Apple Pay Could Be A ‘Game Changer’ For Marketers

mikewestonData-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Mike Weston, CEO at Profusion.

Apple Pay is due to enter the UK this month after already making a big impression in the US. Some 2,500 US banks supported Apple Pay as of March, and it is now accepted in 700,000 locations.

In the UK, every major bank has signed up for the initiative except Barclays, which will likely join the party if its bPay idea doesn’t pan out. Given that the UK has a much longer history of embracing payment technology, such as chip-and-PIN, growth will likely be even stronger than in the US.

Since it dramatically lowers the payments hurdle, it’s easy to see why both retailers and consumers are taking to Apple Pay. But from my perspective, the most interesting thing about Apple Pay isn’t that it makes paying more convenient. It is the potential of mobile payment to finally bridge the gap between online and offline activity. For marketers, this is a game-changer.

It is worth noting that Apple is emphasizing that only recent purchases will be saved on the Passbook App. Retailers won’t have direct access to card information but will get a “token,” which is a 16-digit number, after each purchase that will be consistent for each card a consumer uses. I wouldn’t be surprised if Apple chooses to make this data available to retailers at a later date for a price.

Currently, people don’t like paying for things on their smartphones, where conversion rates are generally around 1%. We all know entering payment details on a phone is a laborious process. This is frustrating for marketers because smartphones offer a treasure trove of personal information.

Most people are permanently signed into social media platforms and use their smartphones for email, browsing, messaging and revealing their location. They sometimes also use their mobiles to place calls. Additionally, there is other information collected by apps, making the mobile phone a billboard of sorts for the owner’s behavior, preferences and activity. The missing piece: real-world spending habits. Now Apple Pay will collect this data.

The Missing Link

We can match virtual and real-world identities by collecting information on how a person purchases goods and services via the same device on which they do most of their online activity. This is crucial because it solves a huge headache for marketers. Marketing campaigns cannot currently be tailored to how someone interacts with a brand’s brick-and-mortar store. Not only does this reduce the efficiency of targeting, it also makes attribution next to impossible.

Linking payment information via Apple Pay to a person’s online profile will help make attribution more accurate, and it should also open the door to more innovative marketing campaigns. This is especially true if other new technology is brought to bear, such as beacons. Customers, for example, could potentially be tracked around a shop by beacons pinging their smartphone, receive relevant marketing information upon their return home to their desktop or tablet. These messages could complement purchases made via Apple Pay, but could also involve items they spent a long time looking at but didn’t purchase.

Don’t Be Creepy

Linking an individual’s offline and online worlds is not a risk-free endeavor. There is a creepiness factor that marketers need to bear in mind.

For example, when Facebook’s Atlas ad platform began enabling cross-device tracking and made tentative steps toward identifying real-world purchases, consumers raised more than a few eyebrows. Their browsing habits on their desktop began to influence the ads they received on their mobiles and tablets. People eventually got used to how their Facebook profiles tracked their online activity.

However, a consistent profile that businesses market to online is one thing but one that is influenced by real-world activity is a different kettle of fish.

Assuming that Apple will eventually allow marketers and retailers to leverage Apple Pay data, any marketing campaign will need to undergo a new cost-benefit test. It won’t be enough to send messages that are vaguely relevant. They will need to provide a tangible interest or benefit to the recipient that outweigh the initial surprise consumers feel when they realize their activity has influenced the ad they receive. Consequently, scatter gun, mass-marketing approaches are obviously a bad idea. So too, on the other end of the spectrum, is overtargeting.

With such a high level of data available on each individual, the temptation can be to create messages that are highly targeted. Since this strategy will trigger the creepiness alarm, marketers must balance relevance and targeting. Another fly in the ointment: The creepiness tipping point for each individual is different. Although data science can help cluster certain groups of people and suggest the best strategy, this is not a substitute for the responsible approach that businesses and marketers should take with the Apple Pay opportunity.

As with other fast-developing tech sectors, such as wearables and smart cities, there are a myriad of ethical and strategic questions retailers and marketers must ask themselves. With more information on individuals, online marketing should become much more personalized, but lines need to be drawn where personalization violates privacy.

Identifying these lines will be one of the toughest challenges facing marketing over the next five years.

Follow Profusion (@prfsn) and AdExchanger (@adexchanger) on Twitter.

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  1. Apple is not in the business of monetizing data, or helping marketers with attribution. They made that clear when they took away the UUID and introduced the non-persistent IDFA, which turned deterministic data into probabilistic. Apple is the most valuable company the world has ever seen because they sell a vertically integrated hardware & software product that is well designed and user friendly. They make almost all of their money by selling hardware, $182B IN 2014 to be exact…Apple is NOT building Apple Pay for marketers. Why would they? So they can dominate the attribution market? Somehow that doesn’t fit their strategy. Tim Cook has said over and over again they do not monetize user data. Closing the offline/online attribution just doesn’t do anything for Apple. The entire purpose of attribution is, to provide an advertiser or publisher can evaluate the value of what they have bought/sold.

    The opportunity for Apple is not in offline/online attribution it is the ease of payments. Mobile still sucks for a lot of people. That’s why Google started penalizing brands for non-mobile optimized sites, UX. Apple is lowering the barrier to transact on mobile and in turn they are building an ecosystem which will pay dividends because they will have their payment solution integrated at POS systems within stores and apps or wherever…

    Apple knows how to create ecosystems. They create software and technology to help support and strengthen their core hardware business. And that’s done fairly well for them thus far. Offline/Online attribution is not even solved by Apple Pay because it would only solve it for Apple device owners, solving for only a piece of a puzzle is not game changing…sorry.

  2. Apple doesn’t receive the data from Apple pay transactions. While the iPhone stands in for a physical payment card, the transactions created via Apple pay run across the major card processors rails. It’s the processors who will have access to the mobile payment data.