Mobile barcode breakthrough means we may soon see them everywhere

Mobile barcodes seem to be about to go mainstream, with Nokia and Sony Ericsson pre-installing barcode readers on many of their handsets. Barcodes in mobile are generally used to retrieve web content. For example a barcode on a poster can be scanned and used to retrieve a web page where the user can win a prize. At the Mobile World Congress in Barcelona earlier this week, Virginia-based Neustar announced the first clearinghouse for barcodes, which allows barcodes from any advertiser or brand to be linked to web content independently of the barcode reader or service provider being used.

A Brief Guide to Barcodes

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1D barcodes like the one on the right are familiar to all of us. These are the codes on products that are scanned at a supermarket checkout. The amount of data which a 1D barcode can carry is limited. 2D barcodes, like the one below, are more robust and can hold a much higher density of information. These are the barcodes used in mobile applications. Typically, a scanned barcode is used to retrieve a web page. Barcodes can be embedded in any kind of printed material such as product packaging, print advertising, posters and even web sites. A camera phone can also display a barcode, which allows a reader to identify it.

Direct barcodes have the URL of the associated content embedded in the code. With indirect barcodes,  the URL is of an intermediate web site where the code is looked up in a database and the corresponding content URL is returned. This means that the content URL is dynamic and can be updated. Scanning the code from a mobile phone also allows contextual and demographic  information about the mobile user to be retrieved and used to tailor the content returned.

Applications

There are myriad applications for 2D barcodes. Advertising and marketing is one favorite. Advertisers love barcodes because they are opt-in (the user chooses to retrieve the brand information) and trackable. Pepsi embedded 400 million 2D barcodes in products in the UK last year. Codes are also often used in supply chain and logistics management.

Barcodes displayed via mobile phones are used in ticketing applications like public transport in the Philippines or loyalty programs in stores like DIY retailer Hornbach in Germany. In South America, Telefonica is using barcodes to allow access to telecommunications services such as mobile package updates (when a user wants to update their service package by, say, adding an SMS bundle). Barcodes on a phone can even be used to authenticate the parties involved in mobile money transfers. Barcode vendor NeoMedia did a fundraising campaign for Haiti at the Mobile World Congress show, where attendees scanned posters around the conference site and NeoMedia contributed $1  for each scan. NeoMedia’s CEO Ian McCready told me that the number of barcode scans going through their system is up hundreds of percent in the last 6 months over the previous 6 months.

Obstacles in the Barcode Market

A number of obstacles have prevented barcodes from going mainstream in mobile in the US, although they are already widely used in Japan. First of all, the readers need to be available on phones. Pre-installs of barcode readers are increasing, but users need to be educated on how to use the barcodes once they have a reader. The barcode market has lacked standards and interoperability, although NeoMedia said that great progress has been made in that area in the last 18 months. Finally, indirect barcodes could not be enabled across all players in the barcode ecosystem because of the lack of a neutral clearinghouse, although particular vendors could of course implement a clearinghouse for the barcodes of their own customers.

So Neustar’s clearinghouse announcement supplies one of the final parts of the puzzle. Neustar’s VP of mobile services, Diane Strahan told me that the clearinghouse will give advertisers more control over how a barcode associated with their brand is used. For example, it prevents counterfeit barcodes associated with the brand being used to execute fraud or copyright infringement. It allows mobile carriers to add additional data, and it means advertisers can customize and update the content associated with a barcode. Neustar will charge a transaction fee per scan for use of the clearinghouse.

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Neomedia and Neustar are both publicly traded companies. Neomedia is based in Atlanta and has 30 employees. Neustar was founded in 1996 in Sterling, Virgina and has 800 employees.