At 7-Elevens, Mentus Media Lines Up Ads for Shoppers
As Jeff Kwan waits in line at a 7-Eleven in Rosemead to buy cigarettes and a Lotto ticket, a monitor above him flashes sports scores, weather reports and plugs for Big Gulp drinks.
“When you are on line, there isn’t anything to do,” said Kwan, 25, glancing briefly at the screen.
Enter Mentus Media. The ambitious Minneapolis company headed by the nation’s one-time billboard king has placed video monitors in about 400 Los Angeles-area 7-Eleven stores to fill shoppers’ idle moments with ads.
Mentus is part of what experts describe as an explosion of ads in stores, where shoppers are captive audiences for advertising. Pitches are plastered on floors, inside shopping carts and on ATM screens--many of them intended to spur impulse buys.
“Almost everywhere you turn, someone is trying to put an advertiser message on something,” said Michele Dorso, a media buyer with Saatchi & Saatchi in New York.
Retailers tend to welcome the ads, which allow them to make money from previously unused space in their stores. In the case of Mentus, 7-Eleven parent Southland Corp. receives a cut of Mentus’ advertising revenue plus free ad time to pitch Big Gulps, Slurpees and other items.
Mentus isn’t the first outfit to bring commercials to the checkout counter. In 1993, Turner Broadcasting System folded its pioneering Checkout Channel, which broadcast commercials and news from Turner’s CNN to supermarket shoppers as they waited in checkout lines.
Media experts said the Checkout Channel was undone in part by complaints that it was too noisy. And advertisers questioned whether grocery shoppers would leave long checkout lines to hunt down an advertised item.
In contrast, Mentus’ TV monitors do not have sound. And they are located in convenience stores, where lines usually are short and items like Big Gulp drinks are steps away. A big question, though, is whether noiseless ads are compelling enough to get noticed.
“Sound is one reason why television is the total-persuasion medium,” said New York media consultant Joe Mandese.
Indeed, Mentus’ screen escaped the notice of some people shopping recently at the Rosemead 7-Eleven.
“I come nearly every day, and I never noticed it,” Estella Rodriguez, 24, said upon leaving the store with a fistful of lottery tickets.
Advertisers nonetheless are testing Mentus because it allows them to reach consumers when they have nothing else to do but wait--and watch ads.
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New York-based Hachette Filipacchi is running 10-second spots in Los Angeles for two of its women’s magazines, Elle and Mirabella. The publisher wants to see if the ads--which appear every two minutes--nudge shoppers to buy one of the magazines.
“I think it’s a terrific medium,” said Jim Docherty, president of Hachette’s new media division. “It provides us the opportunity to do branding and selling at the point of sale.”
Mentus is headed by Gerard P. Joyce, briefly a big player in the billboard business. Through aggressive acquisitions in the 1980s,
Joyce turned his Scranton, Pa.-based Patrick Media into the nation’s largest billboard company. But when tobacco advertising fell off in 1989, Joyce was forced to liquidate the debt-ridden outfit.
The experience left Joyce anything but gun-shy. Documents filed with the Securities and Exchange Commission show that Joyce is using debt to build Mentus--though its debt of $38.6 million doesn’t approach the $750 million Patrick owned when it imploded. Mentus posted losses of $6.4 million in 1997, and isn’t expected to become profitable soon, according to the documents.
Among Mentus’ backers are Sandler Capital, a New York investment firm, and Pulitzer Publishing, publisher of the St. Louis Post Dispatch. Neither firm responded to requests for comment.
Joyce and his partner, former investment banker Thomas M. Pugliese, declined to discuss Mentus’ finances or say how much they each invested in the firm. Documents show they together control 78.3% of Mentus, and that Mentus used $1.9 million from a $40.3-million private debt placement earlier this year to repay a loan from Joyce. Joyce, as chairman, earns $251,741, and Pugliese, as chief executive, earns $212,587.
Since forming the company in 1990, Joyce and Pugliese have launched Mentus in 15 cities, including San Francisco, with the bulk of its screens in 7-Eleven stores. But Joyce said he envisions a network that includes gasoline service stations, drug store chains and high-end carwashes. Ads are transmitted via telephone lines to its screens from its headquarters in Minneapolis. The 10-second ads, which outnumber news tidbits, are similar to theater stills that precede movies.
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Mentus said that it has attracted about 200 advertisers so far, including local car dealers, newspapers and radio stations, but it isn’t sold out. To lure advertisers, it’s been granting discounts and cutting special deals.
WBAL-TV, the NBC station in Baltimore, said it received a considerable discount on screens in 85 convenience stores and got screens in 30 additional stores for free. Kerry Richards, the station’s head of promotion, said it used the screens to plug its 11 p.m. local news show during the May ratings sweeps.
Richards said Mentus was “part of a very large media mix,” along with NBC’s strong network lineup, that helped the news program win its time slot. Richards said that while Mentus looks promising, there is no equivalent of a Nielsen rating to show how many shoppers are watching the ads.
Mentus says it uses register receipts to tell advertisers how many shoppers visit a store, which can run as high as 3,000 in a busy location. The company also surveys shoopers to determine whether they’ve seen specific ads.
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Another issue for advertisers is whether Mentus can verify that ads actually aired.
“How do you know a store manager didn’t unplug the TV set, or a power outage didn’t take out the monitor?” said Dave Yacullo, a manager with Outdoor Services in Los Angeles, a specialist in out-of-home advertising.
Joyce said Mentus’ computer makes an electronic record when it transmits ads to monitors in individual stores. Joyce said that Mentus’ computer electronically checks monitors every four hours to determine if they are operating. Unlike TV, radio and even the Internet, there is no independent auditing service for ad networks such as Mentus’.
