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An ISO by any name?

Earlier this year Bank of America spent $70 million on a promotional campaign featuring print and television ads created by Bozell, New York, the same ad agency that made dairy hip with its 'Got Milk?' ads.

October 14, 2002

Earlier this year Bank of America spent $70 million on a promotional campaign featuring print and television ads created by Bozell, the same New York ad agency that made dairy hip with its "Got Milk?" ads. (See related story Here, There, Everywhere an ATM)

BofA used several print and television ads to milk the convenience of its ATM network, America's largest at some 13,000 machines. While few financial institutions spend that kind of money selling their ATMs, many invest in custom enclosures, elaborate signage and eye-catching screens to promote their brand at the machine.

"Brand is a very important part of a bank's competitive arsenal," said Jerry Silva, senior analyst for retail banking for the Tower Group, a Needham, Mass.-based consulting firm. "Once a brand has been built, it is important to maintain that brand at every point of presence. Branding at the ATM goes back to the time when just having an ATM was considered a competitive advantage."

In contrast, few retailers are interested in that kind of branding, or have the money to pay for it. "With a few exceptions like 7-Eleven, retailers see the ATM as a utility and don't use it as a competitive advantage," Silva said. "It's no longer a differentiating factor, as most large convenience stores and gas stations already have an ATM."

Do I know you?

In most cases, the deployer is a nonentity to the consumer. A deployer's name is generally buried in small print somewhere on the ATM's fascia, provided only as a service for consumers wanting to report a problem with their transaction or the machine itself.

It makes little sense for most ISOs to promote their brand at the consumer level because consumers have no particular reason to seek out their ATMs, said Tom Mortimer, vice president of marketing for Bloomington, Ill.-based Kahuna Business Group. All ISOs are selling the same thing: convenience.

"Without something of tangible value, something that will make the consumer drive an extra block to use a Kahuna ATM, there's really no point," he said. "If you were spitting out an occasional $50 along with the $20s, or even giving away t-shirts with so many transactions, then it might work."

E*Trade Access is one of the few ISOs in the U.S. that makes a widespread effort to leverage its brand at the ATM. Pictured here is a typical E*Trade topper.

Because of the ATM's utilitarian nature, agreed Bob Cannon, president of Houston-based ISO Momentum Cash Systems, "There is no value in the consumer's mind."

Cannon said that banks create value by waiving fees at their ATMs -- at least for their own cardholders. Those with large networks, such as BofA, even use surcharge-free access to cash as a recruitment tool.

"In the ISO market, there's no need for distinction because every customer is surcharged," Cannon said. "But for a customer holding a card issued by a particular bank, there's a value in not paying a fee."

The northern lights

Yet ISOs in some other countries seem more interested in putting their brand in front of consumers. Darren Garbutt, director of business development for Toronto-based Threshold Electronics, believes most Canadian ISOs put a greater emphasis on brand than their U.S. counterparts.

"The market here is small enough, and the players large enough, to get brand recognition," Garbutt said, noting that just a handful of large ISOs dominate the country's 3.8 million square miles.

"I'm sure it's easier to establish and maintain a brand if you're one of a handful of players rather than one of a few hundred," said Kahuna's Mortimer, referring to the highly fragmented U.S. retail ATM market.

Threshold aggressively promotes its Laser Cash brand, spending "north of $1,000 on each machine" for a custom surround in the company's signature royal blue, as well as signage and custom screens, also in blue. "We believe it gets us some mileage with consumers. People can and do form habits around it," Garbutt said.

A brand is only as good as the infrastructure supporting it, Garbutt added. "We think we've done especially well with customers who have had problems resolved quickly through our 24-hour help desk, for instance."

Because Canadian ISOs tend to saturate specific regions with their brands, Garbutt said consumers sometimes invoke the name of a dominant ISO when referring to an ATM. So, for example, they use a Laser Cash machine in Toronto versus a Direct Cash machine in Calgary.

While Garbutt's evidence of consumer acceptance is largely anecdotal, some ISOs have experienced more tangible results with their branding efforts.

Not just warm and fuzzy

Dale Dentlinger, director of E*Trade Access, said transactions jumped 12 percent to 15 percent at ATMs when the E*Trade brand replaced the CCS Express logo used by Card Capture Services, the Portland, Ore.-based ISO that sold its network to E*Trade in March of 2000. While E*Trade Financial customers generated some of the volume, Dentlinger said most of it came from foreign users.

It's more common for ISOs in some other countries, including Canada, to promote their brand to ATM users. Pictured here is a Laser Cash machine, featuring custom surround and welcome screen.

E*Trade Access is obviously not a typical ISO, falling into what Tony Hayes, an analyst for Boston-based Dove Consulting, calls a "gray area" between financial institution and ISO. Interviewed by ATMmarketplace last January when he first joined E*Trade, Dentlinger said, "In the ISO world, ATMs are placed totally for revenue and profit. Banks place ATMs for strategic reasons. We do both."

Dentlinger believes E*Trade Access has benefited from consumers' comfort level with bank brands as well as E*Trade's larger branding efforts -- including ads during Super Bowl telecasts and, in 2001, sponsorship of the halftime show.

"I think a consumer trusts anything that is affiliated with a bank a little bit more," he said. "E*Trade has invested millions in its brand, and it's going to get more of a response from consumers at the ATM."

It requires "a huge investment" to attain that kind of brand equity, Dentlinger said. "We'd never get a payback based on just our ATM program, and there'd probably never be a payback for a typical ISO."

Indeed, Dentlinger said he opted not to develop a strong EDS brand when he headed up that company's ATM division in the mid- to late 1990s. "We just didn't have enough money," he said.

Industry insiders

While few U.S. ISOs devote much effort to developing a brand association with consumers, they work hard to do so for two other audiences: potential retail clients and potential sales reps.

Momentum Cash's Cannon said his company probably spends "upwards of $100,000 a year" on brochures and other sales collateral for retailers. The materials are distributed by sales reps and via direct mail. It's a small part of his overall budget, Cannon said, because he believes word-of-mouth is a less costly yet more valuable marketing tool among merchants.

"We can offer some tangible value to the merchant base," Cannon said. "We sell them on our reliability, our integrity, the uptime of our machines and prompt settlement of funds."

Yet with both retailers and potential reps, a formidable market presence has more impact than a clever ad campaign, Cannon said.

"The consumers don't really care whose machine it is, but people in the business look and see whose machine it is. When they see a large number of our machines, it helps build credibility for us," he said.

Frank Lunn, Kahuna's president, said his company's logo, with a bright yellow surfboard and large blue wave forming the "K" in Kahuna, was designed with potential distributors, or "affiliates" as Kahuna calls them, in mind.

Its lack of a direct  -- and competing -- sales force is one of Kahuna's biggest advantages for distributors, Lunn said. So the surf logo seemed to fit. "Surfers as a representative group are very individualistic, but they identify with and belong to a larger community."

Momentum Cash Systems created a new brand, Toll-Free ATM, for its new program that offers surcharge-free cash withdrawals to customers of participating financial institutions.

Shortly after Kahuna -- then known as Community Merchant Services -- began putting its logo on items like t-shirts, Lunn said the buzz began to grow at trade shows and other industry events. "People didn't even necessarily know what it stood for, but they recognized it," he said. "We got into lots of discussions with people that way."

An artist friend created the original Kahuna logo, and Lunn remembers buying t-shirts and other items in bulk at discount department stores to promote the new design. "It was very, very cheap at first," he said.

While Kahuna provides a signage package for distributors who wish to use the logo on their ATMs, Mortimer said probably only about 25 percent of Kahuna's ATMs are branded with the wave.

New services, new brands

Most industry watchers agree that new brands will be established as new services are rolled out at the ATM. For instance, Euronet Worldwide has created a brand called PaySpot, and is encouraging all deployers offering its prepaid wireless recharge services to post the PaySpot logo on their ATMs.

Momentum Cash earlier this year introduced a brand called Toll-Free ATM for a new program in which cardholders from participating financial institutions receive surcharge-free cash withdrawals at Momentum ATMs.

About 500 machines, mostly in Texas, and 10 financial institutions are currently part of the program. Like similar programs that offer shared ATM access, the participating financial institutions pay a fee to Momentum to make up for any lost surcharge revenue.

For the Toll-Free program, Momentum created a new Web site, complete with ATM finder. It also provides signage that is "much better and more comprehensive than that standard 'ATM inside' sign in the window," Cannon said.

The signage package includes backlit ATM toppers, exterior pole signs, door and gas pump decals and other items -- all at a cost of a few hundred dollars per location, Cannon said. The goal is to make the logo easily recognizable to cardholders of Toll-Free ATM participants.

Public image is important to the financial institutions participating in the program, Cannon said. Because of that, it's important not to stint on quality when it comes to signage and other promotional materials.

"You have to improve the image beyond what has traditionally been found in the retail environment," he said.