Given Google’s core search business and ad-based revenue model, why is the company making the major investment that is the recently-announced *Google* Wallet–an NFC-based mobile payments solution? Because Google’s product strategists’ focus is not on the payment itself; it’s on all of the other elements that comprise a commerce experience and the data that characterizes those elements.
Indeed, appending real-world purchase information to its treasure trove of online behavioral data will vastly increase the value of customers’ profiles and increase the rates Google (NSDQ: GOOG) can charge its advertisers. It will be a way for Google to increase its local presence. NFC (near-field communications) is too often equated simply with payments, but Google understands that NFC tags have broad application (working like Quick Response [QR] and other 2D barcodes do today). Google can help retailers use NFC tags for in-store promotions and check-ins, augmenting the understanding of customer behavior for ad targeting.
Think of a new algorithm as powerful as Google Search but modelizing new consumer behaviors bridging the digital and the physical worlds. Imagine if you could mix consumer behavior with unique geographic business data for local search, encompassing company/brand/product/inventory data with dynamic (review and promotion) information. By providing aggregated and anonymous predictive behaviors, this could even have far-reaching consequences beyond mobile. At the end of the day, who knows you best? Your mobile phone! Imagine how you could improve efficiency of billboard advertising if you knew the exact profile of consumers passing by.
Mobile phones have unique attributes that can be combined and leveraged to generate new mobile experiences that may not even be digital today.
Google Offers in addition to Yelp, Foursquare, Facebook Places & Deals, Groupon, as well as eBay’s acquisitions of Where (after Red Laser and Milo) and CityGrid Media (with Internet conglomerate IAC (NSDQ: IACI) having merged Citysearch, Insider Pages, and Urbanspoon into one company–now known as CityGrid Media) are all part of the same approach. The convergence of local and social are strong mobile catalysts: These factors have accelerated the importance of mobile to consumers and to companies serving them. PagesJaunes–the French yellow-pages company–pivoted its business around a new mobile product strategy. According to its managing director, “Mobile became the most important growth driver for us.” Thanks to interesting technologies and platforms such as Placecast, operators too are joining proximity marketing.
Numerous players–from Internet pure players to operators and retailers–are embracing the mobile/social/local combo. Unifying the online and offline worlds via mobile will create long-term market disruption. There are plenty of new opportunities opening up if you center your approach around the notion of context, trying to invent new product and services that will tie together places, brands, and consumers. Think about mobile augmented reality. At the end of the day, it is all about facilitating the discovery and understanding of information around you. Of course, it is far from being mainsteam, but when you step back and look down the road, consumers will hold up their smartphone to interact with their environment as a natural gesture. After all, 10 years ago, consumers only made voice calls on their mobile phones and held their devices close to their ears. In the past five years, they started consuming content on their mobile phones and looking at the screen.
The challenge for consumer product strategists is to precisely anticipate these trends and create a differentiated product and service mobile portfolio based on the unique attributes of mobile phones. Working closely with other roles in the company (from the CMO to the eBusiness team), they can help reinvent business models and turn market disruption into a competitive advantage.
Thomas Husson is a Principal Analyst at Forrester Research serving Consumer Product Strategy professionals. He blogs at http://blogs.forrester.com/thomas_husson
This article originally appeared in Forrester.