Costco Skips QR, Goes With Less Robust (But Classier) Digital Watermark

Costco (NASDAQ:COST) has begun putting QR-like links into the magazine the chain sends to its members — but is using a proprietary technology rather than the 2-D barcodes, writes Bill Siwicki in Internet Retailer. Instead of the miniature QR checkerboards, Costco is using a digital watermark from vendor Digimarc (NASDAQ:DMRC) that's less obtrusive.

Aside from requiring a different mobile app than QR codes, the basic idea is the same: The customer points the phone's camera at the digital watermark, then the app detects it and takes the customer to appropriate content. But because the proprietary watermark is much more subtle than a QR code — it appears as an extremely light spattering of yellow or gray ink when magnified — it looks decidedly classier.

The clear downside: That classy, subtle watermark just isn't obvious. It can be printed behind text or even overlaid on images, but unless the customer is knows to look for it and how to activate it, it's useless. (And if you add a stylish caption telling customers there's a watermark on, say, a picture, customers are likely to point the phone's camera at the caption, not the image with the watermark.)

The watermark also requires good color printing (making it inappropriate for checkout receipts) and isn't as robust as the QR checkerboard — poor light or too much distance or a mediocre camera can all make it useless. And a code on a billboard? Forget it.

In short, customers will have to be trained in how to use these nearly invisible digital watermarks. Fortunately (or unfortunately, for anyone trying to use QR codes in signage or ads), so few customers currently are comfortable with QR codes that it may just require some education — not re-education.

For more:

- See this Internet Retailer story
- See this digital watermark sample

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