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11 A preliminary set of 20 telephone interviews with media plan- among the public, not the image of transit advertising among ners confirmed the initial hypotheses that (1) the majority purchasers of advertising. It was therefore not pertinent to the of advertisers use media planning services and (2) media current study. planners act as gatekeepers to advertisers in the selection of Beyond TCRP, a 2005 survey by the Traffic Audit Bureau for media and therefore have most of the leverage when it comes Media Measurement Inc. (TAB) reported findings on national to selecting which media to purchase. Therefore, with the advertisers' use and perceptions of out-of-home media, in gen- approval of the project panel, the research team decided to eral (10). A 2005 study in the Journal of Media Economics, enti- focus the main quantitative study on media planners, rather tled "Local Advertising Decision Makers' Perceptions of Media than on advertisers. Effectiveness and Substitutability," reported on local advertis- The sample of 153 media planners comprised general media ers' perceptions of the effectiveness of various local media for- planners and out-of-home media specialists. General media mats (14). A 2002 Arbitron study reported findings on the planners with predominantly national advertisers as clients as importance to advertisers of audience measurement systems well as those with predominantly regional and local advertisers (9). And finally, a study commissioned by Starbucks evaluated as clients were surveyed. The hypothesis was that significant the effectiveness of out-of-home media in achieving the coffee differences would exist between each pairing in purchasing company's communications objectives (12). behavior, levels of familiarity and usage of transit media, and attitudes and perceptions of transit media. The sample included Advertising Revenue Generated all geographic areas and media planning houses of all sizes. by Transit Agencies During and after the media planner quantitative study, the research team interviewed a random sample of advertisers for TCRP Synthesis 51 (1) reported that, in 2002, the actual their experiences with and opinions of transit advertising. amount of dollars coming into transit agencies from the sale The research team also conducted telephone interviews of advertising ranged from $50,000 for the smallest agencies with 15 advertising sales contractors. Here, it was important (e.g., Ben Franklin Transit in Richmond, WA) to $150,000 to to understand their views of transit media, especially if they $300,000 for mid-range agencies (e.g., Fresno Area Express) sell other types of media as well. Also, as the actual sellers of the to anywhere from $3.5 million to $20 million for large tran- medium, in the large majority of instances, it was important to sit agencies in top 20 media markets (1, p. 19). Furthermore, hear their thoughts on obstacles to sales growth. Included in advertising revenue typically represents an extremely small the interviews were high-level representatives of most of the portion of transit agency total revenue. Based on its survey of major media sellers, who, through recent consolidations, are 53 transit agencies representing a cross section in terms of responsible for the majority of the transit ad sales conducted size, location and whether the agency was a bus-only, rail- through contractors. only or a bus-and-rail system, the study reported that adver- Finally, the research team also conducted a survey of tran- tising revenue constitutes between 0.1% and 3.2% of transit sit agency marketing executives. It was important to hear from agency revenue (1, p. 19). the transit agencies themselves on ideas for, and obstacles to, TCRP Synthesis 51 (1) also reported that advertising rev- increasing advertising sales. enues received by transit agencies grew between 1999 and 2002. As Figure 2 shows, over that period, more than 25% of the agencies surveyed achieved advertising revenue growth of more Literature Review than 60%. TCRP Synthesis 51 explains that the most rapid Though the public's perceptions of public transit are widely growth was experienced by the largest transit agencies, driven studied, there are no existing studies of advertisers' perceptions largely by competition for the contracts at a time when media of transit advertising. However, various studies, including sales forecasts were extremely optimistic. Also fueling the previous TCRP studies, have touched upon aspects of transit growth in advertising revenue, according to the study, was advertising and are worth summarizing here. increasing ridership. At the time of the study (2004), public TCRP Synthesis of Transit Practice 51: Transit Advertising transportation ridership had increased 30% since 1995, nearly Sales Agreements (1) reports on the level of revenue generated doubling the growth rate of the population over the same through advertising by a sampling of public transit authorities, period (1, p. 19). as well as the variables that affect this level. TCRP Synthesis of TCRP Synthesis 51 states that the key determinants of an Transit Practice 32: Transit Advertising Revenue: Traditional agency's revenue from advertising are the transit agency's size, and New Sources and Structures (8) was the 1998 precursor to which in turn determines the amount of advertising inventory TCRP Synthesis 51 and reported essentially similar data. TCRP available, and the rates the agency is able to charge for its adver- Report 63: Enhancing the Visibility and Image of Transit in tising inventory. Rates, in turn, are dependent on the popula- the United States and Canada reports on the image of transit tion of the market, the placement of the ad, and the size of

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12 30% 25% Pct. of Transit Agencies 20% 15% 10% 5% 0% No change/ 1-19% 20-39% 40-59% 60%+ decline Change in Adv. Revenue, 1999-2002 Source: TCRP Synthesis 51 (1) Figure 2. Growth of transit agency advertising revenue, 19992002. the ad. The study found that, among bus exterior advertis- both interior and exterior; and train stations and platforms. ing options, bus wraps could command a significantly high Although 95% of bus services offer exterior bus advertising, premium. For example, full bus wraps were priced four times only 23% sell bus wraps. Among the 77% of rail services that higher than the package of two kings, a tail and a headlight in sell car interiors and 69% that do rail platforms, only 23% sell some larger markets. In some medium to smaller markets, car wraps and only 23% sell digital displays. The study sug- bus wraps sold at prices five to ten times the price of a king gests that transit agencies could increase the value of their (1, p.18). advertising assets by creating new inventory (1, p. 10). It As alluded to above, another factor in determining overall found as well that a minority of public transit authorities (less advertising revenue levels can be the timing of negotiation of than 20%) sell advertising space on fare cards, tickets, trans- the advertising sales contract. Because of the apparent adver- fers, schedules, maps, paratransit vehicles, and structures that tising boom in the late 1990s, many transit agencies negotiat- are part of the right-of-way (1, p. 10). ing their contracts at that time benefited from the industry's Something that can reduce potential advertising rev- optimism in the form of greatly inflated minimum annual enue, the study notes, is the use of non-standard ad sizes. guaranteed revenue levels. Among the 13 largest transit agen- When ad sizes deviate from the most common (bus kings, cies that participated in the TCRP Synthesis 51 study, the three queens, etc.), advertisers are less likely to purchase that ad reporting above average revenue levels attribute this result space because it necessitates additional production expen- to having negotiated their ad sales contracts during a general diture (1, p. 5). economic boom time and to having had big players compet- The 1998 study (8) was essentially a survey of advertising ing for their contracts (1, p. 23). practices from across the country and overseas. Though Among the 13 medium to small agencies that responded to the advertising revenue was not the main focus of this study, study survey (all bus-only systems), above average revenue per- it did report that revenue from advertising constituted formance was attributed to two factors. One factor was negotiat- from 0.1% to more than 6% of operating budgets, with the ing advertising sales contracts during an economic boom. The majority of transit agencies around 0.5% (8, p. 21). It also other factor was selling advertising in house (1, p. 24). reported that 58% of the bus services responding to the sur- TCRP Synthesis 51 also offers ideas for how transit agencies vey indicated that they sell whole bus wraps (8, p. 14). The can increase their revenue from advertising. In Chapter Three, survey was answered by 26 U.S. transit agencies of varying "Market for Transit Advertising," the study notes the following: sizes and locations. Of potentially great future significance is improved audience measurement and validation, because the value of outdoor Advertisers' Needs with Respect advertising has been held back by the absence of detailed data on to Out-of-Home Advertising audience demographics." (1, p.15) In early 2002, Arbitron, the media measurement company, TCRP Synthesis 51 found that the most common transit interviewed 300 advertisers in an Outdoor Industry Needs advertising occurs on buses, both interior and exterior; trains, Study (9). The study found the following:

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13 An audience ratings profile of outdoor media consumers is Table 1. Frequency of 75 national advertisers' usage needed. Agencies and advertisers urgently requested age, sex, and of out-of-home media. gender information for those exposed to outdoor advertising, as well as information on roads traveled in the past week and data Frequency on the shopping and buying habits of consumers reached by out- door media. (9) OOH Media "Regularly" "Occasionally" "Never" No. % No. % No. % At the time, the only audience measurement available was counts of vehicular traffic. Though audited by a third party, Billboards 28 38 41 54 6 8 the TAB, most media planners and advertisers still found the Alternative OOH data too flimsy for planning and evaluation purposes. This 19 25 46 62 10 13 (including in-store) study marked the beginning of the multi-year collaboration Transit 9 12 45 60 21 28 among Arbitron, the TAB and the Outdoor Advertising Asso- ciation of America (OAAA) to institute an "eyes-on" mea- Street Furniture 7 9 43 58 25 33 surement system--one that measures the number of people Cinema 3 4 34 46 38 50 actually viewing the billboard--that will debut in fall 2008. Source: TAB (10) Use of Out-of-Home Advertising Tactical--surprise and delight our audience The TAB--a not-for-profit agency founded by national Geographic and demographic targeting advertisers, advertising agencies and out-of-home media Build local presence--community companies--conducted a survey in 2005 of members of the Take advantage of receptivity at events Association of National Advertisers (ANA) (10). The TAB is Mass reach out-of-home media's "verification authority" and, as such, is Proximity to retailers/malls/point of purchase the keeper of the only existing methodology for calculating New product launches (10, p. 5) the audience impact of out-of-home media. The aim of the 2005 survey was to understand national advertisers' use of The report concludes that there are eight "main challenges out-of-home media: frequency of use, amount of spending, advertisers want addressed by the out-of-home industry": barriers to increasing spending, and more. The survey yielded 75 responses, which, the report on the Accountability/measurement survey acknowledges, is too small a sample to be truly repre- Metrics for including in return-on-investment (ROI) sentative of national advertisers. Among its 75 respondents, evaluation the survey found that one-third either does not use out-of- Proof of performance home media or uses it only rarely. Sixty-six percent of respon- Audience research dents reported that out-of-home media is less than 5% of their Production costs relative to space costs total media budgets. Thirty-five percent said they expected Costs--some formats/national campaigns next year's out-of-home budget to increase, and 59% said they Availabilities and locations expected it to stay the same (10, p. 3). Lack of cross media currency comparability--OOH is cur- When asked how often they use transit media, nine respon- rently dealt with as a separate line from other media dents (12%) said "regularly," 45 (60%) said "occasionally," and 21 (28%) said "never" (10, p. 4). These responses are shown Several of the barriers are related to the ability to measure with the responses for other out-of-home media in Table 1. and assess the value of out-of-home media with methods com- Respondents were able to define the categories of media how- parable to those in use by traditional media forms (10, p. 6). ever they saw fit. As a result, some categories may be over reported. Over-reporting would most likely occur in the "Alter- Effectiveness of Out-of-Home Advertising native OOH [out of home]" and "Transit" categories. The survey went on to ask respondents about the reasons Billboard Effectiveness they have for using out-of-home advertising and the barriers There are two field studies that examined the impact of that limit their usage. These questions were open-ended-- out-of-home advertising. i.e., respondents were required to write in their answers rather than select options from a pre-established list. Accord- The Mentos Study. A recent study sponsored by OAAA ing to the survey report, there were seven top reasons given and Posterscope, a leading out-of-home media agency, mea- by respondents for using out-of-home media: sured the effectiveness of an out-of-home campaign for the