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How hot '— or cold '— is ATM advertising?

Although several ATM advertising companies were forced to shut down in response to a chilly economy, others forecast a warmer outlook in the coming months.

January 7, 2002

Despite the recent downturn in fortunes suffered by several ATM advertising companies (ATM advertising hit by unfriendly economy), others remain confident that the business will rebound.

Antoinette Okon, vice president of sales and marketing for Miami-based New Concept Marketing,believes that the tight economy was the primary spoiler for several ATM advertising companies that have ceased operations, including brandATM, RBuzz USA, Ten Square, Satmark Media Group and her former employer, Interactive Touch Marketing (iatm).

"The market just killed everybody this year," Okon said.

Yet part of the problem, she said, is that ATM advertising was oversold in its early days. ATM deployers, potential advertisers and ATM advertising companies themselves had unrealistic expectations.

"We as an industry thought, 'Wow, we're going to make millions,'" she said. "We went out and oversold it. The advertisers were promised so many things that didn't get delivered."

Despite the fact that ATM advertising was a new and untested medium, Okon said, some in the industry felt it could command cost-per-thousand (CPM) rates of $100 or more. "Sometimes I pull up some of those business models from four years ago to use as a reference -- and I just laugh," she said.

"The expectation that you're just going to be able to turn on a flow of revenues isn't correct," agreed J.J. Manning, CEO of CashPoint, a Seattle-based ATM advertising firm. "We expect to start with a rate card that can be consumed by the advertising industry today."

However, Manning predicted, "I think there will be significant ATM advertising revenues in the next year or two, and clearly even more in three to four years."

On target

What advertisers want, Manning said, is a more targeted medium. And they're willing to pay for it, even in a chilly economy.

Manning noted that CashPoint has a cooperative marketing relationship with a company called Claritas, creator of the PRIZM system, which categorizes every U.S. neighborhood in terms of 62 distinct lifestyle types called clusters. Advocates of the PRIZM system believe it can be used to determine consumers' key likes and dislikes, and thus create targeted marketing campaigns.

"Most other ATM advertising products focus on advertising exclusively and use a very generic kind of delivery with no substantive targeting," Manning said. "It's tough to compete in a marketplace that is already flooded with general delivery mechanisms."

CashPoint works exclusively with financial institutions, most of whom are anxious to leverage their investments in their CRM (customer relationship management) systems by sending ATM users targeted ads for bank products such as mortgages and CDs, Manning said. ISOs are not part of CashPoint's business model, he added, because "our product counts on a high recognition factor."

CashPoint raised more than $10 million in two rounds of venture financing and pumped much of it into developing a content management and delivery infrastructure based around a central server. Dieboldand NCR, the two manufacturers which sell the majority of ATMs to banks, have both developed software interfaces to CashPoint's proprietary system.

"NCR firmly believes there is a strong business case for ATM deployers to communicate with their consumers via the ATM, whether the communication is intended to strengthen the deployers' brand image, market their own or sister companies goods and services or advertise third parties' goods or services," said Bob Tramantano, NCR's vice president of solutions marketing and realization.

He added, "Brand image can be strengthened, for example, by showing the deployers' ads while the ATM is in the idle mode. Many millions of dollars are spent on expensive video footage for use on television or in theaters. Using this footage on the ATM is a very inexpensive and cost effective way to strengthen the brand's image to their own customers and non-customers using the ATM."

Cart before the horse?

But not everyone in the ATM advertising business believes that more high-tech bells and whistles are the best way to advance the medium at this stage of the game.

"You know, another hardware or software application we don't need," said Mike Szimanski, president of Baltimore-based ATM Advertising Inc. "Everyone's dancing around looking for stuff to do...'Ooh, let's make the screen bigger,' 'Hey, how about a button there that does that'... selling stuff that doesn't have a hope of returning ROI waiting for someone else to be creative enough to make this appealing and effective to consumers and bring in advertisers."

Szimanski, who coordinated one of the most high-profile ATM advertising deals to date, a late 1999 campaign for Compaq computer that ran on some 1,700 machines in six cities, said, "Believe me, I'm as sick of talking about Compaq as anyone else. … That deal involved five or six ATM networks, and it was configured probably five or six different ways. But the point is we got it up and running."

Dick Juenger, vice president of marketing for Secora, a St. Louis-based ATM advertising firm, echoed Szimanski's sentiments. While technology will play an important role in future efforts, Juenger said, "Right now, we're doing what we can to make a profit, whether it's sending files to 20 machines or 100 machines."

New Concept Marketing's Okon is seeking funding – in the low six figures, as opposed to the millions in capital raised by some companies in flusher economic times – with plans to conduct a six-month beta test in the south Florida area later this year.

She plans to focus on local and regional, rather than national, advertisers. She will conduct the test at cost or, ideally, will turn a small profit. "If we can do it for $150,000 or $200,000, no one has to lose sleep over this," she said.

Contending that advertisers want more consumer research, preferably through exit polls conducted at ATM sites, Okon said she intends to use a third-party research firm to compile test results. Few ATM advertising companies have made an effort to gather data to show their product worked, she said.

Because she has invested so much time and effort in building ATM advertising, she wants to give it her best effort. "If it doesn't work, then I'll know I need to start looking for another job," said Okon, whose last major deal was a pilot with the Spanish-language auction site DeRemate.com in the New York City area last summer.

It's important to realize that it will take time for ATM advertising to prove itself, said Secora's Juenger.

"You have to go into it knowing there will be downturns and there will be upturns," he said. "It's a long race, and you've got to pace yourself."