The payment terminal is about to become a point-of-sale entertainment center, as VeriFone Holdings Inc. prepares to expand the marketing engine it designed for taxicabs to large retailers.
VeriFone announced two executive appointments Wednesday to guide this strategy, which has its roots in the 2007 deployments of its payment terminals in New York City taxis. The San Jose, Calif.-based company still sees New York taxi terminals as the test bed for what it calls “payment-enabled media” applications, but it is ready to build on its early work and expand this system to other industries.
VeriFone describes its taxi terminals as full computers running Microsoft Corp.’s Windows operating system, giving it extra flexibility in how it presents information on the devices’ screens. Cab riders are presented with the sort of marketing normally only seen online: video ads that can be made interactive so users can follow links or play games on the screen.
Though this approach treats consumers as a captive audience for advertising right as they are making a payment, VeriFone contends it does not contradict the payment industry’s constant push to speed up transaction times.
“Shaving a second from the checkout may translate to millions of dollars for the retailers, … but the retailers acknowledge that there is a downtime as they scan the items, as you are looking at tabloids,” says Bulent Ozayaz, general manager of VeriFone’s payment-enabled media operations.
During that downtime, this service “may help them to advertise in-store items or even generate new top-line profit advertising certain items that do not conflict with their business model,” he says.
Ozayaz previously was the general manager of VeriFone’s U.S. wireless business. VeriFone has also hired Chris Polos as its vice president of U.S. media sales. Polos, who reports to Ozayaz, most recently was director of advertising at Danoo Inc.
Most terminals large retailers use already have the technology to display advertising, Ozayaz says. Retailers added this technology was when they upgraded their machines to comply with the Payment Card Industry Data Security Standard, which requires certain security measures for retailers that handle card data.
“The technology is there,” Ozayaz says. “The infrastructure cost is minimal or none.”
Ozayaz and Polos say they are just at the beginning of their expansion efforts for their advertising system and are working to attract more advertisers. VeriFone would share ad revenue with the merchant that displays the ads on its terminals. Ozayaz predicts large retailers will have the advertising system operational within 12 to 18 months.
Because its touch-screen terminals are interactive, it can measure viewers’ levels of engagement, Polos says. In the taxis, for example, viewers could turn off the screen if uninterested.
VeriFone’s first experiments with this technology were in its 2007 deployments with New York City taxis. This year it expanded its system to taxis in Chicago, Boston, Miami, Las Vegas, and Washington, D.C.
Taxi rides last an average of 14 minutes, and during this time “you’re looking to be entertained or distracted,” Polos says. “From an advertiser’s perspective, it’s one of the best experiences you can get.”
Polos acknowledges the experience would be different at the point of sale, where the opportunity to engage consumers may be just a few seconds. So the experience would have to be adjusted before it can be deployed at different merchants. “Each retail environment will be different,” he says.
Meanwhile, VeriFone plans to update the machines in New York cabs so that all have Adobe Systems Inc.’s Flash 10 technology in place by June to take better advantage of the more powerful terminals the cabs use, Polos says, noting anything tested on those machines could be reproduced at its point-of-sale terminals.
Adil Moussa, an analyst at Aite Group LLC of Boston, says VeriFone’s advertising system is “a good idea” but one that may not be a fit for all retailers. He recalls once seeing a similar system tested at gas pumps, but he could not remember whose technology it was. “I couldn’t take my eyes off it,” Moussa says, stressing that while pumping gas there was little else on which to focus.
“I was really surprised when I saw it, but I’ve never seen it again,” he says.
Moussa questions whether the same system could work in stores, where consumers are less interested in killing time and more interested in paying and then going home. Even companies with massive advertising budgets “would be more concerned about annoying the customer” if consumers viewed the ads as intrusive.
Another concern is that terminal screens may be too small for many customers to want to watch, Moussa says.
Ultimately, the system could be engaging and effective if it is in the right environment. But it is up to VeriFone and its clients to make sure they are presenting ads in the right place, he says.
