post. However, I think the major hurdle for QR codes isn’t the lack of standards or the cost of the technology (our platform is VERY reasonable). The major issue is that marketers and advertisers aren’t using the codes properly. They are printing them too small or without any call to action. They use static instead of dynamic codes that end up not working. They aren’t educated and this is why the customer gets frustrated and confused.

    To your last point, MOST current technlogies and products will be replaced and improved – especially in a 10 year time frame. It’s like saying – don’t buy a cell phone or an iPad because they will come out with a newer, better one in ten years.

    Also, you forgot to mention Mobile Discovery’s dynamic code management platform! 🙂 http://www.mobilediscovery.com – we were doing this long before ScanBuy and MS. 🙂

    Thanks!
    Jennifer

    Mobile Discovery offers a PROVEN campaign management platform

    • Thanks for the comment Jennifer. It’s good to know that your solution is out there, and I hope that those who read your post will explore what you have to offer. I absolutely do agree with your assessment that 2D barcodes are not being used properly by brands and agencies. I do think however that the lack of standards is the biggest problem. Please allow me to recount a situation that happened to me.

      I was attending a major wireless conference where one of the leaders in 2D barcode solutions was presenting. This fellow represented a company that has a major presence in Japan and has been actively involved in helping brands and agencies here in the States adopt 2D barcodes. After his presentation, I went up to introduce myself and to ask a few questions. He handed me his card, which of course had a 2D barcode affixed to it.

      After asking my questions, I then pulled out my phone, launched one of my four barcode reader apps and scanned his card. UUUUUGH, it wouldn’t scan. So I launched my second reader app and scanned the code. That one wouldn’t scan either. I did this for all four apps. None of them worked. Looking fairly embarassed, he said that I should download his company’s app, which I did and it worked.

      Here’s the point: This guy was a leader in the 2D barcode industry. His company had been in this business for years. If anyone should have had a solution that worked the first time, it should have been him and his company. But as I later explained to him, no consumer is going to go through what I had gone through. They’d try it once and say: “forget this!” That consumer would probably forever write off barcodes as total wastes of time. I think that’s where we are today. Not only are the codes poorly utilized, but they are delivering an inconsistent and poor experience for the consumer. A death nail if there ever was one.

      Yes, 10 years is a long time, but 1D barcodes are still being used successfully today and have been for decades. 2D will, in my opinion, not have the same luck. Because of the reasons I discussed in my post, 2D will meet an early demise…. with all due respect.

  2. QR Codes can be beneficial to brands and companies. It would be agreed that consumers have to have a positive experience with scanning codes, otherwise, losing potential consumers or existing consumers, is a risk. The mobile experience has to be seamless. Great Post!. http://www.scanlutions.com has great insights to QR Codes.

    Thanks,
    Andy Lynn

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