THE KIOSK CONUNDRUM

Mark Hamstra

Consumer packaged goods companies hoping to use interactive kiosks as a vehicle to get their brands in front of consumers might want to board a plane for the United Kingdom. That's where supermarket chain Sainsbury's has been hosting what is reported to be a successful kiosk-marketing program in its stores that allows customers to print from a customized selection of manufacturers' coupons for use during that shopping trip.

Here in the United States, however, kiosk-marketing opportunities have been relatively scarce. The expense of deploying the systems, the dearth of large kiosk networks and the general slowdown in spending on advertising have stalled the development of kiosks as marketing vehicles, according to sources in the industry.

Kodak's Picture Maker kiosks certainly appear to be an example of the successful use of a kiosk by a marketer, but other instances are few and far between.

"It has been done, but it tends to be a pretty expensive proposition when you're just using it to tout one thing," said Francie Mendelsohn, president, Summit Research Associates, a consulting firm based in Rockville, Md., that specializes in kiosks.

She cited Sainsbury's loyalty-kiosk technology as an example of supermarket kiosk marketing that works. Consumers swipe their loyalty cards in the kiosk as they enter the store, and, using data from their past purchases, the kiosk displays on its monitor a selection of manufacturers' coupons that consumers can choose from to print out and use that day.

"Based on anecdotal information, it costs [CPG manufacturers] very little, and they are very pleased with it," Mendelsohn said. "Customers are not going to print a coupon unless they are going to use it."

Neither Sainsbury's nor InterAct Systems, the technology company that supplies the kiosks, returned calls to comment about the program.

Although similar systems have been tested in the United States, Mendelsohn and others in the industry said they are unaware of any widespread deployments.

However, a few marketers are reporting encouraging results from touting their brands at customers' fingertips.

During the 2001 holiday season, Warner Home Video, Burbank, Calif., conducted a marketing campaign with Coinstar, Bellevue, Wash., which has 9,500 coin-redemption machines in supermarkets throughout the country.

For about six weeks starting in mid-November, the entire Coinstar system displayed 15-by-18-inch signs on top of its kiosks touting a $5 mail-in rebate on a selection of Warner video products, and also displayed an ad for the rebate on its video monitors. Consumers who redeemed at least $5 worth of coins received a coupon for the $5 rebate.

"We're still getting numbers in, but it looked pretty good for us," said Valerie Isozaki, director of promotions, Warner Home Video. "We're very pleased with the overall program. We got a lot of exposure in the grocery channel, which is a very important channel for us."

She said it was the first time she was aware that Warner had done any type of marketing via in-store kiosks.

Warner did not pay Coinstar for the promotional exposure -- it was viewed by Coinstar as a marketing vehicle to attract customers to use its services as well.

"I would say we worked together to the benefit of both our companies," said Isozaki. "We gave them a nice national offer and they supported it through multiple media."

In addition to the promotional materials on the kiosk itself, Coinstar also touted the offer in a national, freestanding newspaper insert.

Unlike some of the Internet-access kiosks that have been less than successful in some retail settings, the Coinstar kiosks serve a practical purpose during the shopping process, a characteristic that is essential for kiosks to be effective, according to industry experts.

"Customers don't want to add time to their shopping experience," said Kevin Sheehan, senior vice president, marketing, Intermedia Kiosks, Owings Mills, Md., which has nearly 400 Express Deli kiosks in supermarkets.

His company's kiosks allow customers to place their deli orders electronically and return to the counter later to pick them up. Sheehan said he has been in discussions with manufacturers recently about the possibility of incorporating ads into the systems.

Although kiosks in the deli do not yet carry brand messages, some kiosks in the alcoholic beverage aisle do.

Beverage Marketing Technologies, Katonah, N.Y., has rolled out its ChoiceMaster kiosks in about half a dozen Hannaford Bros. supermarkets in Maine, and recently installed its first kiosk in a Wegman's in Princeton, N.J., among other venues. The kiosks allow consumers to research wine, beer and liquor according to a variety of criteria, and winemakers and brewers have been using the media to promote their brands.

"With the wine industry, there's a lot of product knowledge that the average consumer doesn't know -- like what foods to pair the wine with, and maybe some background information about what it might taste like," said David Biggar, vice president, sales, Beringer Blass Wine Estates, Napa Valley, Calif. "For what we consider to be a relatively low cost, we're able to get that information on the kiosk and, therefore, into the store."

Although the ChoiceMaster kiosk gives customers a brief description of every alcoholic beverage that the retailer offers at no cost, those brewers and winemakers who want to embellish their listings can do so for a small fee -- amounting to less than $6 per year per label per store, according to Jim Greaves, president, Beverage Marketing Technologies.

Biggar said Beringer Blass, which is owned by Australian brewer Foster's Group, has been focusing on marketing some of its higher-volume wines, which include Beringer White Zinfandel, Beringer's Founder's Estate and some varieties of its Meridian line of wines.

He said preliminary observations indicate that the kiosks could be driving increased sales of the products.

However, he said he was not sure if other factors -- like the overall performance of the store, product advertising or editorial coverage in consumer magazines -- might also have influenced sales.

In fact, measuring the value of kiosks as branding tools continues to be a challenge, according to a marketing director at consumer products giant Unilever, which markets various food and health and beauty care products through in-store media at Wal-Mart stores.

"Nobody can argue that it's not a great concept," said Unilever's Jim Geike, who handles product marketing at Wal-Mart. "But we need to understand how people are using it. There's advertising value, there's educational value, there's all kinds of stuff. We're really putting the structure in place to figure out how does this work in different places and how we should go."

Wal-Mart's in-store media program includes not only a television network that broadcasts product commercials on 10 to 12 screens per store, but also interactive kiosks where consumers can sample music, videos, video games and computer software. Marketers can have ads appear on the monitors in the kiosks, both in the form of cuts from their commercials and in specially created, quarter-screen panels that appear as consumers navigate through the touch-screen system.

Several national consumer product companies use the system, including Gillette, General Mills, Nabisco and Kraft, in addition to Unilever, according to Mark Mitchell, executive vice president, advertising sales, Premier Retail Networks, San Francisco, which runs Wal-Mart's system, along with those of Sears, Best Buy and other retailers. Advertising on the system -- including both the interactive kiosks and the TV network -- can cost anywhere from $50,000 for limited exposure up to $300,000 for a package that includes category exclusivity, he said.

Geike said Unilever is currently evaluating the effectiveness of the program and expects to decide by April how to best utilize the system. Unilever thus far has been using it to introduce new products, but he said an analysis of how the interactive kiosk component is being used could lead the company to explore other options.

"We believe that it's a great place to be, and we're working on understanding how people use it," he said. "The temptation is to evaluate based on how much product is actually moved, but we're really trying to measure it on the communication value to the individual that's using it."

Lief Larson, group publisher, Kiosk Magazine, and chairman of the Lexington, Ky.-based Kiosk Association's committee on advertising, said he thinks that kiosk advertising could pick up as the economy moves back into a growth phase.