Dave Levine believes he may have developed a new revenue stream for vending machines with his LED screens.
Automatic Vending Service in Scottsdale, Ariz. has found the LED screens help improve sales. Daniel Slone services the machine.
For years, industry observers have predicted that vending machines would serve as advertising billboards for products and services. With advances in digital signage technology, that future is arriving.
In the past two years, a Phoenix, Ariz. entrepreneur has made some significant headway retrofitting text-based, light emitting diode (LED) screens to snack machines. There are presently about 100 snack machines in Greater Phoenix retrofitted with digital screens running LED text messages of stock reports, public service announcements, and even paid advertising.
The machines, with messages running 24 hours a day that are programmed wirelessly, are the first phase of an attempt to establish a national network of digital screen message boards on vending machines.
The project is the brainchild of David Levine, a former vending operator who has invested a lot of his own money in the enterprise over the past three years. Levine is working to establish the first nationwide advertising service that will allow businesses to target their messages to consumers in the work place on vending machines.
Levine’s company, MB Media Brokers, is not the first attempt to sell advertising on display screens mounted on vending machines, nor is it the only such attempt in progress.
Display screens on vending machines as advertising medium
In early 2005, a company called The Media Stores attempted to sell advertising on video display screens mounted on vending machines. The Media Stores also marketed compact video discs in glassfront machines. That company has since ceased operations.
Automated Vending Technologies, a vending equipment manufacturer and technology provider, has also conducted field test for machines that have built-in, video display screens. The AVT system utilizes liquid crystal display technology. These tests will be examined in an upcoming article in Automatic Merchandiser.
David Levine’s company, MB Media Brokers, recently won the Smart Money Small Business Challenge for 2007. The award is sponsored by Smart Money Magazine and Sony Corp.
“Our media is one of the only ways to expose the advertiser to a captive, working consumer on a daily basis,” Levine told Automatic Merchandiser.
Beginning as a vending operator
Levine, 32, got into the vending business in 2000 after working as a stock broker. He had always been fascinated by vending.
In four years, he grew his vending business to about 60 machines. While he enjoyed the business, he felt that it had the potential to do more than its traditional role of providing refreshment services.
“I saw huge, untapped potential in the business, but with stagnant prices and rising costs, the vending business as it stood made no sense to me,” Levine said. “Throughout this period, it bothered me that product manufacturers were the only people that were advertising on vending machines, either using their creative packaging or Lexan machine fronts. It always sat there in my mind, because I knew that they thought of the vending machine as a billboard.”
Levine first considered selling advertising on Lexan machine fronts, but this was impractical; replacing an ad is cost prohibitive and time consuming. Levine reasoned it would be much easier to have a digital screen in the machine that could be changed remotely.
Levine came across a remote-controlled LED sign at a retail store, and recognized that it would be fairly simple to retrofit such a sign in a vending machine. “I knew this would work well because the LED came with a wireless remote, so if I had to change a message, I wouldn’t have to do it from inside the machine,” he said. “I instructed my vending machine repairman to wire the sign directly into the power supply and hang it on the door.
Remote-controlled digital sign
The installation of the LED screen was the easy part. Levine then faced the task of developing a system whereby an advertiser could buy a defined unit of exposure. There was also the task of creating the message text for the LED screen; a system was needed to allow an advertiser to create text within defined parameters.
Levine began talking with software programmers who were familiar with LED technology.
He sold his vending business in 2004 and devoted all of his energy to the new project. He formed MB Media Brokers in early 2005.
Levine considered liquid crystal display (LCD) screens, but felt they were too thick and bulky to be retrofitted to snack machines. Also, they did not seem cost effective.
The LED screen Levine uses is about 26 inches wide, 3.9 inches deep and 1.8 inches thick. It fits just across the bottom of a 5-column snack machine and is attached with Velcro®. Levine is also working on a screen for a 4-column snack machine that will be about 21 inches wide.
The screen is powered with a dedicated plug. “None of the product is obstructed (from view) at all,” Levine said. The screen does not interfere with internal machine cleaning, and the electrical current does not affect the machine functions in any way.
“Installing the LED screen was not easy; we spent several months to ensure that product would not jam inside the machine, and developed a proprietary LED shield for this purpose,” he said.
2005: Exposure to the vending trade
Levine exhibited his LED screen in a glassfront snack machine at the Vend Source product distributor showroom in Phoenix in the spring of 2005.
Steve Adams, owner of HMI Vending, Landscaping and Maintenance in Phoenix, visited that showroom and took an immediate interest in Levine’s idea. Adams operates several rest stop locations and saw potential to run traffic advisories in rest stops. “I was pretty intrigued by the prospect,” Adams said. “I think there’s a lot of potential.”
Adams offered to work with Levine to develop the concept. In addition to public service announcements, Adams saw the potential for a vending operator to reap “passive” income from advertising on the LED screen.
Levine recognized the importance of offering a turnkey system for the vending operator. He wanted a system that would allow the vending operator to be able to program his own messages into the digital feed in addition to having messages from other sources, such as news feeds or product advertising.
Levine uses a wireless pager to receive and send digital content to the machines. The digital feed includes 26 “slots,” each of which contains 240 characters. The messages rotate, each running 180 times in a 24-hour period. “There is a continuous stream of messages referred to as message slots,” Levine explained.
Easy for the operator
Having been a vending operator himself, Levine considered it important to offer a service that would not make any demands on the operator’s time. “We need to totally remove the advertising sales away from the vendor,” he said.
Once the technology was in place, Levine turned his attention to finding vending operators. Steve Adams of HMI Vending, Landscaping and Maintenance was already on board and running messages on about 20 machines.
In approaching other vending operators, Levine pointed to research indicating that LED messages increase product sales. He told them that once he sold advertising on the LED screens, he could pay them a commission.
Levine has since installed about 100 LED screens in machines operated by a handful Phoenix area operators.
He selected machines with locations that have 150 or more people.
He began running text messages from stock exchanges and Amber Alerts.
Vending operators see merit in the concept
One vending operator partner, S & L Vending in Phoenix, saw the LED screens as a way to add value to the vending service, noted Lori Endres, co-owner of the company. She agreed to let Levine install his screens on 25 machines.
In addition to the stock prices and Amber Alerts, S & L Vending has run some of its own messages on the screens.
Endres said the screens have worked well mechanically, and there have been no complaints from customers. Some employees have requested sports news on the screens.
Endres’ company has not yet earned any income from the screens, but Endres is hopeful this will change.
Another vending operator, Automatic Vending Service Inc., based in Scottsdale, Ariz., agreed to retrofit 30 machines with Levine’s screens. “I thought it had some potential,” said Jim Leonard, company owner. “It’s a little value added to the snack machine.”
Levine ran a text ad for M&Ms for one month this past Spring on Leonard’s machines. The ad was not funded by M&Ms, and it was not product specific. It said, “M&Ms make friends; buy a bag today.”
Levine claimed month-over-month data showed a 5 percent increase in sales. More significantly, year-over-year data, which would reflect before and after results of the LED installation, showed a 32 percent increase during the month in the 21 machines he tracked.
Leonard concurred that there was a lift in M&M’s product sales.
With a base of 100 machines, Levine sought advertisers. He researched competing advertising channels such as Yellow Pages and direct mail to get an idea of what type of information he needed to show prospective advertisers.
Levine’s software allows for the creation of zones of machines, based on total head count. A typical zone has 15 to 20 machines. Machines can be added to or deleted from zones, depending on the advertiser’s needs.
In marketing the service to advertisers, he was cognizant of the need to protect the identity of the vending operators involved.
“We have designed proprietary location demographic forms, sales forms, brochures, our Website, maps and location breakdowns that do not reveal information about the individual vendor,” he said.
Online text coupons
Levine’s Internet server contains online couponing which an advertiser can access over a Website.
“When a customer sees an ad on our screens with a promotional code, they can text that code and receive information about the advertiser on their cell phone,” Levine explained. “This data is tracked internally for the advertiser.”
The advertiser, in turn, can send a text-to-phone coupon to the consumer who called them. “We track our advertising using online coupons and text-to-phone coupons,” Levine said.
He initially approached advertisers who already used Yellow Pages and direct mail. “That’s the type of business that finds this most interesting,” he said.
Levine quickly learned that he needed to quantify the audience for advertisers. He learned that other media sold audiences based on cost per thousand impressions.
Fortunately, DEX technology gives him the tool he needs to do this.
Machines are divided into zones which consist of one or more zip codes in a given geographic area and contain 3,200 or more employees. A typical zone may contain 15 to 20 machines, but a densely populated area, such as a business district or an amusement park, may contain fewer machines. One unit of advertising equals one zone for one month.
“It is a localized form of advertising,” Levine said.
“Once the machines are DEX enabled, we will use vend count – we do not need sales – to track the number of impressions or views,” Levine explained. “We will combine this with an employee count and demographic information to get a very accurate assessment of the location. The advertiser will track their ad using vend count data, online couponing and text-to-phone couponing.”
First paid advertiser gives a thumbs up
Levine’s first paying advertiser is a home inspection company that he met at a local real estate trade show. The company has been advertising in select zones for eight months, and is satisfied with the results.
“I know it’s brought us some business,” said Shannon Hubbard, co-owner of the firm, Mesa, Ariz.-based Homewerx Home Inspections. “People have found us that way.”
Hubbard was interested in being able to reach employees at their place of work. “It seems like it’s a market that’s not being tapped,” she said. “You’re hitting an audience that has a job. You can target the specific areas you want.”
Hubbard said Levine did a good job quantifying his audience based on the number of employees and the number of impressions per day.
She said employees at the locations can text message to her company for discount coupons. She said she particularly likes the ability to communicate to a potential customer almost immediately. “Everybody wants something now,” she said.
Levine continues to fine tune the system to make it easier for advertisers.
“We are developing a proprietary dynamic order routing system that will simply find available space within a given area, which will allow for a national rollout of our system,” he said.
Messaging and remote data transfer
Levine foresees pairing his service with another emerging vending technology – remote machine monitoring. He is giving serious consideration to partnering with at least one wireless telemetry provider.
Under this scenario, the vending operator could purchase a package that will allow him or her to offer LED screen advertising, and at the same time gain the benefits of wireless data transfer.
“The vendor would use our free device to hook up to his (or our) inventory management equipment inside the machine,” he said. “Then, instead of just sending messages to the machine, the machine would send us inventory data.”
Levine also envisions a system that could accept credit cards, perform remote inventory management, and carry advertising.
“It will soon occur to people that vending machine advertising has become the most economical, dynamic and trackable form of advertising available,” Levine said. “Not to mention that it is one of the only ways to reach captive working individuals on a repetitive, daily basis.”
He has hired a full-time advertising sales rep. He has also worked out a trade arrangement with the Yellow Pages, whereby the Yellow Pages runs an LED text on Levine’s LED screens in exchange for a Yellow Pages ad.