Technology is allowing vending machines to take on new promotional roles. Systems like Quickstore24 and SPIO install touchscreens and coupon dispensers on vending machines, enabling consumer brands to advertise directly to customers at work, school or on the go. A trial between SPIO and Chick-Fil-A saw redemption rates of 20%, much higher than typical promotions. Vending provides a direct connection to consumers that other marketing channels lack.

1. www.AMonline.com 03.08
Vending takes
new role in
marketing
promotions

2. Vending takes new
role in marketing
promotions
echnology is giving vending machines new promotional
capabilities. As a result, consumer product marketers
are beginning to see vending machines as tools to do
more than market products for immediate consumption. They
are beginning to see vending as an avenue to encourage consum-ers
to buy a wide range of items, including financial services, TV
services, vacation packages, and more.
In the past few years, technology players have developed
touchscreen video screens and coupon dispensers that can
be retrofitted to existing vending machines. These devices, on
vending machines, enable consumer product marketers to reach
consumers in school, at the work place or in transportation and
at entertainment hubs.
Coupon dispensers in vending
machines allow consumer
product marketers to reach
consumers where they work
and go to school.
By Elliot Maras, Editor
The ability to target a message to a consumer in the at-work en-vironment
in particular has raised eyes in the marketing community.
In January, Automatic Merchandiser reported on the Quick-store24
™, a vending machine that has interactive video touch-screens,
multiple payment options, and on-site dispensers that give
redeemable coupons. This system was developed by a Walker Digi-tal,
LLC, a company that focuses on finding solutions using modern
information technologies.
In February, Automatic Merchandiser reported on another
technology solution, the SPIO system, that utilizes coupon
dispensers and interactive video touchscreens to give vending
machines new capabilities as marketing vehicles for consumer
product manufacturers.
T
A customer receives
a redeemable coupon
from a SPIO dispenser.
C o v e r S t o r y

3. The SPIO system consists of a coupon dispenser that is installed
in the vending machine. When a vend is made, a promotion is
dispensed simultaneously. It can be an offer to receive a free item
from a restaurant or $5 off a $25 purchase at a retail store.
SPIO provides the dispenser at no cost to the participating vend-ing
operator. SPIO provides the operator with coupons, either plastic
or paper, in clips that are placed in the machine to be dispensed.
The only cost assumed by the vending operator is the labor for
installing the dispenser.
Innovations offer opportunity for vending
All of these innovations are happening at an opportune time for
the vending industry, since traditional vending has become increas-ingly
unprofitable due to a shrinking customer base and rising costs
and more competition from other retail channels.
Innovations such as Quickstore24™ and SPIO could give the vend-ing
industry the tools it needs to bring a higher level of value to the
consumer. Preliminary indications are that this is beginning to happen.
SPIO recently completed a successful test with a Chick-Fil-A
restaurant in Oglethorpe, Ga. Promotional offers were distributed
through vending machines within a 10-mile radius of the store.
Consumers redeemed the offer for a free food item. The redemption
rate was around 20 percent, which is 10 times greater than most
traditional coupon promotions.
Chick-Fil-A isn’t the only consumer product marketer to see merit
in the vending promotion. SPIO has recently signed similar arrange-ments
with Direct TV and Blockbuster.
SPIO enhances customer experience
“It’s a pretty effective way to put your ad right in the hands of
the consumer,” said Chuck Treister, executive vice president of vend
partners for SPIO. In addition to lifting sales for the vending opera-tor,
the coupon enhances the experience for the customer and the
location. “It’s what it does from a standpoint of customer relations,”
Treister said.
Treister, who has worked in vending operations and equipment
manufacturing, said coupon redemptions are not a new idea in
vending. However, earlier programs required some labor on the part
of the vending operator.
“A lot of (product) manufacturers have dabbled in this concept,”
said Dennis Thornton, a partner in Advanced Vending LLC, the
Ringgold, Ga. who participated in the Chick-Fil-A promotion. What’s
unique about SPIO is that the operator doesn’t have to do anything
extra and the marketing offer is very well targeted to the end user,
resulting in a win for every party involved.
“It’s just an SKU that the driver keeps filled,” Thornton said.
Connie Lee helps introduce Chick-Fil-A customers to the SPIO promo-tion,
which allowed her to market to consumers directly.
Chick-fil-a redemption rates surpass industry average
“The consumer is really liking it,” Thornton added. He said in
some locations, redemption rates have been as high as 70 percent.
The average rate has been 20 percent, which is still high compared
to most coupon redemption programs, according to direct marketing
industry sources.
A key factor in the success of the Chick-Fil-A promotion was the
value of the offer. In the promotion, offers were made in vending
machines for three consecutive quarters. Consumers received one
of six offers redeemable for a free item with the purchase of a snack
or beverage.
“Most offers are worth more than the consumer is paying for the
item in the machine,” Thornton said. “It makes a significant impact.
There is no doubt about that.”
Another benefit that vending offers to product marketers is the
ability to tailor a promotion to a location. “There are different adver-tisers
that want to be in different venues,” Thornton said.
SPIO is in the process of introducing a video screen to the ma-chine
that will further enhance the promotional effort. “I think this
is going to be unbelievably successful,” Thornton said.
Coupon dispenser: a direct connection to consumers
Terry O’Neal, owner/operator of the Chick-Fil-A store in Ogletho-rpe,
Ga., agreed the promotion accomplished some things that no
other promotion has. “They (SPIO) could go places where I couldn’t

4. Dennis Thornton of Advanced Vending LLC, based in Ringgold, Ga., said
consumers like the SPIO coupons.
get my foot in the door to get customers,” he said. “It ‘walked’
them in the door. We never expected to get 15 to 20 percent
return, but we did.”
O’Neal wanted to get the coupons in the hands of kids in
schools. He knew that if a kid got a coupon for a free item, they
would bring their parents with them to the restaurant, and they
did. SPIO produced the coupons for him.
The SPIO promotion delivered better results than the direct
mail programs O’Neal did in the past.
In one instance, ice cream vending machines dispensed cou-pons
redeemable for free ice cream at the restaurant. “It was a
win-win for both of us,” O’Neal said.
O’Neal said the more generous the offer, the more successful it is.
“We had new customers that never ate at Chick-Fil-A ever,”
said Connie Lee, who was the marketing director for the restaurant
when the promotion began. “With these venders, we were reaching
people we couldn’t reach.”
Lee said that prior to the SPIO project, her options for pen-etrating
schools and work sites were limited.
Vending brings marketers a new tool
She previously designed nutrition education programs for
schools that helped to get the restaurant’s name in front of stu-dents.
In the B&I sector, she approached managers with “be our
guest” coupons for free meals for employees. She even developed
inserts for employee paychecks, but this was difficult to get em-ployers
to agree to.
“You can’t just walk into a factory and pass out coupons,”
Lee said. In comparison, she said, “the vending machine was
wonderful.”
Dobbin Prezzano, president and co-founder of SPIO, brought
an extensive background in marketing and direct mail to vending.
“These are very high response rates,” he said for the SPIO promo-tions.
The average response rate for a more traditional direct mail
promotion is 2 percent.
At-work consumers: a prime audience for marketers
The at-work consumer has become a target market for consumer product manufacturers. Following are purchase habits of these consumers.
63%
69%
74%
54%
80%
92%
85%
73%
74%
52%
89%
Purchase coffee close to work rather than close to home
Don’t decide what they’re having for lunch until they’re at work
Buy lunch at least four times a week
Don’t eat dinner with their families every night
Not sure at 4 p.m. what they’re having for dinner
Use discount coupons at restaurants
Purchase fuel just before, during or just after work
Have business related travel booked from office
Shop for groceries during the work week
Have ordered a birthday gift online
Use discount coupons at grocery stores
Source: WorkPlace Media employer survey
C o v e r S t o r y

5. Vending machine: a consumer destination
Prezzano said the vending machine has an advantage for mar-keters
since it is a destination for the consumer. “The consumer is
making a particular choice to go to that machine because they’re
getting something else there,” he said.
In addition to redeemable cards, the machine also dispenses
a magnetic stripe card that can be loaded with value for use in a
retail store. There is also a patented Website decoder that contains
an imbedded code that becomes visible when held up to a Web
page on a computer screen.
Prezzano, who exhibited the system at the Direct Marketing As-sociation
trade show recently, said SPIO is making waves because
the direct marketing industry is beginning to focus more on work
place marketing. What SPIO brings to the table is being able to
interact directly with the consumer.
Retailers in particular are learning that work-site marketing, which
is also known as “alternative print media,” is a cost effective way to
target consumers with disposable income. In the work place, marketers
find an attentive audience for messages that focus on convenience and
value. In some cases, employers offer coupons as perks through payroll
checks, intraoffice mail or other company correspondence.
Work place marketing: an emerging industry
Work place marketing experts don’t question the role that vend-ing
machines can play in these efforts.
Dobbin Prezzano of SPIO says marketers in many industries are inter-ested
in reaching consumers directly.
“Work places and vending machines are as natural a pair-ing
as coffee and a doughnut,” said Dan Wheeler, executive vice
president of WorkPlace Media, a Mentor, Ohio-based company that
develops creative graphics and distributes them to selected work
sites. “When you consider that 83 percent of working Americans
rely on caffeine to get them through the day, and another 72
percent rely on some sort of vending machine snack such as gum,
chips or candy bars, the value of targeting workers right in their
cubicles is undeniable.”
Where traditional business-to-business marketing has focused
on reaching the location manager or account decision maker and
relying on that party to communicate information to consumers,
the vending machine offers the marketer more direct access to
the consumer.
“What I tell them (the product marketers) is we’re going to get
them to their consumer,” Prezzano said.
One example is the financial services industry, which is looking
to interact with high school and college students.
Vendors must provide location information
In seeking vending operator partners, Prezzano said he looks
for operators who can provide demographic information about
their accounts; this is what the clients want to know. He requires
vending operators to provide input on the number of vends per
year, what type of business the location has, and how many
people are there.
The video screen will make the opportunity even stronger,
Prezzano said. “The video screen has the trackability,” he said.
“Marketers are ecstatic about it.”
At-work consumers’ daily
“pick me ups”
Caffeine
beverages 43%
40%
28%
25%
19%
10%
Coffee
Gum
Salted
snacks
Candy bars
Cigarettes
Source: WorkPlace Media employer survey

6. Barry Frankel, owner of The Family Vending Co. in Coral
Springs, Fla., recently decided to participate in the SPIO
network. “As long as the promotions continue to come with val-ues,
the purchase of the drink becomes insignificant,” he said.
In a previous role as a cold drink manager for a beverage
bottler, Frankel saw the ability of on-can promotions to drive
sales. One promotion he remembers was $5 off the price of
admission to Universal Studies. “It was a great promotion
for a very large customer; it got you an account and also
helped drive sales,” he said.
“We’ve got to bring the customer back to the vending
machine,” Frankel said. “This will give us new value.”
In the meantime, more is being learned about the at-work
consumer market.
At-work consumer: a target audience for marketers
The at-work consumer has a higher level of disposable
income than the rest of the population. As busy profession-als,
they are willing to pay a premium for convenience, often
saving time by running errands on office time to stores
within a 5-mile radius of where they work.
At-work consumers also spend the majority of their day
in commercial areas, literally surrounded by hundreds of
stores and restaurants. Naturally, they are going to visit
these businesses more often than the average consumer –
often just to take a break from the office.
Because the at-work consumer spends 60 percent of
their waking hours at work, they are often looking for new
“pick-me-ups” to help keep them focused and alert. At-work
consumers are more prone to making impulse buys.
In the past, these highly valuable yet largely untapped
consumers had to actually leave the confines of their cu-bicles
to forage for this elusive “something.”
Work place focused, direct marketing companies target
this valuable demographic audience and attempt to deliver
products to them in the work place.
If the recent Chick-Fil-A promotion is any indication, vend-ing
machines have a big role to play in not only work place mar-keting,
but in many types of targeted consumer marketing.
Vend product manufacturers add value
with on-pack offers
Vend product manufacturers have periodically partenered with
other consumer product marketers to offer vending customers
added value. Last year, General Mills Inc. offered $3 off any
movie or game rented at Hollywood Video and Movie Gallery on
some of its core products.
The success of the program encouraged General Mills to
introduce another $3 off any movIe or game purchased at
Best Buy on three of its core products, Sweet & Salty Bugles,
Gardetto’s Original Recipe and Chex Mix Traditional.
The offer is announced in a big colorful label on the front of the
bag. There is no work for the vending operator. “You cannot
pass any amount on the operator or it’s a ‘no go,’” said Charla
Sheffield, associate marketing manager for vending at
General Mills.
Stu Case, a partner in Pacific Brokerage Co. Inc., the Yorba
Linda, Calif.-based product brokerage, said the promotion is
better than other types of manufacturer promotions that have
been done in the past since there is no extra work required on
the operator’s part.
“It (the General Mills promotion) has driven additional cases,”
Case said.
For more informaton, contact:
SPIO, 866-604-7746, www.gospio.net
Electronically reprinted with permission from Automatic Merchandiser magazine • March 2008