The U.S. consumer shopping experience is rapidly evolving — more consumers are shopping online now than they were five years ago; they are using mobile payments and in-store mobile apps; and their preferences in their retail experience are changing, too. Today’s customer is certainly not the same customer it was five years ago. So why would you sell products to your customers the same way you did five years ago?
Current technologies available in the vending industry are making it possible for operators to cater to the “new,” desired consumer shopping experience with vending machines and retrofits that accept credit cards and mobile payments, that showcase eye-catching visuals on video screens and allow consumer interactions through touchscreens. There is also the ability for operators to capitalize on the technology through the use of digital advertising campaigns.
Introduction of digital advertising
As soon as digital advertising became available, New York-based Answer Group jumped on board. For the last three years the company has been running digital advertising campaigns on a number of its machines with Crane. “I think [digital advertising] is a great platform for generating income,” said Howard Goldstein, vice president of Answer Group. “Why not use the [digital] space if it’s available?” The company has signed up for, and been a part of, the majority of the campaigns available.
Previously, digital advertising in the vending industry hasn’t had huge success, according to Sharon Peyer, vice president of Crane Media Network. However, as machine connectivity grows, so too will the digital advertising opportunities.
So far Crane has offered more than 30 endemic and non-endemic digital campaigns to operators, across more than 12,000 machines in the U.S. Endemic includes consumer packaged goods companies, and non-endemic includes brands that want to reach consumers who frequent the venues where vending screens are located, but don’t sell in the machines, such as local banks, real estate companies, charities, etc.
“When an operator signs up to be part of Crane’s Media Network, we can look at the vending operation’s planogram and see where the machines are located and then we can see what machines meet the criteria of where a particular brand would like to advertise,” said Peyer. “We ask the vending company if they want to participate and we tell them what they can expect to earn.” If they qualify for a campaign, the process is fairly hands-off, which is what makes it appealing to vending operators.
Little to no backend work
The ease of use with digital campaigns is one reason Answer Vending can utilize the concept. “All they need from us is permission to put the campaign into our system,” said Goldstein. “It’s quite simple. If we were to sell the advertising space ourselves, it would be a bigger ROI, but we don’t have the time or people for that, so we agree to use the digital advertising campaigns. The pro is we get a couple extra hundred bucks a month, which is always good.”
Goldstein says Crane manages the digital campaigns for them. About a week before the endemic campaigns run on the machine, the company contacts Answer Vending, lets them know they are going to run a campaign and confirms the vending operation is still using the product. “It’s all managed on their end,” said Goldstein. “It’s easy to use.”
Peyer says the system was designed to appeal to vending operators. “The reason we have them sign up for our network is so that we can do all the heavy lifting for them,” she said. The largest amount of work is upfront when the operator signs up for the Crane Media Network. They have to make sure that their planograms are online, generally via the company’s VendMax service, so Crane can see them, broken down by spiral and by individual machine. “As long as they are maintaining that in our database, which they do through normal operations, that information gets updated in our database and as they update products, we can see what’s been added or removed, so that’s the work up front.”
Operators who don’t use the company’s VendMax products have the option of using its cashless portal where they can sync their data and the locations of their machines.
When it comes to implementing non-endemic campaigns, the vending operator can enjoy doing little to no work on the backend. “Signing up is one agreement, it’s digital and they click to sign. It’s not a lot of heavy paperwork,” said Peyer. “When they sign up initially, they basically say they are interested in all campaigns, but they want the ability to opt out of some. We will let them know that in 7 days, for example, Mastercard is coming out with a campaign, here are the machines it will be on, if you have any objections, let us know within 7 days. Typically people do not opt out.”
With endemic campaigns, the process is also very similar. If an operator is going to participate, they have to promise not to take out the product and confirm their understanding that if they stop carrying the advertised product or Crane no longer sees it in their planogram, they have no right to get paid — they get a link within an email where they click to agree. Once that’s done the ads can be sent to their machines automatically.
The growth of green
One of the biggest benefits of the digital advertising campaigns is the extra monthly revenue growth for operators. The Texas-based full line vending operation Made-Rite Company placed 38 snack machines and dozens of bottle glass front machines with digital advertising capabilities. “The touchscreen has made the snack machine so much better that we felt we’d be able to compete better,” said Craig Reggia, full service business development manager at the Made-Rite Company. Operators can run up to three ads on a machine per time, and receive between $1 and $5 per machine each month.
“Let’s just say you’re getting $1 per ad per month, that’s $3 per month, just on one machine. If you have 1,000 machines that’s $3,000 per month. It eventually pays for the screen and will cover the cost of the cell service, so why not do it?”
The company recently ran a campaign with Oreo cookies and noticed a 22 percent increase in sales at the machine. “We weren’t usually selling that many Oreos to begin with,” said Reggia. “Just someone looking at it saw the visual stimulation and thought ‘Oh I need to get Oreos’”.
The company also ran two non-endemic ads for Apple Pay and Mastercard on its bottle glass front machines. And although they couldn’t track the increase of sales for those products, Reggia believes just having the Apple Pay and Mastercard ads drew customers to the machines. “We did get an increase in sales, but we didn’t know if it was a boost based on the ads or because it was a new machine with Apple Pay,” Reggia said. Customers like the machines because they are visually appealing and allow them to review nutrition information on products, too.
Reggia is optimistic about what the digital ad campaigns mean for the Made-Ride Company going forward, but he says he’s in the minority in his region. “In our area in East Texas, a lot of people are scared of technology,” he said. “A lot of people still aren’t investing in technology such as credit card readers.” Reggia understands that in an industry that makes pennies, spending $500 more on a vending machine with digital advertising capabilities could be intimidating. Even with video screen retrofits available, the price tag can be a problem.
Goldstein agrees. Though it’s an expensive machine to begin with, he says, it’s all money to your bottom line. “I think it’s a benefit for every vendor to partake in it whether you have 10 machines or 5,000 machines,” he said. “If you’re going to buy a brand new machine, why wouldn’t you want a machine with digital advertising capabilities?”
Digital advertising is beginning to make waves in the industry. Peyer predicts it will continue to grow as connectivity increases and more operators get onboard. “A lot of operators are laser-focused on the day-to-day, but in any business you want growth and growth is hard to come by when you do the same things day in and day out,” she said. Digital advertising should be considered incremental to what vending operators are doing.
For now, progressive vending companies will continue to reap the benefits of digital advertising campaigns. They can also be a lucrative investment for operators planning long term.