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.