Does anybody actually use QR codes?September 16, 2011: 10:30 AM ET
From the storefronts of high-end boutiques to the billboards in Times Square, the black and white codes are nearly ubiquitous. Marketers love them but are they really getting much out of them?
By Alex Kantrowitz, contributor
FORTUNE -- They're everywhere: tucked away in magazines, adorning business cards and t-shirts and splashed across posters and billboards, not to mention on display at The Museum of Modern Art. Clearly, so-called QR codes -- small square patterns that look like Cubist renderings of a traditional barcode (right) -- have become ubiquitous. Less clear is whether those black and white boxes are a major marketing innovation or just a fad.
Created by a Toyota (TM) subsidiary in the mid-1990s to track auto parts, QR codes were designed to deliver more information than the traditional barcode. The new codes were like today's hard disk drives compared to the old barcode's floppy disk -- a drastic jump in capacity. They were better in nearly every way, resistant to dirt or damage and readable in any orientation. (QR code stands for quick response, a reference to how speedily the data they contain can be decoded.) By 2002, Japanese marketers had glommed onto the technology, using it to target consumers increasingly equipped with sophisticated QR code scanners -- their phones.
The potential for marketers is obvious. The codes can be printed nearly anywhere, at any size. Using special apps designed for Apple (AAPL) iPhones and Google (GOOG) Android-based smartphones, consumers point their devices at the codes for a few seconds and are sent to a website or interactive advertisement. The codes can even dial a 1-800-phone number or compose an SMS. QR codes promise marketers a simple way to ad digital elements to old-line advertisements and potentially track consumers in the physical world they way they can online.
For advertisers, it's been love at first scan. Two years ago, major companies in the U.S. jumped in with both feet. Time Warner's (TWX) HBO used a blood-soaked QR code in its television ads for the third season of vampire drama True Blood. Macy's (M) decked out its department stores with codes that brought up videos of Tommy Hilfiger and Martha Stewart doling out fashion advice. And Vibe used the codes in fashion spreads to send readers to sites where they could buy clothes pictured in the magazine. Other brands using the codes in innovative ways include Coca Cola (KO), Delta (DAL), Ford (F), Gap (GPS), Home Depot (HD), Starbucks (SBUX) and Verizon (VZ) to name only a few.
But judging their actual value to marketers in America is tricky. Turns out, the advertising innovation promising better tracking actually suffers from a dearth of reliable public data. Big advertisers have kept the information they gather from their own campaigns close to the vest. Data sets released by app developers looking to drive downloads and smaller marketing agencies, meanwhile, have been unreliable at best.
Comscore (SCOR) released its first study on the codes this summer, revealing that 14 million people, or 6.2% of mobile users, scanned QR codes in the month of June. Better yet, nearly 37% of users were in the coveted 25 to 34 age bracket and more than one in every three of them had a household income of at least $100,000. "QR codes demonstrate just one of the ways in which mobile marketing can effectively be integrated into existing media and marketing campaigns to help reach desired consumer segments," noted Mark Donovan, Comscore senior vice president of mobile. Of course, it remains to be seen how those numbers will change over time.
QR codes have other drawbacks. Because the technical standard behind them is more or less open source, almost anybody can create their own codes and readers, leading to confusion among consumers. (The code in this story redirects to Fortune.com.) Anybody who has scanned more than a few, meanwhile, knows that the 'fad factor' has led some marketers to stick the codes on anything they can find without always putting much thought into the end result. Many simply redirect users to a corporate homepage -- a dead end in other words. Mike Whers, CEO of Scanbuy, a New York-based provider of scanning technology, admits that in those types of cases "most companies aren't satisfied with the performance of their campaigns."
Still, many U.S. marketers look with anticipation to the very real success of businesses using QR codes in regions where they have been around much longer. In South Korea, for instance, retail giant Tesco rolled out "mobile supermarkets" in busy subway stations, allowing commuters to quickly scan items they wanted to buy. By the time they got home that evening, those groceries had been delivered. In short order, Tesco had taken the top spot among online grocers in the country.