Decoding ROI in marketing's QR codes

Finance gets involved in the fast-growing 'quick response' technology for smartphones.

CFOworld –

As president and chief financial officer of CustomXM, a printing firm in North Little Rock, Ark., Paul Strack has an interest in tools that will keep printed materials relevant in age of increasing digital communication. As a result, he's watched what are known as "QR codes" for several years. "We saw how this code could serve as a bridge from the print to the digital worlds," Strack says.

QR, or quick response codes, are those square barcode symbols you've certainly noticed --- and perhaps seen your company use -- on growing numbers of magazine ads, product packages and other marketing media. The codes are formatted so they can be scanned by smartphones. Once scanned, a code can direct the user to a mobile website that provides additional information, such as product specifications or notice of a promotion. "QR codes make printed pieces interactive," says Jason Pinto, chief marketing officer with interlinkONE, a Boston-based provider of marketing software.

A Growing Market

Several months ago, Strack took out a two-page ad in his local business paper. One side featured the back of his head; the other, the front. A QR code placed over his mouth contained instructions on reading it. Readers who scanned it would see a video of his mouth talking, during which Strack provided information on CustomXM and the services they offered.

By tracking responses, Strack found that about 5% of the paper's 4,000 readers activated the code. In addition, several c-level executives noticed the ad and have begun talking with Strack about potentially working together.

While QR codes haven't yet hit the mainstream in the U.S, their use is growing. In June, 2011, 14 million mobile phone users in the U.S., or 6.2% of the mobile population, scanned a QR code, according to market research firm comScore Inc.

It All Started with Autos

The technology behind QR codes traces its origins to the automobile industry, says Al Ferrara, partner and national director of the retail and consumer product practice with BDO. Initially, the codes were used to track parts moving along assembly lines. While similar to the bar codes found on many grocery and other products, QR codes can hold greater amounts of information.

To use the codes, a smartphone owner must download an application that allows his or her phone to read QR codes. Once a code is scanned, it provides a link to a mobile website.

The benefits to the businesses that deploy QR codes? "For the first time, you can track marketing leads from a piece of paper to a website; from the physical world to online," says Bobbie Carlton, founder of Carlton PR & Marketing in Woburn, Mass. The adage that half of all advertising dollars are wasted, but no one knows which half, becomes less accurate, she adds.

While companies that interact directly with consumers appear to be the heaviest users of QR codes currently, those operating in business-to-business sectors also may find them of value.

For instance, different QR codes could be included within the ads a firm places in various trade publications, and used to track the number of individuals that scan the codes from each one, Pinto says.

The cost of generating a QR can be fairly modest, Pinto says. Any number of QR code generators can be found online, many of which are available free. The software needed to track responses -- which is critical to obtaining full value from the codes -- sometimes can be found for $20 or $30 monthly, he says.

In addition, there's the cost of creating the ad itself, as well as the mobile site to which the QR code directs users. This should be regularly updated. "You have to keep making it fresh, BDO's Ferrara says." Of course, that costs money.

The price tag for CustomXM's ad was several thousand dollars, most of which went for the ad itself and the video, Strack says. Creating the QR code cost nothing, and the tracking tool is less than $100 per month.

'The Codes Are a Bridge'

Recouping even the typically modest investment needed to deploy a QR code often depends on a few key steps. One is offering those who read the code something they can use. "The codes are a bridge," Strack says. "When the user crosses the bridge, there needs to be something of value." That might be useful information, a coupon or another promotion.

QR codes should be tested before they're deployed. Those that are too small or out of proportion may not work, Bobbie Carlton says.

Similarly, the site to which the code leads should be developed specifically for mobile phones. A website designed for computer monitors usually is difficult to view on a phone, Pinto notes.

Because QR codes still are new, it helps to provide some instructions on their use, adds Pinto. "Be willing to use some space to educate people."

Finally, in order to reap the full benefits of a QR code, you want to find some way to gather information from the user, such as an email address, so that you can contact them again. The QR codes and the scanning applications don't capture this information.

Done right, QR codes are another tool for reaching clients and customers. "They're not the Holy Grail, but they help us measure the effectiveness of a marketing campaign," says Strack.

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