Intelligent Packaging is About to Avalanche
This article first appeared in MediaPost on October 27, 2017.
The moment we realize the size of the gap between our current abilities and our future dreams can be both devastating and motivating.
Until now, the main role of packaging has been to protect and preserve the product, secondarily to convey product and marketing information to the shopper. Packaging professionals use terms like these below to describe capabilities beyond those core functional expectations:
Active packaging enhances the product with a physical functional benefit. This could be an additive to the primary packaging material that has a direct effect on the product inside, such as antimicrobial plastics or other material improvements that help extend shelf-life. We also think of secondary material layers, among many other innovations.
Intelligent (or “smart”) packaging goes further, putting to use electronic and digital capabilities like printed electronics, near field communication (NFCs) or radio-frequency identification (RFID) chips. Ultimately, the chip engages the shopper through his or her smartphone. Through this connectivity, the intelligent package may provide a micro-service such as authenticating the product, showing the product’s transportation path and specifying the provenance of the product ingredients. Using the same electronic and digital capabilities, people can launch a variety of rich brand experiences depending only upon the creativity of the marketer.
In pizza terms:
Active packaging keeps the pizza warmer longer, either because of a superior cardboard innovation or an added layer of foil.
Intelligent packaging can be tracked on its way to your house for the big match, because it is connected to the Internet, and so are you.
With the launch of the iPhone 8 and iPhone X, I believe we’ll soon see an explosion in NFC tags.
To date, only Android users have full access to their smartphones’ NFC capabilities. Apple’s reticence to open up these capabilities has effectively prevented mainstream culture from adopting NFC technology and marketers have yet to realize the business benefits of incorporating NFCs into physical product experiences like packaging. (Yes, exceptions exist, but mostly among luxury brands.)
However, the new iPhones’ NFC capabilities extend beyond Apple Pay into web connectivity. When iPhone users enter the NFC community, this will cause a surge in adoption and the sudden rise of intelligent packaging.
However, orchestrating the delivery of new tech to provide connected experiences that turn consideration into purchase and trial into loyalty, requires more than changing a packaging material or printing electronics on paperboard.
What’s devastating is the moment when brand marketers and packaging teams realize that despite their desire to take advantage of new technologies to delight their consumers, they have few digital capabilities in place to make their dreams achievable. While marketers don’t see this sucker punch coming, I do, and it will be painful. Here’s why:
Earlier this year, McKinsey found that consumer packaged goods companies’ operations were only 31% digitized. The CMO Council recently found that 77% of marketers believe it takes their teams 90 days to make changes to packaging and other physical touchpoints, but they wish they could execute the same in 30 days. This is likely a severe underestimation of the digitization chasm, because in late 2015, InfoTrends found that it takes on average 195 days to refresh a product. When marketers discover that they are twice as slow as they thought they were, and more than six times slower than they would like to be, this blow will hurt.
However, I believe this will be just the motivation needed to achieve two large improvements that will rocket-launch intelligent packaging. First, marketers will be ready to increase the speed at which packaging changes can be made to more closely align with the speed at which digital marketing changes are made now. Packaging management software has been proven to reduce time to market by digitizing and automating the workflow and tasks. Second, marketers will become focused on the quality of their packaging, refusing to add the cost of NFC or RFID chips to packs that haven’t been thoroughly approved for content, measured for color accuracy, or otherwise free of printing defects.
The expectations for high-quality, rapidly-developed packaging are growing, and I look forward to innovations that will allow brands to take advantage of advances in consumer electronics and connectivity to delight consumers around the world.