Transit Advertising Sales Agreements (2004)

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5 CHAPTER TWO CURRENT PRACTICES IN TRANSIT ADVERTISING With few exceptions, transit agencies in the United States accept and display advertising on their property and vehi- cles, primarily for the purpose of raising revenues. Adver- tising revenues are generally channeled to transit agencies’ general funds, although in some cases advertising is sold in exchange for the upkeep of bus shelters, repainting of buses, or media trades. For some agencies, an important reason to accept advertising is to provide a service to the community through the display of public service or co- promotional announcements. ACCEPTING TRANSIT ADVERTISING The large majority of U.S. transit agencies display adver- tising in or on buses, rail cars, and stations. In the survey of transit agencies conducted for this report, 96% of respond- ing agencies reported accepting some form of advertising. While accepting advertising, transit agencies may opt to limit the size or placement of advertisements. Bus wraps in particular generate varied reactions and are often limited in number, time, or place, or banned altogether. In restricting advertising sales, transit agencies may be motivated by aesthetic considerations, often driven by the preferences of the governing board. Agencies may also seek to create a clean and uncluttered appearance on their property and ve- hicles to maximize the prominence of agency logos and other branding. Cities such as Seattle limit advertising on the right-of-way, effectively precluding display of advertis- ing on bus shelters. When executed carefully and creatively transit advertising can be attractive and even create value for transit customers. Back-lit displays can brighten and add color to a dark station interior. Bus shelter advertising can bring color and light to streetscapes. On a practical level, participants in focus groups in New York City have said they welcome advertising in sub- way cars because the advertisements help them avoid uncom- fortable eye contact with other riders and provide something to look at during trips. The experiences of the few agencies that traditionally have not accepted any advertising provide interesting perspectives on these issues. The one large agency that has not displayed advertisements, Houston Metro, has prohib- ited advertising on bus exteriors to brand buses with the Metro name and make the vehicles visually clean and no- ticeable. However, Houston Metro may begin accepting advertising at bus stops, at stops on the new light rail line, and at transit centers, although no decision has been made. (Note that co-promotions are accepted for interior bus cards.) The San Diego Trolley permitted no interior or exterior advertising on its vehicles or stations when the service opened in 1981. The trolley cars were painted a bright red that became a powerful brand. The branding and clean ap- pearance of the trolley helped to differentiate it from bus service and attract customers who avoided taking the bus. In late 2002, however, the San Diego Trolley wrapped some of its trolley cars with advertising tied to the Super Bowl played in San Diego in January 2003. The wraps generated revenue that was used to repaint the trolley fleet. Very few complaints about the wraps were received. The public seemed to accept the wraps because they brought in the revenue needed for the repainting. In Montgomery County, Maryland’s Ride-On bus sys- tem has not accepted advertising since the early 1980s, when a controversy over abortion-related advertising prompted the county council to stop accepting advertising on the county’s bus fleet. The issue arose again in 2002 when the county council voted to resume advertising on bus exteriors, although the county executive was opposed. County staff has been concerned about how advertising displays would affect bus aesthetics, particularly because the paint scheme is not designed for the display of ads and the addition of advertising would require a new paint scheme and the repainting of the entire fleet of 350 buses. TYPES OF TRANSIT DISPLAYS Bus Advertising The most common type of transit advertising is the exterior bus display. Side displays come in three standard sizes: queen, king, and super king. King-size displays, measuring 30 in. by 144 in., are the most common. Queen-size dis- plays are smaller at 30 in. by 88 in., with super king-size displays at 30 in. by 240 in. In addition, advertisements are commonly placed on the back, as tails (21 in. by 72 in.), super tails, and full backs (see Figures 1–7). These are the standard measurements. Transit agencies sometimes use other sizes for some vehicles, although doing so may re- duce their revenue potential because advertisers find it necessary to reformat their displays.

6 FIGURE 1 Capital Metro (Austin, Texas) queen-size advertisement applied over the preexisting color scheme. FIGURE 2 TARC king-size advertisement featuring a co-promotion.

7 FIGURE 3 San Francisco Muni king-size bus. FIGURE 4 King County bus design for king-size advertisement integrates with advertising, recognizing transit advertising as a functional feature of the bus. Various steps can be taken to enlarge and enhance the value of exterior bus advertising. “Headliners” include a strip above the windows that complements the main adver- tisement below the windows. Full or partial bus wraps use the windows as well as the side panels of the bus (Fig- ure 8). The survey of transit agencies found that exterior bus advertisements are carried by 95% of agencies that operate bus services and allow advertising (Table 2). Interior car cards are sold by 79%. Bus shelter advertising is often controlled by the local municipality rather than the transit agency; only 19% of agencies surveyed sell space at bus stops.

8 FIGURE 5 Golden Gate Bridge, Highway and Transportation District specialized tail integrates with the agency’s color scheme. FIGURE 6 Greater Dayton RTA half back advertisement.

9 FIGURE 7 Community Transit full back advertisement. FIGURE 8 Full wrap (Community Transit) above and wrap leaving windows clear (Chicago Transit Authority) below.

10 TABLE 2 PERCENTAGE OF TRANSIT AGENCIES WITH VARIOUS TYPES OF ADVERTISING Properties Percent Bus Exterior 95 Interior 79 Wraps 23 Stop 19 Passenger shelters other than bus stops 12 Rail Car interior 77 Platforms 69 Other parts of rail stations 54 Brand cars or stations 46 Dioramas 38 Car exterior 31 Car wraps 23 Digital displays 23 All properties Maps 18 Fare cards 14 Billboards on right-of-way 12 Tickets 7 Transfers 7 Trestles/bridge viaducts 2 Rail Advertising Rail car interior and station advertising plays the dominant role in advertising on rail property. Station displays include one-sheet posters (46 in. high by 30 in. wide) and two- sheet posters (twice the width). Back-lit dioramas, which vary in size, add illumination. Inside rail cars, car cards may be posted just below the ceiling or above seats near car doors. As shown in Table 2, among rail agencies responding to the survey, 77% carry rail car interior advertising, with 69% offering advertising on station platforms and 54% in other parts of stations. One-third of the agencies carry advertising on the exte- rior of rail cars. Exterior rail car advertising is not neces- sarily attractive to advertisers because many rail lines op- erate in tunnels and outdoor rail lines often run through thinly populated areas. Other Types of Advertising Advertising may also be sold at transit centers; on fare cards, tickets, transfers, schedules, and maps; and on other property such as station clocks. Fewer than 20% of all agencies surveyed sell advertising on these media. Advertising may also be displayed on paratransit vehi- cles (Figure 9) and on trestles and bridge viaducts or other parts of the right-of-way (Figure 10). New Jersey Transit (NJT) has displayed billboards on train viaducts going back to the 1930s, when the rail lines were privately owned. NJT has approximately 400 small billboards, measuring 6 ft by 8 ft or 12 ft by 25 ft, which are primarily bought by local advertisers. National advertisers buy space on approximately 70 large, 14 ft by 48 ft, billboards. Nontraditional types of advertising include bus wraps, station dominance, video screens, and electronic signs and in-tunnel ads. These are discussed in detail in chapter seven. FIGURE 9 Worcester (Massachusetts) Regional Transit Authority advertising on paratransit vans.

11 FIGURE 10 Billboard on transit property in New York City. USE OF ADVERTISING SPACE Paid advertising constitutes the main use of advertising space on transit property and generates the bulk of adver- tising revenues for transit agencies. Paid advertising in- cludes both advertising displayed solely for the commer- cial purpose of selling a product or service and noncommercial advertising that conveys a social or politi- cal message. As discussed in chapter six, some transit agencies only accept commercial advertisements. In addition to paid advertising, advertising space is also frequently used for transit agency promotions and unpaid PSAs. These are important uses of the space, even though they may consume only a fraction of the total advertising space. Transit agencies typically reserve 10% of the total ad- vertising space for their own communications, although the percentage among agencies surveyed varied from none to 15%. In addition to the space set aside for this purpose, transit agencies may sometimes also use unsold space. Three-quarters of the transit agencies surveyed use some or all of the unsold space for their own purposes. The in- house advertisements are removed, however, if the adver- tising sales contractor sells the space. Some agencies, such as CityLink in Peoria, Illinois, reserve all of their advertis- ing space for paying customers and use only unsold space for in-house messages. In-house space is used for a variety of purposes ranging from customer communications regarding service changes to efforts to engage the community in transit. As an exam- ple of the latter, the Transit Authority of River City (TARC) in Louisville, Kentucky, has wrapped two buses using winning designs chosen from a children’s contest. Co-Promotions A common use of in-house space is for co-promotions with local attractions, such as museums, zoos, sports teams, and special events. The co-promotions often encourage riders to take public transportation to an event or attraction. The transit agency thus promotes use of its services during off- peak hours when there is ample capacity. The co- promotions may attract nonriders, particularly to events where the parking is limited, expensive, or at a distance from the event site. Attracting nonriders not only increases ridership but also builds public support for the transit agency and increases awareness of its services. Transit agencies sometimes place limitations on the manner or type of co-promotions. One objective can be to highlight the transit message. The San Francisco Bay Area Rapid Transit District (BART), for example, limits co- promotions to a primary BART message such as “Take BART to” such-and-such event, or “Save on your BART fare,” with a discounted admission price to an event or mu- seum. The Washington Metropolitan Area Transit Author- ity (WMATA) aims at building ridership, focusing co- promotions on races and sports events that take place at downtown locations with good MetroRail access.

12 Several examples show how co-promotions benefit both the transit agency and other participants. One outstanding illustration is from Philadelphia. The Southeastern Penn- sylvania Transportation Authority (SEPTA) and a local bank, Citizens Bank of Pennsylvania, ran a very successful co-promotion in early December 2001, tied to the bank’s opening of several hundred new branch offices that were purchased from Mellon Bank. Citizens Bank underwrote free rides for more than 350,000 area commuters on SEPTA’s trolleys, subways, and buses in the Philadelphia region during the morning rush hour. The bank also dis- tributed free coffee and donuts at major SEPTA stations. The bank provided sleeves that fit over fareboxes and turn- stiles announcing “Ride Courtesy of Citizens Bank.” The bank advertised the promotion and produced posters for transit stations. SEPTA installed and removed station post- ings and farebox sleeves and up to 1,000 informational car- cards on SEPTA vehicles on a space-available basis, and publicized the event on the SEPTA website, a metropolitan newspaper, and other unpaid venues. Citizens Bank paid SEPTA $355,000 for the promotion. In addition, SEPTA realized an 8% gain in ridership for the day, representing approximately 60,000 trips. The bank felt that this promotion was the most successful banking pro- motion in memory. As a result of the promotion’s success on the bank’s opening day the bank later joined with SEPTA for a fol- low-up promotion. On the first anniversary of the opening, the bank distributed 15,000 free bag lunches at downtown SEPTA stations. Included with the lunches were coupons good for free weekend rides. Ridership increased on the designated weekend. A popular type of co-promotion involves transit agen- cies and sports teams. The team does not even need to be in the same city. Madison (Wisconsin) Metro Transit combined with its advertising sales contractor and a local radio station in a co-promotion for Milwaukee Brewers baseball tickets. The advertising sales contractor provided the baseball tickets to Metro Transit, which worked with the radio station. The ra- dio station gave away tickets to listeners who called in and a station disk jockey accompanied the group to the game. Knoxville (Tennessee) Area Transit (KAT) has run ef- fective co-promotions with a local television station and a museum. Because, unlike billboards, buses are not station- ary, one local television station co-promotion wrapped two KAT buses and then ran “Live at Five Bus” segments on each bus highlighting the route on which the buses would operate the next day. KAT provided free rides on these buses. News anchors from the television station rode these buses and covered the event. The co-promotion provided good exposure for KAT and publicized the route of each bus line. KAT also ran a co-promotion involving art, buses, and a local museum that reached an upscale audience. The Knox- ville Museum of Art exhibited the work of a Tennessee artist, Red Grooms, who has become internationally known for “sculpto-pictoramas,” life-size constructions of buses and other urban scenes. The museum wrapped a KAT bus in solid red with Grooms’ signature on the side. On opening night the bus gave KAT good exposure to museum patrons, most of whom who would not ordinarily ride buses, thus helping to enhance the agency’s visibility and image. A concern with co-promotions is whether the partner would otherwise buy advertising space through the adver- tising sales contractor. To prevent co-promotions from re- ducing the amount of paid advertising, some transit agen- cies limit co-promotions to organizations that have not advertised recently or require that organizations continue their previous level of advertising. A variety of limits are used. BART, for example, does not engage in co- promotions if the partner has paid for advertising on BART during the previous 12 months. WMATA “bonuses” an ad- vertiser with free co-promotional space if they continue their previous level of paid advertising. The Chicago Tran- sit Authority (CTA) enters into co-promotions only with public, nonprofit, and civic organizations; for special events; and with sports teams. These limitations prevent co-promotions from diverting revenues from the advertis- ing sales contractor. Public Service Announcements Advertising space may also be made available for unpaid PSAs. Madison Metro Transit, for example, provides space free on an as-available basis to nonprofit organizations. Madison’s advertising policy recognizes that “many public service ads support worthy causes that improve life in the community.” Metro Transit also provides space for elemen- tary school students as part of safe-riding campaigns. Of those agencies surveyed, 30% set aside advertising space for PSAs, most commonly 10% to 15% of the total space. An additional 12% of agencies surveyed make un- sold inventory available for such announcements. As with in-house advertisements, however, the PSAs are removed if the advertising sales contractor sells the space. Opening up advertising space for PSAs can create goodwill for the transit agency and the advertising sales contractor as well. TARC staff, for example, report that the agency offers space to nonprofits as a community service, which in turn helps build community support and goodwill for TARC. On the other hand, accepting any such announcements can preclude agencies from rejecting controversial PSAs.

13 (See chapter six for further discussion of the public forum issue.) METHODS OF SELLING TRANSIT ADVERTISING SPACE The large majority of transit agencies surveyed (84%) use outside advertising sales contractors. The contractors sell advertising space and post and remove the advertising. A few of these agencies sell some of their space through the advertising sales contractor and some internally; however, 72% of agencies surveyed use an outside advertising sales contractor exclusively (Table 3). By contracting the sales function, transit agencies obtain the benefit of the advertis- ing sales contractor’s expertise, promotional capacity, cli- entele of advertisers, and ability to package transit adver- tising with other advertising venues. The ability of advertising sales contractors to bring in national advertisers is essential to transit agencies in major U.S. metropolitan areas, all of which contract with one or more firms. National advertising is an important source of revenue for these agencies. Most of the transit agencies in the top 20 U.S. media markets that responded to the survey reported that national advertisers account for 35% to 75% of their advertising (Table 4). In practice, only transit agencies in small- and medium- size media markets, which attract primarily local advertis- ers, sell advertising using in-house staff. Of agencies sur- veyed that are in small- and medium-size markets, one- third sell advertisements exclusively with in-house staff. An additional 14% sell by means of both in-house staff and advertising sales contractors (see Table 3). Of the 14 surveyed agencies that sell advertising in-house, only 4 pay commissions to staff for the sales. In two cases, the commission paid is 15%, and in the other two cases, 5%. Several agencies quite successfully use in-house staff to sell advertising. CityLink and Metro (Akron, Ohio), for example, achieve above-average revenues from in-house advertising sales (see chapter four for revenue figures). CityLink staff credit their success to hard work and a sharp eye for identifying advertisers. Staff looks for businesses that would benefit from the combination of advertising venues that CityLink can offer—for example, pizza parlors that will advertise on buses and run coupons in CityLink’s newsletter. CityLink encourages advertisers to buy in TABLE 3 HOW ADVERTISING IS SOLD Type of Advertising Top 20 Media Market, Large Agency Other Transit Agencies in Top 20 Media Markets Mid to Small Media Market Total Contracted 93% 86% 55% 72% In-house 0% 0% 32% 16% Both 7% 14% 14% 12% Total 100% 100% 100% 100% No. of respondents 14 7 22 43 TABLE 4 PERCENTAGE OF ADVERTISING FROM NATIONAL BRANDS Percent of National Advertising Top 20 Media Market, Large Agency Other Transit Agencies in Top 20 Media Markets Mid to Small Media Market Total 0 8% 20% 31% 20% 5 8% 20% 15% 13% 10 — — 23% 10% 15 — — 8% 3% 20 8% 20% — 3% 25 — — 23% 10% 30 — 20% — 3% 35 17% — — 7% 40 8% — — 3% 50 8% — — 3% 55 8% — — 3% 60 8% 20% — 7% 70 8% — — 3% 75 17% — — 7% Total 100% 100% 100% 97% No. responding 12 5 13 30 Note: Percentages may not add to exactly 100% because of rounding.

14 volume by offering free advertisements on interior car cards and publications such as a rider’s guide and customer newsletter. CityLink also sells advertising on the rider’s guide, newsletter, and a historical calendar. MEDIA TRADES Media trades offer a way for transit marketing departments to advertise on radio, television, and in print without incur- ring regular budgeted costs. The transit agency provides space on its property to the radio or television station or newspaper in exchange for space (or time) on radio or tele- vision, or in the newspaper. Media trades are often arranged by the advertising sales contractor as part of the vendor’s contract. Madison Metro’s advertising sales contract, for example, provides for $50,000 in media trades on radio, television, and some print. The value of the trade is calculated at rate card prices. One advantage of media trades is that they occur out- side the transit agency’s budgeting process and thus remain under the control of the marketing department. Agencies may shy away from media trades, however, for a variety of reasons. Some agencies prefer to obtain maximum revenue from the advertising sales contract. Also, the real value of media trades can be difficult to evaluate. Will the transit agency be able to obtain priority for the space and timing of the advertisements? Can the advertising obtained from trades be integrated with the agency’s media planning? If trades are made on the basis of rate card rates, given dis- counting and placement issues, do these rates reflect the true value of the advertisements? If rates are negotiated, how does the transit agency know it is receiving fair value for its space?