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While many ISOs have talked the full-motion video talk, there hasn't been much walking. That's beginning to change, with steps taken by two large ISOs. Both Cash Resources and International Merchant Services are installing screens devoted to full-motion video advertising.

January 7, 2002

Finding full-motion video content on an ATM hasn't been a big challenge – provided one didn't mind attending an industry trade show, where it's been presented as a viable option for at least three years.

In the real world, however, it's been a different story.

The earliest deployer of full-motion video – Plano, Texas-based EDS – was also the most successful, earning $650,000 in advertising revenue during an 18-month period in 1997-99, according to Don Jarecki, the company's former manager of retail ATMs. The program, which ran on 950 ATMs in San Diego, Los Angeles, Dallas, Chicago and New York, was halted when American Express purchased the EDS portfolio in 1999.

More recently, only a handful of financial institutions – including San Francisco-based Wells Fargo, Boston based-Fleet Bank and Pittsburgh-based PNC Bank – have dabbled in the medium.

While many ISOs have talked the full-motion video talk, there hasn't been much walking.

That's changing with steps taken by two large independents, Englewood, Colo.-based Cash Resources and Euless, Texas-based International Merchant Services, both now installing screens devoted to full-motion video in retail locations.

Cash Resources

Like everyone else in the ATM industry, Cash Resources president and CEO Sam Jonas is all too familiar with the chicken-or-the-egg analogy: "You can't get the locations without the (advertising) income to pay for them," he said, "and you can't get the advertisers without the locations."

But while advertisers aren't interested in talking to ATM companies that can't offer desirable locations, Jonas said the funding issue offers some flexibility. "You can break the first part of the rule if you're willing to go hip pocket national," he said, referring to his decision to invest in equipment and install screens with no prior commitments -- or checks -- from advertisers.

In December of 1999 Jonas incorporated ConvenienTV, a digital media division of Cash Resources devoted to selling advertising space on 15-inch color screens that are suspended above the checkout lanes in retail locations. His partners in the venture are Frederick Kidder and Daniel Karns.

He hired ad industry veteran David Dornseif as ConvenienTV's director of sales and marketing and established an in-house production facility to create full-motion video content.

In June of 2000, ConvenienTV began installing screens at convenience stores in the Denver area, with a PC driver at each site to control content. The cost: approximately $5,000 per site.

More, more, more

One of three Triton distributors participating in the manufacturer's ambitious full-motion video topper pilot, Jonas said he is also committed to promoting ATM advertising. The ATM model is especially effective in space-strapped locations like restaurants, he said.

However, he believes strongly in the concept of multiple screens at a single location. "More screens mean more revenue," he said.

And checkout lanes are an obvious place to capture the eyeballs of consumers waiting in line to make purchases, he added. Retailers have long recognized this, loading areas near the cash register with magazines, gum, lip balm and other ephemera.

While most ATM advertisers pay a CPM, or cost-per-thousand, rate based on either transaction volumes or on a transaction volume/foot traffic combination, Jonas said advertisers are more inclined to accept a rate based on foot traffic alone with screens positioned where consumers can't miss them.

"Not everybody walks past the ATM, but everybody walks past the checkout," he explained.

Ultimately, Jonas said, "I believe there will be screens both at the point-of-sale and at the ATM -- and they'll both be a slave to the PC."

Jonas expanded his number of installed sites this spring – particularly in the desirable Chicago DMA -- with the purchase of the Kahuna Media Network from Community Merchant Services Inc. of Bloomington, Ill. The combined company brings the number of sites to nearly 400 with daily foot traffic of more than 300,000.

By the end of this year, Jonas hopes to grow the network to 1,000 sites, primarily in the Denver, Chicago and Phoenix DMAs. His initial focus is on local and regional ad campaigns. "That's absolutely the first step," he said. "None of us have enough coverage to get a national buy."

Like the retail ATM business itself, Jonas predicts the most successful purveyors of digital media content will have a "super regional" presence, with a strong concentration of locations in a selected geographic area rather than a number of sites scattered across the U.S.

"When a guy tells me he has 500 ATMs in all 50 states, I say 'you poor schmuck,'" he said. "The similarities between this business and the ATM business are striking. Economies of scale, geographic concentration and scalability – all are keys to success."

DSL dilemma

The biggest snafu he's encountered by far, Jonas said, is telecommunications. Early efforts to utilize DSL were thwarted when his primary DSL provider filed for Chapter 11 bankruptcy protection.

ConvenienTV hasn't been the only business impacted by the fallout in the telecommunications industry. An article in the June 18 edition of Newsweek chronicles a devastating downturn in the market: "In the race for most catastrophic meltdown of the new century, the telecom industry may have just overtaken the dot-coms," according to author Brad Stone.

Since the beginning of the year, according to Newsweek, at least six public companies have filed for bankruptcy, including such big players as PSINet. Losses to stock and bondholders are expected to approach $150 billion.

For Jonas, who prefers to have as much direct control as possible over the end product, the unreliability of the telecommunications has been especially difficult. "It's a management nightmare," he said. "People will tell you broadband services are here, but don't believe it – they're not," he said.

He has done some experimenting with satellite technology and is researching various wireless options. For the time being, however, he runs weather reports, news headlines and other "infotainment" content pulled from the Web down to the screens via standard phone lines.

For full-motion video content, he relies on "sneakernet" performed by Cash Resources technicians during routine ATM service runs. While FMV content is updated monthly, "it looks as if it's done every day," he said.

Noting that a merchant cash replenishment model has become the standard in many retail ATM programs, Jonas said he has considered allowing merchants to load the video content. It will remain in the hands of the service techs for now, however, because it's simpler to keep tabs on ad campaigns that way.

While coping with telecommunications shortcomings has been discouraging, Jonas remains convinced that his business model will be successful because it provides one of the best ways to reach time-strapped consumers who are constantly on the move.

"When people are out of the house at 7 a.m. and work all day until they get home at 7 p.m., your best chance to reach them may be when they stop at the convenience store for coffee or gas," he said. "I don't think we've spoken with anybody who hasn't seen right away where this is going. It's like the microwave or the cell phone – common sense tells you it's coming."

International Merchant Services

"Touch Me," proclaimed the bright yellow stickers and buttons one saw practically everywhere at February's ATM Industry Association trade show in Clearwater, Fla. Attendees heeded the message and streamed by the International Merchant Services booth to see – and yes, touch – the ISO's QuikNet 24 full-motion video topper.

When a consumer touches the 15-inch color screen, an action results – a receipt-based coupon is delivered or a box pops up on the screen so that the consumer can submit an email address to receive more information.

Ultimately, that's why the QuikNet 24 topper will be successful, predicted Michael Penman, CEO of the Method Factory, the Sarasota, Fla-based software developer that created a customized version of its Dynamic Media Server application for IMS.

"Consumers don't just want to be fed information; they want something to happen," Penman said.

"We always want the consumer to walk away with something tangible," agreed Stephen Johnson, IMS' director of business development.

Right here, right now

Taking interactivity a step further, the topper also offers the option of completing an e-commerce transaction on the spot. The software interfaces with the ATM reader so that a consumer can swipe a credit card and make a purchase – with all of the card information encrypted for security, Penman said.

The most likely products for these kinds of purchases, Penman said, are those that will capitalize on the tried-and-true buying patterns of consumers in a retail environment. If a customer often buys a magazine at his local convenience store, for instance, perhaps he would buy a subscription if offered the option at the ATM.

While the consumer may have to be prompted to touch the screen with ads that specifically instruct "touch here" or "click here," Johnson said many people have a natural inclination to do so, because of the ever-increasing usage of the screens at kiosks in public places like museums, department stores and airports.

The data divide

In addition to the topper's interactivity, Johnson said one of the strongest selling points for advertisers is its real-time access to a detailed set of demographic data that can help them determine which ads are most effective.

He believes the lack of demographic data has been one of the biggest weaknesses of ATM advertising to date. The industry has never offered advertisers benchmarks such as television's Nielsen ratings or radio's Arbitron ratings.

"We can show how many people saw their ad, how many people clicked on their ad, how many people clicked on other ads. We can track position points on the screen, so in the future we'll be able to say the real estate on the bottom right is more valuable than the screen on the bottom left," Johnson said. "It all comes back to the advertiser's dream of having a back-up plan and being able to switch a campaign mid-stream if something goes sour."

Noting that the ATM industry is currently wrestling with the issue of ADA compliance, Johnson said another feature that will become important to both advertisers and site owners in the coming months is the unit's touchpad. Installed just below an ATM's keypad, it gives wheelchair users access to all of the topper's features.

Testing, testing

IMS is testing 25 of the toppers in the Dallas/Fort Worth area. Johnson said that several paying advertisers have signed on for the pilot, including such heavy hitters as the Weather Channel, half.com and AT&T.

Like ConvenienTV, IMS has experienced DSL-related communications problems. The company is making plans to move at least some of its units to either satellite or to wireless communications such as Mobitex.

The company's eventual goal is to roll out the QuikNet 24 program at all 2,700 locations it has under contract, including 450 where it owns the machines, and to sign up other distributors to place the toppers.

The topper is currently configured for the Triton 9600, which makes up the bulk of the IMS network. However, it can be modified for use with most other ATM makes and models. "It's not limited to the Triton unit," Johnson said.

Profit sharing

IMS will own all of the toppers; distributors will pay a one-time site license fee. Johnson said this offers two benefits to the distributor: an instant tax write-off and access to newer technology as it becomes available. "We plan to constantly update the equipment to keep up with technology and the consumer's demand for it," he said.

The formula for revenue sharing is still being developed, Johnson said, but will likely include up to five people: the location owner, ATM owner, distributor, ISO and site license owner. Some cases will obviously involve fewer than five parties. The location owner and ATM owner could be the same person or company, for instance.

Another issue that IMS hopes to resolve during the pilot is what kind of a rate the topper will command with advertisers. Noting that advertisers are notoriously hungry for demographic data, Johnson said he expects they may be willing to pay a CPM rate of $50.

"They're getting a $15-30 CPM for online advertising, and it doesn't offer the kind of tracking capabilities we do," he said.

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