Mister Beacon Episode #58
RFID In PackagingNovember 08, 2017
A masterclass / case study from Markus Wulff of the Absolut Company on how his team integrated the digital world with the physical (bottles of Malibu) using RFID to engage their customers. Recorded after his awesome presentation at the @Active Intelligent Packaging Industry Association conference in Amsterdam.
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Steve Statler 00:07
Marcus, thanks so much for talking to us. We're at the Active Intelligent Packaging Industry Association is such a long title after was read it. And you've just come off stage after giving a Tour de Force the best presentation, as far as I'm concerned, and you were basically talking about a pilot that you did for Absolut, as in vodka, but you're part of a much bigger company, right?
Markus Wulff 00:35
So after Absolut Vodka is one of the brands in the portfolio. So we have kind of record as a portfolio company with about 200 brands. And it's the second largest distributor and producer of all products in the world.
Steve Statler 00:53
All right, well, thank you for your work. I've enjoyed it personally. And what do you do for them?
Markus Wulff 01:00
So my title is a little bit self defined. So I My name is Markus Wulff, and I work with digital business innovation. And what that is, is probably everything outside regular marketing and outside regular product development. So traditionally, innovation within our business has been new flavors. new packaging could be as more of how it looks, not the functionality. So my focus is how can we deliver consumer value with adding technology. And that can be either in homes in off trade, or entrees offer is retail on trade is more than restaurants. And home is connected to home trade.
Steve Statler 01:55
All right. And tell us just at a high level what what was it? What was the use case? What was the pilot that you were talking about earlier?
Markus Wulff 02:04
So from the beginning, we have bottles being shipped every year to retailers. And it's quite a lot of bottles every year. For absolute it's 110 million bottles every year. And for other brands in the portfolio, for example, Malibu is around 40 50 million. Now, it's just two of the brands within the parent car portfolio. So let's say with us, you have 150 million bottles that being put on the shelf or in Boston restaurants. So we thought of how could this be something that actually is a static piece of glass with alcohol, even though it's a great product? Can we use the packaging to be something that could consumers could interact with? Yeah. Because we think about retail, there is a lot of balls on the shelves. But most FMCG brands don't know what's happening.
Steve Statler 03:09
Fast moving consumer goods except fast money. So you're disconnected, you kind of hand it off to the retail and then who knows what happens. So you're trying to kind of directly connect with folks. And what was the technology that you used.
Markus Wulff 03:22
So we used NFC, near field communication, small chips that you can put on almost any surface, not metal, because it disturbs the antenna. But that is a static, you don't need any battery. And as we act when you have some sort of reader, for example, the iPhone can read. So I put my my phone like this, it has an antenna and the radio frequency can only read a specific number or URL or or an ID of the chip.
Steve Statler 04:02
Okay, so that's what's up. So you essentially have a sticker, which has got a chip in it and an antenna. And there's a field generated by the phone that powers this thing up. And it sends you either a URL or a number that an app might understand. Exactly. And so what was the app in this case?
Markus Wulff 04:24
There was no app. We did evaluation of different technologies. We actually, like a demo room. How can you use iBeacons in retail? How can use NFC QR code augmented reality? Eddystone which is the next generation of beacons. I love how can this be relevant for us where consumers and the retailers and when you look at it, it's you know, they all have advantages and disadvantages. The hardest thing is to scale these technologies with cuz even though it cost him like $5, with a beaker, including store, when you scale this, it becomes quite a big number. And if you think about 100 50 million bottles, so cost was one of the factors. And the other one was the the thresholds for interacting. And we wanted to have such a frictionless interaction as possible. So we choose NFC, because you actually don't need an app on Android phones. You just tap your phone to the bottle and your axon that.
Steve Statler 05:40
How did you let people know where on the bottles tap? Because that's one of the challenges, isn't it?
Markus Wulff 05:45
It is a big challenge, I would say. Since it's still like no industry standard. Luckily, the malleable brand has its logo is a sunset, that is circular. Alright. And the NFC chip was the exact same cell, right? So we put it behind the song.
Steve Statler 06:10
So NFC chips of flats, and bottles of Malibu, a fairly curved, how do you stop the chip being broken? In a fulcrum?
Markus Wulff 06:22
So this is a challenge, I would say, because there are a lot of suppliers that have NFC tags and sell them. But if you look at the production we're having it's tested is quality assured, we know exactly what's happening there. If what happens is if you put something on a bottle that hasn't been there before, it works. Maybe it works correct, but maybe it doesn't either, because they have a process of bottling and need to put on the labels, the cap might go into heat toner with the shrink sleeves are many steps in the operations process that might might destroy might do something with a chip. And this is something that you only can test you have to do within the your own facility and test it.
Steve Statler 07:19
So you've managed to crack it somehow. Did you put padding in or did you just not squeezed too hard.
Markus Wulff 07:25
So we the manual ball has a shrink sleeve, which is plastic that goes into the tunnel, and then it has the form of the bottle. The actual NFC chip is put on the role of the shrink sleeves, you had like a big row a put the the NFC on the backside of the print just where we want it and then the row goes on on the bottle. And as it shrinks that thing is if we put the chips, so on the belt, all balls will be I mean, we can have a production speed of $15,000 an hour, and these will go hit each other on the belt and needs to do that. And that is quite short of how the the quality of the glasses. But if you put something that is fragile on it, it becomes something else. So we realized that they can actually not be put in a position where it connects to another bottle. Okay. And by having the current bottle, we could move it a little bit down. And so it's in a safe place now. So it didn't need any, like, caching or anything.
Steve Statler 08:48
And that's I'm just trying to think I have drunk quite a bit of Malibu in my time, but I can't remember is the bottle like that, or it has a little bit of a curve on?
Markus Wulff 08:56
It has, maybe because a few years ago, we did a redesign. Okay, it's being more curved now. Okay, and the curve is on the bottom or the bottom half of the bottom. Alright, so yeah.
Steve Statler 09:09
So we've been talking about how you apply it, how how just some of the issues with production. We haven't even talked about how you program it. So let's do that. And then we'll quickly describe what actually happened. So how do you program these tags? Are they did they have unique IDs or?
Markus Wulff 09:25
So that is the part of the pilot, how do we actually handle the tags and in this case, we had a predefined unique URL, okay. Which the URL itself was the same, but there was an idea as well. That was unique, so.
Steve Statler 09:46
So it was like you were serializing the bottles with XR. Exactly. Which is something that the industry wants to do. Anyway.
Markus Wulff 09:53
Yeah. But that's the thing. When ordering the tags, you can pretty much choose how you want one m to be handled. And that is quite quite a nice feature with the NFC tags that you can have a unique identities.
Steve Statler 10:09
We should cover off what the consumer got out of that because I know you emphasize that a lot, because if they don't get anything out about it, you can have the tags, they can work, but no one's going to tap.
Markus Wulff 10:18
No, but I think there right now there are a lot of suppliers, a lot of new technology. We have, I would say also from a brand perspective that Okay, can we use this technology to get more data from the consumers? That the biggest challenge is how do you actually get consumers to interact with the bottle. And by I would say, giving them much more than the value they give away in personal data is the only way to get consumers to interact with your products. Because if you say, watch our latest commercial, I mean, you're still being it's like moving from from your own website, but you do it on mobile. So it needs to be something that is contextual. Now we know where the tap the bottle, we know is the first, second or third time we can see if there are like local activations activities going on, for example, like festivals that we can tap into. So it's somewhere much a little bit different thinking to create services and partnerships, that benefits the consumers.
Steve Statler 11:27
So the thing of value was, what contests?
Markus Wulff 11:31
I would say the contest was a trigger to interact with the bottom. So we had the two parts. One was the contest, which was you could win a trip to sunny island, or you could win the two speakers. The other part was we use contextual data, so dependent on where the person interacted with the bottle, and what the weather was like we could suggest bars nearby. So it was more than 25 degrees, because just rooftop bars. It was we had curated other bars nearby.
Steve Statler 12:08
And was it like an instant reward? Or did they have to wait for the results?
Markus Wulff 12:12
We had two trucks as well, the big price was not instant. And I think we had three months. Notice till till the consumers notice they had one. And the other part was like every day there was a price. And I think there was a big learning as well that we could see a lot more engagement with the daily prices. Because there's probably a behavior as well from from I mean, the younger audience that you want to interact, and you want to see the results directly. So we could see that, even though he participated in the competition for the big price, it was a much higher engagement with a daily process. It's a learning that's how it is.
Steve Statler 13:05
There's so much involved to getting this right, you had some good results. And I know you can't give away the exact statistics, but can you give us kind of a ballpark sense of what kind of conversion rate you got?
Markus Wulff 13:17
So I mean, just to give the perspective, the the connected packaging is quite new area. So it's I wouldn't say there and the like benchmarks. There are a few other examples that have been scaled off in regular digital channels is around 0.02% Click on a banner. With this one we had around 4%, 4% conversion.
Steve Statler 13:52
Which is amazingly good.
Markus Wulff 13:55
I think. I mean, if we look at new behavior, and that we tried out something as a pilot, I think it is. I mean, we were happy with the results. And I think if you look at the future, the contactless and tapping behavior will be something that is, you know, standard behavior. But of course there will be other competitors other bands doing the same thing.
Steve Statler 14:24
Of course. Yes, absolutely. They're all different tools in the kitbag. But just what about that tapping behavior by country? Because you mentioned something in the q&a about that, which I thought was really interesting.
Markus Wulff 14:36
Yeah, it is. If you look at different markets, it's even though we can see, for example, Europe has a very high usage of mobile apps, mobile phones, using services, the contactless that you actually can use your phone or credit cards or any car was to do things wirelessly is not a behavior that exists in all countries.
Steve Statler 15:05
It certainly doesn't exist in the United States, people just have an X even less than over here. But in the UK, it does. Why is it in the UK?
Markus Wulff 15:14
I think there are two reasons. It's, first of all the oyster cars where you can when you go to work every morning, yes, put your car like this and it open up so you can take the underground to work. But then the Visa and MasterCard have done a great job with contactless credit cards. So if you have the sign of contactless, I would say almost any merchandise.
Steve Statler 15:49
It will get it. Yeah, they have that actually muscle memory in some in some countries, so.
Markus Wulff 15:57
And the third one is Apple pay Apple launching in US, UK. Now it's been there for capital, it's actually three years now. So I think that's also a behavior that exists that you use your phone to actually do transactions.
Steve Statler 16:15
And so you're running. So you started off with Tesco in the UK, and you're running it here in Amsterdam? Yes, we are.
Markus Wulff 16:21
We're running it in our stance. Well, we did the first pilot with 45,000 bottles in the UK. Now we have a roadmap for several pilots, both in Europe and US. And it's all about activating locally, because even though we have the NFC tags on the bottles, it can be hyperlocal the messaging camera hyperlocal. So let's say we want to do something in Amsterdam, there, the convocation can be about this event, if you tap it in the radius of 500 meters here. So it's, I mean, it's a it's a global initiative, but it's activated locally. And I think that's the important thing that it can be very relevant dependent on the location and timings and what's happening around you.
Steve Statler 17:11
So you know, what's, what's next, you've got good engagement, but there's a cost issues in this, how much does FC tag cost?
Markus Wulff 17:22
Depends on. The thing is that the actual tie you send isn't that expensive, but don't have many suppliers that can handle labeling, converting. And do everything that has to do with the packaging industry.
Steve Statler 17:37
And explain the jargon converting, what does that mean?
Markus Wulff 17:41
The labeling is if you have a bottle and you have a label on it, you might want to put the chip on the label. Yes. And that's something that I mean, not all suppliers support today because, I mean, it's a new offering for them. So for the first part, we ordered the NFC chips ourselves and spoke to our suppliers can you apply this to the shrink sleeve, and it's I would say it will count quite soon, but it's still hard to get like a full service from this device, that's okay, you can put the NFC chip on the label. And if for example, you want to do something we believe that the shrink sleeve and everything to take responsibility that the technology will work in the production and by doing that, it is no service that is offered by suppliers. Today it's if something doesn't work, it can be either to ship it can be because the there is two materials that connects there can be heat that is in the production that can be balls shaking or hidden shatter. So a lot of moments that can go wrong and I think it's a maturity as a track for suppliers to actually offer labeling converting with tags on them. So it's actually you buy one thing from from scratch.
Steve Statler 19:24
You mentioned, you know things can go wrong. Do you have a sense of what kind of yield you got out of that process? Was it like 100% of the bottles operating or did you?
Markus Wulff 19:35
I mean from during the testing with the pilot we have quite good results. Then we had to the different results in another facility. And then we did with other boilers, we can see that they hit each other and it broke the chip on NFC. So there are a lot of All things I can work in in one test that on different bottles with maybe different location, but you think it's the same process, it can be totally different. So it's still like a learning phase for us as well.
Steve Statler 20:12
And so what next two years, they're just more learning? Or do you have something that you can share about where you want to go with this?
Markus Wulff 20:18
Now we will be deploying in Amsterdam, we have several other European countries that will go on next early 2018 that we're looking into, from a more holistic view, how do we scale this to all bottles and see it as a part of our business model and the value we create for consumers? So what value do actually I think there are two tracks? One is the technology track? How do we get this into the balls? Without any, there is not a pilot? In fact, it's more of a always on? And then the other one is? How do we add value for the consumers? And that is more of how can I be relevant? Should we create tighter partnerships with local services? Can there be something that you use to unlock value in airports or whatever it is? So depending on where you're so I think that's two tracks that we, at the moment going parallel.
Steve Statler 21:26
So last question, because I'm going on stage in just a few minutes, but I do want to just hear from you. Can you say anything about the analytics that you got the data?
Markus Wulff 21:38
So that's quite interesting, we got quite a lot of data from the interaction with the model. And we do gather a lot of data before the pilots as well in our digital channels. And we have also do a lot of consumer quality evaluation to see okay, well, what is our target group? What do they think about the future of packaging etc? I think with this one, we could go a little bit deeper with seeing impressed the consumer conservatory group has, you know, what music they listen to? What movie categories.
Steve Statler 22:26
So you are asking them questions as part of the contest?
Markus Wulff 22:30
Actually no. So this is I would say this is not identified data from on a personal level, very basic data that is collected in a group from the people who participated in the competitions. So you use Facebook Connect to actually log into the competition. And then we can see different categories what they are interested in. So we can see, okay, this person interested in this, but we could see from a group level, fascinating.
Steve Statler 23:05
Well, Marcus, congratulations. That's just a huge amount of work. And you did it, thank you. Thank you for being being in the podcast.
Markus Wulff 23:13
My pleasure. Thank you.
Steve Statler 23:14
Markus Wulff 23:14
Good luck on stage.
Steve Statler 23:20
We have a warm up question that we ask all our guests. Yeah. Which is what three songs you would take on a long trip to like Mars or something?
Markus Wulff 23:31
I would take Debbie Bowie's is the space song.
Steve Statler 23:36
Markus Wulff 23:36
Yes. Definitely. Yeah, that's perfect. And I will take Abba, it's a Swedish. It's Swedish. Dancing Queen. And yeah, there is. Like to Swedish guys who sings and plays guitar. It's called AutoZone. And Falk also is to last names, okay. And they have a song that I've always been listening on. And now I have it on repeat when I go in the car. So maybe listen to 10 times in a room.
Steve Statler 24:15
And what's the song called?
Markus Wulff 24:17
It's called Blinking Blue. It's about it's actually about the transformation in like humans and technology. But that's, that's not why I like it. It's a really good song.
Steve Statler 24:31
That's fantastic. And so you're from Sweden.
Markus Wulff 24:34
I am from Sweden. Yeah.
Steve Statler 24:35
And do you work out of Sweden?
Markus Wulff 24:37
I work out of Stockholm. I work for the Absolut company that has absolutely the portfolio. After it has been a Swedish product for a long time. Then it was acquired by printer called it's still produces in Sweden on this. The headquarters still in Sweden, but we work globally. So it's the headquarters of absolutes. We do strategies, innovation, and Marketing frameworks for all markets.
Steve Statler 25:04