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Coca-Cola SMS-enabled vending machine changing future of mobile payments

NEW YORK - A Coca-Cola exec at the 2011 Mobile Marketing Forum discussed the company's SMS-enabled vending machines that let consumers pay for beverages using their mobile devices.

Doug Busk, mobile brand strategy and global connections at The Coca-Cola Co., was one of the participants in the ?What?s on the Horizon with Mobile Payments: How All the Pieces Come Together? session. He pointed to a vending machine that uses mobile SMS to enable payment and provided special offers via product code exchange as examples of how SMS can drive purchases.

?What we?re seeing in a couple of use cases is that this increases purchasing frequency,? Mr. Busk said. ?Because the consumer doesn?t have to carry around coinage to purchase, it is easier and faster.

?We think that it will not cannibalize currency sales in the same machine," he said. ?Any time you take friction out of the system, you increase frequency.?

Cashless is priceless
Atlanta-based Coca-Cola has hundreds of these vending machines in place in Norway, Sweden, Finland and Great Britain through a partnership between a Coca-Cola bottler and Ericsson.

Consumers can use SMS or cash to pay via the machines.

There is no need for registration or to download an app.

When consumers use SMS to pay, the cost of the purchase ends up on their mobile phone bill.

?We are going to consider this for other countries as well,? Mr. Busk said.

The challenge is that the machines do not make economic sense unless they do not accept any cash ? which requires regular machine maintenance ? and only accept credit, contactless and SMS payment methods.

?We have 1.7 billion servings a day and a massive number are cash transactions, with vending a big area,? Mr. Busk said. ?The challenge we face is that you don?t really get to a great economic advantage until you can safely pull all of the cash out that.?

The other speakers during the session were Jay Emmet, general manager of OpenMarket, Chris Wuhrer, vice president of global innovations at First Data and Doug Youker, senior director of mobile commerce for America as Sybase 365. The session was moderated by Mickey Alam Khan, editor-in-chief of Mobile Marketer and Mobile Commerce Daily.

Mr. Busk also presented during another session titled ?Driving Mobile Capability Globally.?

The executive pointed to some of Coca-Cola?s recent efforts in the mobile space, such as the use of PINutes, which let mobile users exchange a product code found on a bottle cap or elsewhere via text messaging for free mobile minutes or data.

Some consumers hoard products with these codes in order to get the free minutes.

?This is exceedingly popular in multiple markets,? Mr. Busk said. ?We?ve used it in many ways.?

The exec also pointed to how important SMS continues to be in mobile marketing, with 4 trillion SMS messages sent globally in the past year and the volume continuing to grow.

?There is no more unifying format than SMS. If you want to reach consumers globally, SMS is the best way to do it,? Mr. Busk said.

While apps present a tremendous opportunity, building an app with staying power can be a challenge.

?This has really caused a lot of brand marketers to stumble,? Mr. Busk said. ?Great apps are created with they are holistically integrated into an overall campaign.?

Coca-Cola held a brand application challenge to address this issue.

The challenge received over 100 submissions. One of the apps to come out of the challenge is the Coca-Cola Share Happiness app, which enables users to share music that they are listening to via Facebook.

The company also recently launched its first BlackBerry app.

?Not every market has a critical mass of smart devices to make apps a broad offering for your consumers,? Mr. Busk said. ?Some countries will hit significant penetration levels in the next year and that?s a good time to think about apps and whether it?s a good time to start offering.?

Mobile Web is also important an important strategy for marketers as it moves from being a weigh station to destination for consumers. This is being driven by the growth in smart devices, faster networks and lower data costs.

He pointed to data showing that the percentage of total Internet traffic coming from mobile grew from 1.82 percent to 4 percent in a year.

?We are seeing more and more Web usage through these devices,? Mr. Busk said. ?The Web is coming to your business not the other way around.? 

Final Take
Doug Busk, mobile brand strategy and global connections, The Coca-Cola Co.