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9 CHAPTER 1 Background Problem Statement Advertisement-skipping technology (e.g., TiVo) makes it even less attractive to advertise on television. Transit advertising is a small but important contributor to the operating budgets of public transit agencies across the On the whole, advertisers report less satisfaction with the United States. Thanks in part to advertising revenue, which performance of traditional media (5). Not only are tradi- typically represents less than 5% of a transit agency's operat- tional media becoming less effective, but also the popularity ing funds (1), public transit agencies are able to keep fares of out-of-home media is rising because they are seen as within reach of the populations they serve, thus meeting the becoming more effective. One observer commented: "The most fundamental aspect of their missions. world of outdoor media, so often the unloved child of adver- The best available estimate is that transit media generated tising, has suddenly become the exciting cousin" (6). This sales of $801 million in 2007 (2). It is fair to say that roughly perception is certainly related to the belief, often quoted, 50% to 60% of the sales revenue made its way into the hands that people are spending more time outside of the home (7). of public transit agencies. The rest was kept by the advertis- Whereas all advertising sales grew at a compound rate of ing sales contractors that actually generated the sales, in the roughly 4% between 1997 and 2007, advertising sales for out- majority of cases. Transit media sales have been fairly stag- of-home media grew roughly 6% over the same period (2). As nant since they dropped over 30% from their height in 2003 the outdoor advertising community likes to point out, out- (see Figure 1). of-home media's advertising growth rate is second only to Substantial growth of transit advertising appears feasible in that of Internet advertising. the context of the U.S. advertising industry overall. While This study was motivated by the belief of the America Public growth in the industry is slow, forecasted at only 2% for 2008 Transportation Association (APTA) that public transit agen- (3), the size of the industry is enormous. Although there is no cies could be--and probably have a need to be--benefiting definitive source, a solid estimate for 2007 expenditures on more from their advertising assets. Transit is currently just media (not including advertising production) in the United 0.4% of all media spending in the United States. APTA has States is $230 billion (4). With such a large "pie," it indeed set an objective of capturing 1% of U.S. media dollars; in seems reasonable for transit agencies to obtain a larger piece. other words, growing transit advertising from an $800 million Adding to this optimistic view is the growth of out-of-home business to a $2 billion business--two-and-a-half times its advertising. Advertisers are looking for alternatives to tradi- current size. tional media--television, radio, print--because the impact of To state the obvious, this is an extremely aggressive growth these media today is widely regarded as diminished. Myriad target. In this light, one can appreciate that the essential ques- technology-driven cultural trends are pointed to as culprits: tion of this study is not "What can be done to stimulate higher sales for transit advertising?" Rather, the essential question is More and more, people are getting their information and "What can be done to generate a quantum leap in demand for entertainment on their computers, not on televisions or transit advertising?" Addressing this question was the focus radios or in magazines. of the research conducted for this study. As context, this With the advent of the many new channels that compose chapter offers explanations of the media landscape, transit cable television, the mass audiences that the major national advertising's position within this landscape, and advertisers' networks used to be able to deliver no longer exist. changing attitudes toward media.