Video Screens Give Vending Machines New Capabilities

Oct. 24, 2007
Streaming video technology, in combination with Internet connectivity, gives vending machines a new role as an advertising medium.

A host of technologies have emerged to provide vending operators new benefits in recent years: cashless purchasing, remote machine monitoring, electronic security, data-based menu planning, and more. One technology that potentially offers the vending industry major growth is video screens that effectively transform vending machines into video terminals.

Streaming video technology, in combination with Internet connectivity, gives the vending industry the possibility of creating a powerful network for video advertising, news alerts, and other point-of-sale video communication. The video technology, in combination with remote data transfer, gives marketers one of the most powerful tools ever created for location specific marketing.

Advances in streaming video technology have been taking place in tandem with remote machine monitoring in vending. As these technologies converge, they create a host of opportunities for the vending industry.

Last month, Automatic Merchandiser reviewed the progress of a network of vending machines in Phoenix, Ariz. retrofitted with light emitting diode (LED) screens carrying text messages.

Where LED screens are limited in their audio and visual capability, the liquid crystal display (LCD) screen is a much more visually powerful format. A handful of technology companies have developed LCD screens for vending machines and have been testing them in cooperation with LCD content providers, vend product manufacturers and vending operators.

The most extensive testing has been done by Automated Vending Technologies Inc. (AVTI), based in Corona, Calif. AVTI is both a vending machine operator and manufacturer and has developed its own vending management software and hardware. AVTI has exhibited its machines, equipped with proprietary software and hardware, at vending trade shows in recent years.

AVTI's glassfront machines feature a 7-inch wide LCD screen, located above the payment keypad, playing pre-recorded, streaming video content. The video screen connects to a PC via the Internet, which allows content to be sent to the machine remotely. The LCD screen uses the same PC connection that allows remote access of other machine activities.

AVTI's proprietary interface allows the operator to remotely communicate with their vending machine from any Internet connection via Cingular Wireless' wireless network and receive real-time sales data, inventory levels and maintenance updates from the machine.

Screens play streaming videos

In the past year, AVTI tested streaming video commercials in 10 of its machines in cooperation with some vending product suppliers. The 10 AVTI machines displayed commercials for Otis Spunkmeyer Inc., Living Essentials Inc. (maker of 5-hour Energy) and Tropicana Products Inc., who provided AVTI with product to measure the impact of the video commercials on sales. Another 10 machines serving similar populations were configured with the same products but without the video screens for comparison purposes.

The machines involved in this test did not have cashless readers.

The company claims the video commercials resulted in 20 percent to 30 percent sales increases for the products advertised. AVTI will expand its testing to more machines.

Jim Rosenthal, national sales manager for vending at Living Essentials Inc., said his company also provided AVTI with TV commercials to run on the video screens. He said he believes the tests demonstrated that the videos positively impacted the sales. He said he was awaiting information on the frequency of the ads and the size of the audience.

“That medium has created awareness and is stimulating growth for particular items in the machine,” Rosenthal said. “If it stimulates a purchase, it's well worth it. This is a developing process.”

Rosenthal compared the vending video screens to TV infomercials, which have proven to be a very successful sales tool.

Rosenthal agreed that modern vending machine technology offers a product marketer the ability to quantify the audience, particularly when compared to other advertising media.

“I think it has merit,” agreed Glenn Seawell, director of the vending channel for Otis Spunkmeyer Inc. “It's a form of point of sale advertising.” Seawell said he was awaiting further information on the recent 10-machine test.

In the meantime, a handful of vending operators have purchased AVTI machines on account of the video screens.

Vending operation finds benefits

M.C. Vending, a 1-route operation based in San Diego, Calif., has operated 14 AVTI machines with video screens for the past nine months and is enthusiastic about the screens' benefits, according to J.J. Carrell, co-owner. Eleven of the 14 machines have used a DVD player to deliver content to the video screen, while three of the machines have used an MP3 player.

At the time of this writing, Carrell was looking forward to utilizing AVTI's virtual private network (VPN) to receive content for the video screens. He has already downloaded 15-second commercials for Coca-Cola, Pepsi-Cola and Gatorade from those companies' Websites and played them on his machines' screens. “We're basically giving them (the advertisers) free advertising,” he said. He noted that this is a temporary situation; his long-term goal being to earn “passive” income from the video ads.

AVTI recently decided to provide video content to vending machines through its VPN. Vending operators will be able to provide their own content, but it will first be sent to AVTI, then to the LCD screens via the VPN.

“AVTI always controls the content,” explained Shannon Illingworth, founder of AVTI.

Video screens provide a point of difference

M.C. Vending became interested in the video screens as a way to distinguish itself in the marketplace, Carrell said. “It aesthetically changes the whole look of the machine,” he said. “It draws your eye.”

Carrell credited the video screens with helping win an account.

Carrell also developed a video commercial for his own company that he plans to play on the screens.

Carrell believes strongly in the prospect of reaping “passive” income from running paid commercials on the video screens. So much, that he has hired a local advertising professional to develop an advertising package and sell commercials.

M.C. Vending hired On The Mark Concepts, based in San Diego, Calif., a company that creates and places broadcast advertising. Mark Schreiber, president of that company, said he is developing media kits and has already spoken to prospective advertisers.

“It creates a great way for advertisers to get an enticing visual message to a captive audience, and in most cases, on a repetitive basis,” Schreiber said. “There are 15- and 20-second silent commercials available on each machine. The message can be changed monthly or even weekly, offering different imagery to repeat customers.”

A tool for targeted marketing

One of the unique features of using vending machines as advertising vehicles is that the audience can be quantified, a factor that could prove highly beneficial in the development of this medium as an advertising channel.

Audience quantification has emerged as a challenge in the development of LCD screens in other retail venues.

The LED-based advertising system featured in the September issue of Automatic Merchandiser utilizes the audience tracking capabilities in the vending machines to quantify the viewing audience. The article noted that the purchase transaction technology in the vending machines gives the system the means to do this.

There is no reason that an LCD-based system such as AVTI's won't also use vending purchase transaction tools to quantify its viewing audience.

Schreiber has not yet finalized his advertising rate cards. He was not certain at this writing how many machines will be part of his first advertising package. He believes that he can sign up as many as 26 advertisers for 20-second spots.

“The elusive eyeballs advertisers vehemently endeavor to capture are easily measured by the machines' traceable purchase numbers,” Schreiber said.

The 20-second ads will be shown once every five minutes; there will be 15 20-second ads in every 5-minute loop. There is no plan at the present time to quantify the number of people who will view the ads, Schreiber noted.

Schreiber was confident that the rates will be competitive with other types of media, such as yellow pages, direct mail, radio and television.

Vending operator envisions reaping passive income

Carrell, for his part, feels confident that his vending company will be reaping “passive” income from the LCD screens. He thinks it is likely that the screens will grab $50 an ad per month per machine. With 20 spots sold, that would total $1,000 extra revenue per machine. This would obviously represent an excellent additional income.

While AVTI's package includes remote machine monitoring capability, Carrell at M.C. Vending was unsure which vending remote monitoring program he will use.

Carrell said he believes in remote machine monitoring, but he considers it important to examine all of the available systems.

Webson Vending in Dayton, Ohio purchased several AVTI machines in the past year in order to provide the video screens, noted Jesse Webber, company owner. “I think it gives us more visibility with the consumer,” he said.

Webber said the video screens helped him win an industrial account that saw an advantage in using the screen as a promotional tool. “They liked to be able to put their own logo on the screen,” Webber said. He said the account provided him with their logo on a compact disc. He sent the disc and some text copy to AVTI, which sent it back to him in a DVD file.

The AVTI video screen has also found use in one of Webson Vending's school accounts. “Instead of paper, they decided to display the messages this way,” Webber said.

Fit Fuel Sees POS Promotional Capabilities

Fit Fuel LLC, a Gardena, Calif.-based company that markets healthy products, has utilized the AVTI machine for its vending program. The company operates some of its own machines and provides products to other vending operators.

Sean Kelly, president of Fit Fuel, said the AVTI video screen is an important part of his company's vending initiative, thanks to its ability to promote nutrition messages at the point of sale.

For Kelly, the system's remote monitoring capability is an important function that supports the video message. “It combines the digital signage with the vending technology that's useful to vending operators,” Kelly said. “You want to see if your digital signage is leading the sales.”

AVTI, meanwhile, has formed a partnership with The Chapman Group, an Anaheim, Calif.-based producer of Internet-based video content. This partnership will expand the variety of video content that AVTI will offer its vending operator partners.

Tommy Buzbee, AVTI's national sales director, said operators will also be able to sell their own video advertising. The operator will simply provide the ad content to AVTI, which will produce it. He said there will be a production charge. “It's possible for the operator to do what he wants commercially,” Buzbee said.

Next test will feature cashless payment

AVTI will be launching another test with machines that have LCD screens and only accept cashless payment, noted Buzbee. The machines in the earlier test did not have cashless acceptance. Buzbee said the purpose of the new test is to see how much more consumers buy when the machine only accepts credit or debit cards.

Vending operators utilizing AVTI's network will be charged a monthly fee, Buzbee noted. This will cover sending and receiving video content and processing cashless transactions.

Buzbee said vending operators can purchase the LCD screens and retrofit them into existing machines made by other equipment manufacturers.

LCD digital signs may be the innovation that enables the vending industry to attain new relevance. Providing the vending industry recognizes this capability, a new era of prosperity could be awaiting.


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