Article

Is Kiosk advertising a Catch-22?

Industry experts are steering away from the bigger-is-better approach in developing advertising revenue streams for kiosks.

March 12, 2002

In Joseph Heller's classic novel "Catch-22", the story's protagonist found himself surrounded by paradoxical demands that trapped him in lose-lose situations. Kiosk operators trying to attract deep-pocket advertisers are contemplating a similar dilemma.

The catch is supposedly this: Without large numbers of kiosks, national advertisers are not interested in purchasing ads for kiosks. But without ads, companies have a difficult time selling large numbers of machines.

But Mike Szimanski, president of Baltimore-based ATM Advertising Inc., said kiosk advertisers should not write themselves off even if elements of this paradox ring true.

"I used to be one of the biggest proponents of the critical mass theory," Szimanski said. "And yes, there's some basis for it. But the industry needs to get over it. It's no longer a valid excuse. It's an obstacle, but it shouldn't be a roadblock."

Is bigger really better?

Instead of bigger is best, Szimanski believes the focus should be on creative uses of kiosks that will attract consumers.

"Be absolutely open to what your content should be and be prepared to deviate from your original model to attract consumers," he said.

By doing so, Szimanski believes the advertising component will eventually take care of itself. In an industry that is relatively young and features fast-paced breakthroughs in technology, the prize will go to those in the forefront of developing cutting-edge technology.

"If you've got popular, attention-getting devices and industry buzz can be built around consumer interest in them, the advertisers will come," he said. "You never know what's going to take off next in this country. For all the money spent, all the good intent, all the creativity and technological know-how, this thing should be working better. I mean, simpler ideas have gone through the roof. And I think the rule is, consumers, consumers, consumers."

Hamed Shahbazi, president and chief executive officer of Info Touch Technologies Corp. in Burnaby, British Columbia, Canada, likewise refuses to blame critical mass. He said too many kiosk projects were launched without a solid game plan or sophisticated sales pitch to attract advertisers.

"Really, the big issue is that it's a bit of an uphill climb to get advertising for kiosks and no one's helping their case by making a professional approach," Shahbazi said. "I see a lot of smaller circulation print Web site publications that do a lot better than kiosks."

"Patience, Grasshopper"

Kiosk advertising runs the gamut, from World Wide Web-style presentations (banner ads, multimedia full-screen presentations, flash-based ads, etc.) to stills or multimedia used in a loop when kiosks are not being used. There are also secondary screens, either another computer or a larger plasma screen, which play high-resolution ads. The kiosk itself can have ads painted on it or signs placed above the screens.

But build it and they will come? Not with kiosks. That, Shahbazi said, is a mistake many have made.

"There are lots of problems, but that's really because the approaches haven't been solid," he said. "People who make a grounded approach, who get their documentation together and communicate well, can succeed. And they go out and they regionally focus. I'm talking about having a good media kit, being able to explain your pricing strategy and how you're going to create value. Lots of things need to be in place. The only way I see people engaging advertisers is by getting sales people out knocking on doors. But many don't. And they wonder why they don't get advertising."

Besides its Surfnet kiosks that provide advertising options and track usage, Info Touch recently created its own advertising agency-Clicks and Mortar Media Inc. (CMMI)-to create marketing strategies for kiosk clients.

"Its sole purpose is to create relationships on kiosks," Shahbazi said. "We're working on an inside-out strategy, fortifying our own networks and working very closely with our owner-operators.

"We have a U.S. client who has 30 to 40 kiosks and does extremely well in advertising," he added, declining to say who the client is. "It's extremely profitable because he has a sales team that hits the ground running every single day."

Szimanski agrees that a focused approach, combining regional or local advertising with a creative plan to attract traffic, is preferable to shooting for national advertisers at this point.

"Would a million kiosks in this country make a difference to the big advertisers? I don't know. With a stroke of the pen, the same buyers can reach millions on a TV show or with a radio buy," he said. "Maybe national ad buys aren't the answer. Maybe we as an industry haven't earned the right to play on that scale yet. It's not the route to go now. I've seen the same thing happen with ATMs, where companies aggregate very large networks-over 20,000 in a large market-and in many cases that still wasn't enough for the big national buys."

Deciding what to do

Shahbazi said another mistake many have made is expecting advertising to be the major source of income.

"If you do that, you're asking for trouble," he said. "Advertising should be just one component of your overall monetization strategy. For instance, you might include a bill pay application where you get a transaction fee."

It was this strategy that led to the formation of CMMI to complement Info Touch's kiosk program. Shahbazi said CMMI is involved in any kiosk project the company considers. The company considers the viability of each project and develops a strategy for the promising ones.

"Once we feel we have a viable strategy, then we go to market-with a value proposition and a strong media kit," he said.

Like Shahbazi, Szimanski believes that most kiosk launches have not effectively marketed the medium.

"Kiosks and kiosk advertising are relatively young," he said, "so it's justifiably disorganized in a sense. We're not appealing across the board to advertisers as a one-entity entity."

To correct that, Szimanski's ATM Advertising is developing the eGamePreservenetwork. The network seeks to develop traffic and keep consumers at the kiosk long enough to peruse ads by offering sophisticated gaming, entertainment, trivia and other interactive options. At the same time, the network is seeking existing and new kiosk networks to join up.

"As is, you have different groups hammering away at agencies and each kiosk situation offers something a little different, so they can't convince advertisers that they have the numbers to buy," he said.

Times are tough all over

There is another reason why kiosks currently face a formidable challenge. As the Sept. 3 issue of Advertising Age reported, the nationwide plunge in ad spending for 2001 could be the largest since the midst of the Great Depression in 1938. Advertising suffered an 8.1 percent decline then. Through May, spending for 2001 was down 6.4 percent. If the trend continues, it would mark only the fifth year-on-year decline on record.

"Obviously we're not in the best environment for ads on kiosks anyway," Shahbazi said. "Anything that's ad-driven has really lost its luster and that's hurt the industry. To compound that, kiosks are not known for their advertising capabilities. To compound the problem even more, there aren't a lot of kiosk companies that have deployed in a robust manner. You still see the field littered with kiosk projects that have gone awry. That doesn't inspire more confidence in kiosk advertising. It creates less."

Said Szimanski: "In some cases people are building things out there because they can, not because they should. I know companies that built ad-tracking and ad-delivery technology, investing hundreds of thousands if not millions of dollars, all before the first advertiser was probably even consulted, and certainly before they were lined up."

Has naiveté been the kiosk operator's own worst enemy?

"It's huge," Shahbazi said. "I think the kiosk industry needs to come together and give out the right information, to say, `Listen, advertisers will come but you need to align yourselves with people who are building the right software and people who have sales experience.' "

In the end, the feeling is that with better focus and more development advertising has a viable future on kiosks.

"Given my criticisms you're going to find this hard to believe but I'm a tremendous fan of the industry," Szimanski said. "I think these machines are remarkable devices. But someone has to fabricate a whole new (configuration) that's going to work in proven advertising models."

[Editor's note: Info Touch Technologies became Tio Networks in April 2006.]