Digital shopper marketing: The birth of a multi-billion dollar industry

We’re witnesses to the birth of digital shopper marketing as a multi-billion dollar industry. It opens up a new space for advertisements and messaging.

Shopper marketing is aimed at the purchasing decisions that we make inside shops and stores. Researchers say 50% -70% of brand selections are made in store, as it seems that entering the physical retail environment overwhelms many of the pre-store-visit adverts that we’ve seen.

That’s why brands spend billions of dollars each year attempting to influence shoppers inside stores, think: colourful packaging, displays, product positioning, special offers and events.

Now, increasingly, digital tools are being pressed into the battle to make a connection with the customer.

There have been trial runs, such as QR codes on packets, but now that technology is advancing quickly, shopper marketing is about to transformed.

How will digital and the web transform shopper marketing?

The answer is, of course, connected to smartphones. IDC say 144.9 million smartphones sold worldwide in Q1 2012. Total 2011 sales were 491.4 million units.

QR codes may have proved to be unpopular, but the next generation of visual recognition apps are more sophisticated. By ‘visual recognition apps’ I mean technology that allows your smartphone to recognise objects through its camera and then pull and display relevant information from the web; coupons, discounts, recipes, video… No cumbersome QR or barcode required.

Aurasma has developed a visual recognition app that has been downloaded more than 4 million times. According to its website, it’s a “free augmented reality platform that lets you discover, create and share amazing virtual content, integrated into the real world.”

Amazon.com has a barcode scanning Price Check app that allows consumers to scan bar codes in stores and compare prices with the online retailer. It has also created the Flow app, a visual recognition augmented reality app “that lets you discover information about everyday products around you”. “To get started, point your camera at book covers, video games…”.

… conditioning us to expect that every physical object will have a digital label or extra information that can be accessed by pointing a smartphone at it.

IBM is developing an augmented reality app for grocery stores, “as you browse the aisles and point your phone’s video camera at merchandise, the app will recognize the products and overlay digital details on top of the images”.

My point is: Visual recognition apps such as IBM’s or Amazon’s or even Aurasma’s will condition us to expect that every physical object will have a digital label or extra information that can be accessed by pointing a smartphone at it.

The technology will be built into phones, aiding adoption, for example: “Telefónica will initially encourage its customers to download the Aurasma app, while the long-term plan is to dispose of the need for an app by integrating Aurasma technology into O2 phones”.

Once mainstream consumers are comfortable with this technology, and assume every physical object has digital information attached, shopper marketing  will be proundly affected.

What will happen when visual recognition apps reach mass adoption?

When shoppers are familiar with accessing extra information by pointing smartphones at products on a shelf, digital shopper marketing will become a multi-billion dollar industry.

… the owner of popular visual recognition apps will be able to bypass existing retail to consumer relationships.

Retailers, brands, manufacturers and technology companies will then compete to be the owners of the default choice visual recognition app on the world’s smartphones.

They’ll compete because the owner of popular visual recognition apps will be able to bypass existing retail to consumer relationships.

The owners of the popular shopper apps will control the first message that appears when a device is pointed at a product on a shelf. That message could send an in-store shopper to Amazon or a rival retailer, or it could just offer a discounted price, on a certain product.

Rather like Google selling the top place on its pages to the highest bidder, there will be an opportunity for the owners of popular visual recognition apps to make a fortune through selling off their prominent digital labels to the highest bidder.

These apps will be enhanced by countless technologies; social media, RFID tags, indoor positioning systems and many more.

The birth of digital shopping marketing may not be straightforward. It’s always unsettling when digital technology disrupts an existing industry, but a lucrative future awaits for who prepare for these new opportunities.

Ciarán Ryan