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Passbook in the next 12 months

Apple is a media machine. They not only get great coverage for the release of their new devices, they get coverage for their software and their failures (Apple Maps).

A good portion of the media said they were unimpressed with the iPhone 5 update, partially due to the massive number of leaks prior to the launch and the relatively small changes made to the device.

In my opinion I think the customers and the analysts are missing the true value of the iOS6 update. Two features can help Apple get a foot hold in the social space as well as the mobile advertising space.

Facebook has no idea what just hit them – Photostreams

Shared Photostreams are a direct attack on Facebook and Instagram, two of the largest photo sharing platforms. Apple tried to create a social network based on music with Ping but the reality is that photos, not music are a major driver of social based traffic. These photostreams have the power to link friends directly, and ultimately decrease the need to share photos on Facebook. These streams are not only helpful for friend to friend interaction, I think that Apple will release an Enterprise level version of streams soon. Think about Gucci or Ferrari sharing a stream of photos with you from a recent event. When this happens, major brands will have a major incentive to duplicate their efforts on Facebook fan/brand pages.

Given the fact that Apple controls the physical device, this poses a major threat to Facebook’s mobile growth, especially within first world countries. I think the uptake in developing nations will take much longer due to device penetration.

PassBook was also part of the iOS6 release and a handful of major brands have already thrown their support behind it. If you haven’t had a chance to play with it, it is a virtual wallet or keychain that helps you store your membership cards, coupons, and tickets.

The major differences between your current plastic membership cards and paper tickets is how the app interacts with the phone itself. Passbook allows updates to be pushed to the coupons, tickets or membership cards. It also allows the device to push a promotion to you if you are within a certain location.

For example, if you are at an airport gate, and you have your ticket in Passbook, it will automatically tell you if the flight departure is delayed or if the gate is changed.

Another example is that if you walk in to Target and they have a special promotion on dog biscuits, they will push you a coupon that is only valid that day. By the way, Target’s system is pretty advanced and already has some data on who is in your family and what you regularly purchase.

One other major feature with Passbook is that you don’t need to have a branded app to get a passbook coupon. You can receive Passbook coupons via SMS, Email or via a download link at the moment.

What are the implications of Passbook on Mobile Marketing?

1) Passbook coupons are essentially new ad units. Two companies – WooBox and Socialize have already launched capabilities to send out Passbook coupons via SMS. Socialize is more of a shell coupon in some ways. It allows the coupon to be replaced daily by a central ad server.

I could see these new “ad units” being used for app distribution. There might even be a scenario where you are at Best Buy and Amazon pushes you a coupon to increase the “showrooming” effect. Dangerous stuff.

2) Passbook is a training vehicle for the mobile wallet. People are eager to get rid of all of those plastic key fobs and just dump the data into one digital place. This starts training users on having their phone ready to go when they are checking out. This is going to set up the NFC mindset in the coming 12-18 months. If Apple does not include NFC in iPhone6, there may be a contract dispute holding things up.

3) Passbook in some ways could be Groupon’s savior. However, if Groupon continues down the route of just pushing random deals to your device, it gives the user incentive to delete Groupon all together. Groupon essentially has to get smarter about how they distribute coupons/deals given the new capabilities of Passbook.

4) Passbook can be a post shopping cart experience. For instance you buy a plane ticket to Miami. Once you arrive in Miami, Passbook may suggest a better car rental deal, a place for dinner, and spa. This is essentially very similar to the deals you see upon checkout of Expedia or Orbitz. They are upsells but often times they are generic and too far in advance. This gives the airline or travel site the ability another chance at an upsell which is more timely or potentially even impulsive.

5) Passbook will get smarter, a lot smarter. Given the amount of data it may collect, and the fact that Facebook has some OS level integration, it might be able to suggest places around you with incentives. For instance, your Facebook profile knows you like Bobby Flay from the Food network, and you are in NYC near his restaurant. It could potentially recommend going to his steak house and offer you a free desert.  Passbook may also integrate social features – eg – I redeemed a coupon and shared it with my friends. This can be facilitated by the Twitter or Facebook integration.

6) Passbook brings relevancy back to QR codes. For the past few years QR codes have struggled in America to gain popularity since you usually needed an external app to read the code or people just didn’t understand what they are. Passbook will make QR codes a standard and help bring the concept to the masses.

7) Retailers may see compressed margins due to the increase usage of coupons. In the past major brands put out coupons for two reasons, one for branding the other to increase sales. They always assumed that only a small portion of the coupons would actually be redeemed. If people are always armed with a coupon, retailers may need to adjust their margin forecasts.

8) Passbook starts to push coupons and membership cards into the male market. Traditionally coupons have always been redeemed at a higher rate by women. This app is genderless and will start to allow men to have their info without having to carry around bulky cards or coupons.  This change in demographic could inherently change what types of coupons we see and will necessitate advertising agencies to re-assess persona profiles.

9) Passbook’s secret weapon is its ability to push notifications to your locked screen. This allows people to know what the deal is without even opening an app. This instant push information is incredibly powerful for influencing purchasing decisions. Think of it like the specials board at a restaurant.

10) In the developer documentation for Passbook they have reserved a template for “Generic.” This wildcard placement will be the hot bed of innovation and/or scammers.

11) Apple has issued design “guidelines” around how your passbook should look. This limitation is good in some ways but I think advertisers may need to learn how to boil marketing messages down significantly.

12) Since Passbook is also time aware, this may allow certain retailers to offer various promotions throughout the day. This will ultimately lead to a much heavier workload for small businesses but hopefully it will also result in more business throughout the day. For instance, Burger King offers free super sizing on Saturdays from 2 to 4 pm. As soon as it turns 2 pm and you are near a Burger King, Passbook may push a notification to you.

13) Passbook takes a lot of fluffy social metrics like engagement and amplification and adds a layer of performance to them. REDEMPTION or in other words REVENUE. Brands looking to see real returns on mobile marketing initiatives are going to love Passbook. It will finally give them more concrete data on how their marketing incentives are working. It may also give them insight into location specific improvements, persona validation etc.

Where does Passbook fall short?

I think Passbook has a long way to go. First, it really needs to integrate with a payments service or a major bank to set up the mobile payments part of the strategy. Without that integration, it may end up being a novelty app.

Passbook is an Apple product. If this were available on Android, I would certainly use it. This isolation may make certain large brands hesitant to integrate with it since it only touches a portion of their customers.

The major issue that I see is that Passbook is not a simple experience. The Target App is integrated with Passbook but it is relatively hard to find, and requires a SMS authentication procedure. If Apple can make the integration process easier, adoption and usage rates could skyrocket. Right now, the process of adding a card or coupon to your Passbook is too convoluted. If you are wondering how to get the Target app into Passbook follow these directions.

Passbook is not supported in the iPad at the moment. I see tons of people traveling with their iPad and I know I would be likely to put my plane ticket on there. If the iPad mini comes out, there is a reason to open up Passbook to other devices in the Apple portfolio.

Right now Passbook uses a stacked tab layout. It seems reasonable for 5-10 passbook items but once people start getting the hang of it and the brands realize the power, I could see people having too many options. This may require a UI redesign or create the need for folders or a search function. At the end of the day, I am sure Apple will find a way around the UI issues but I could see it getting messy fast.

The last major issue I can see is that this app will create too many expectations from consumers and force everyone in to the Bed Bath and Beyond model of offering 20% off all the time. American consumers are highly price sensitive and once they get in the rhythm of getting a good deal, it starts to eat into brand loyalty. This was evidenced by Groupon and its impact on small businesses. Many small businesses never saw any repeat customers from their initial offering partially because there was a competing deal going on the next week.

Overall, Apple has the ability to really revolutionize mobile commerce with this app. It may also unlock a whole new mobile advertising model which will trump the standard banner model.

I highly encourage all the analysts to read more on the Passbook app, it will be the new iTunes for Apple.

Here is a list of current apps that support Passbook:

Apple the cool kid with no real friends

Apple is always making the news, keeping them cool in the eyes of the media. If you look at most tech blogs the articles around Apple are usually the most heavily commented on and linked to. In other words Apple is good for the media industry.

In the past week or so news leaked that iOS6 would not be including the YouTube app by default. This doesn’t mean you can’t get the app on iOS, it just wont be on the home screen like you are used to.  Is this big news? Not really, it is just Apple putting a line in the sand against Google and it’s Android operating system.

When I saw this news, I started to think, Apple is really good at making hardware and operating systems. However, they come up really short in content generation and social networking. Google is still the most dominant player in search, online video still has the most widely used maps, and is making strides in the social networking space. Facebook clearly dominates the social network space and is making inroads in to the advertising space.

Apple a few years ago buddied up with who they thought was the coolest kid around, Google. Apple these days is dumping Google in favor for Facebook and Twitter offering OS level integration of the two platforms.

I think to some extent these partnerships are keeping Apple a pure hardware and OS play. If they bet on the wrong partnership in the future this could be disaterous for them long term. If they bought a network like Path, which is tiny in comparison to Facebook, could they push it to greatness or would they mess it up and lose market share? Would any of their acquisitions actually cause them to lose partnerships?

I think getting into bed with Facebook and booting out Google is a short cited move in some ways. As a user, I would love the ability to have both Facebook and Google features by default on my iPhone. I don’t want to be tied to one network if possible, and it would be nice if the social integrations were selectable by the user and not just some corporate lawyers.  In my opinion Apple can gain more consumer market share by allowing more than one network to integrate at the OS level.

Otherwise, Apple will continually go through a cycle of being the coolest kid with the best hardware, but it will also be known as the kid who dumps his real friends whenever something new comes by.