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Local versus national

The ATM seems a perfect place to advertise the lunch special at a diner across the street. It might also be an effective branding tool for a national product launch by a fast-food chain or a new soft drink.

January 16, 2002

For ATM owners, the opportunity to sell advertising on machines is certainly the next best way to build revenue. But the question of whether to focus efforts on a series of small, site-specific ads or sell the space to a larger, national advertiser is puzzling.

Advertising experts are divided on which is most effective and say that the still-developing marketplace for ATM advertising sales may have room for both approaches.

David Moritz is president of St. Louis-based Secora, anATM advertising and content design companyin which ATM manufacturer Triton Systems Inc. holds a majority interest. He's not sure where or when the ATM will gain acceptance from advertisers but is a proponent of pursuing national advertisers.

"If somebody has figured it out totally, I haven't talked to them yet," says Moritz, who is involved in a significant national test program involving Triton's ATM toppers. "We don't profess to have all the right answers. We're just giving it our best shot."

Gary Walston, president of ATM Advertising Solutions Inc., an ATM advertising brokerage company based in The Woodlands, Texas, believes localized advertising is the quickest and surest way for ATM owners to generate revenue.

"I certainly believe that today, the best way to generate ATM advertising revenue is to do it on a very localized level," Walston says.

Few and far between

Walston says the size of an ATM network and the location of the ATMs are the most important issues to consider before setting up an ad sales initiative. He advocates the site-specific approach (selling ads on individual machines to nearby merchants) for owners who have a limited number of ATMs.

"If a small ISO (independent sales organization) comes to me and has 20 or 25 ATMs and says, 'Hey Gary, how do I generate some extra ad revenue from these things,' I would unequivocally tell them sell it on a site-specific basis."

Advocates of national advertising believe this localized approach is labor-intensive, however. The ATM owner must call on merchants to sell the ad space and figure out a way to get the ad produced, whether it's an on-screen message, ATM receipt or a sign placed on the ATM.

"An ATM sits on a street corner, and somewhere within those four corners there's a sandwich shop, or a dry cleaner, an oil lube place or a sit-down restaurant. Ideally, you could sell to all four of those groups and still maintain category exclusivity," Walston says.

Of course, the biggest hurdle to overcome when pitching ATMs to ad agencies and media buyers is proving the number of people, or eyeballs, that will see the message. Agencies buy television, radio and print using something called a CPM (cost per thousand) as a measuring stick. This formula figures the cost of reaching a thousand people with a message.

Site-specific ad sales are rarely made to agencies. An individual business owner usually decides whether to advertise. The retailer can measure the effectiveness of the program by how many people visit the establishment as a result of the ad. The storeowner pays the ATM owner a flat fee each month for the ad.

Walston says an ATM completing 500 transactions per month could charge an advertiser $75 monthly per ATM for an onscreen ad and coupon - a price that's palatable for most small businesses.

"When you're selling to a smaller retailer, and if you're asking them to give you $75 per month, that's a very small check to write. That's an easy decision," he says. "If you're trying to sell advertising to a bigger advertiser and you're asking for tens of thousands of dollars, it's a more difficult check to write."

While site-specific sales may be easier to make, Moritz says it requires more effort to coordinate this type of program.

"You are only putting one ad possibly on one machine. There in lies the difficulty," he says. "You need quite a few local advertisements to really fill up your machines. The management of those ads is going to be tremendous."

Managing such a program is another challenge.

"Let's say a local guy has got a network of 20 ATMs in a city. You're going to put a couple of local advertisers on each one. That's at least 40 local advertisements you've got to go out and sell, create and distribute to get to the right machines at the right time," Moritz says.

Another drawback is production expense.

"You have to have people that can create the content for it, because the local advertiser is not going to have, especially on the video side, a video spot prepared," Moritz says, whose two-year-old company employs ten people. "You're then going to have to create a 15-second advertisement that runs full motion video (FMV). That's going to be expensive."

A bigger opportunity

Selling in a network gets more realistic when an ISO or bank has 200 or more machines in a local market. Walston says that level of coverage may attract a local or regional advertiser who could blanket a message throughout the ATM coverage area.

The ATM advertising concept is still in its infancy, however, and there are few examples of successful tests or larger networks. In fact, a new group, the ATM Advertising Council, was recently formed to promote ATM advertising to agencies and media buyers. The group plans to distribute information about test programs and create studies showing the medium's effectiveness.

For now, most ATM owners with an interest in advertising are testing the waters with site-specific programs.

"As an educated guess, more is sold on a localized basis, because you have a lot of independents that are trying to get revenue for their machines," Walston says. "They may not have a whole lot of machines, but they're selling site-specifically."

Carl Davidson, president of Ads4ATMs, a manufacturer of ATMs and developer of advertising for ATMs and kiosks, offers advertisers the option to rotate their ads on different ATMs in a local area for a flat fee each month.

"We say, Mr. Advertiser, for $300 a month, we'll put you on six ATM machines, with your ad rotating every two weeks automatically to another ATM screen in your area," Davidson says. "So, you're going to get a whole bunch of eyeballs out there, instead of the same eyeballs seeing it every single day."

Davidson's big clients include the Clarion hotels, Gold's Gym and AFLAC Insurance, along with a number of small, local businesses.

The latest test markets

Triton Systems Inc. formed a joint marketing alliance with Secora last year to find out what works in ATM advertising.

Triton's pilot with Secora began the first week in March and will run through the end of summer. The ATM advertising pilot uses full motion video on ATMs throughout the country. Advertising agency Ogilvy & Mather is also working on the project.

"That's what this industry has been waiting for, some solid research from people in the advertising business that buy media," Moritz says. "We all have our own opinions as to what will sell, saying, 'Yeah, that sounds great. There's no problem. They'll buy that.' Well, they haven't been buying it, and we need to determine what it is they value and will buy on a regular basis."

From hardware to software, an ATM's technological capability to accept FMV advertising is also a factor. International Merchant Services Inc., an ISO based in Euless, Texas, has developed its own ATM advertising technology, specifically for the Triton 9600 model, with components specially developed for other units.

Stephen Johnson, International Merchant Services' director of business development, has gone beyond selling ATMs to creating an advertising program of his own. QuikNet24 is the company's advertising ATM Kiosk. Johnson says IMS is testing the new product in the Dallas-Ft. Worth area.

The regional test pilot began in February with the deployment of one unit at a Texaco gas station. Customers can view news, weather and commercials and shop while making an ATM transaction. Advertisers can track the ad's success online through real-time statistics.

"We've actually had more response from national advertisers," Johnson says. "We haven't actually been pushing real hard locally, because we've had better success with getting national advertisers on board."

Current advertisers include Weather Channel, Half.com (a subsidiary of Ebay) and All Legends.com (an online sports memorabilia company).

Not all the advertising space is filled, and the company is getting more advertisers to sign on before deploying the ATM Kiosks to other locations. International Merchant Services plans to have 25 of the QuikNet24 ATM Kiosks in gas stations, malls and grocery stores this spring.

The national scene

According to Walston, there hasn't been a true, national ATM advertising campaign yet. Fragmentation, or the inability to achieve critical mass in key markets across the country, has been a hindrance to such an effort.

"Even a large deployer of ATMs that may own 5,000 or 10,000 ATMs is typically spread throughout the country. Deployers typically lack enough machines in one area to sell that as one group," Walston says.

Walston says financial institutions will play a critical role in determining the success of advertising on a national level.

"More big banks have to be on board with ATM advertising to help provide coverage in the top 25 markets," Walston says. "In my mind, that is what will help to accelerate ATM advertising as a viable medium."

For national advertisers interested in ATM advertising, Walston recommends a local approach.

"Groups that you see advertised on billboards or on TV, I would certainly recommend a local campaign specific to a designated market area (DMA)."

Brokerage companies such as ATM Advertising Solutions and Secora have attempted to put together as many ISOs as possible to help advertisers target a specific market.

"They want machines. They don't want just 400 or 700 ATMs," Moritz says. "They want thousands of machines. If you can't provide them the reach, they're not interested, period. If you get a national advertiser, it could be a much more beneficial proposition from a financial perspective. That is if you can get the critical mass. That's been a tough part of the industry."

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