Transit Advertising Sales Agreements (2004)

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33 CHAPTER SEVEN CASE STUDIES IN NONTRADITIONAL FORMS OF TRANSIT ADVERTISING Nontraditional forms of advertising offer the opportunity to tap unused space and create exciting forums for advertising that can benefit transit riders and transit agencies. Several nontraditional forms of advertising have attracted the inter- est of a number of transit agencies and companies that build and operate advertising displays, including bus wraps; video screens and electronic signs in buses, trains, rail stations, and bus stops; in-tunnel advertising; and sta- tion dominance (the station equivalent of a wrapped bus). Experience with each of these types of advertising dis- plays demonstrates at least some potential to generate revenue for transit agencies. The full revenue potential has yet to be proven, however, for most of these nontraditional forms of advertising. Their revenue-generating potential may be circumscribed by limited demand from advertisers for certain types of advertising and technical issues that limit the number of installations. Some types of displays, such as silent television monitors and in-tunnel displays, require that advertisements be adapted specifically for the new medium. Customer response has been mostly positive, although some issues have arisen; for example, with the audio from television monitors. Many of these types of advertising are provided by small and/or start-up companies. The limited capital and stability of some of these companies, combined with the pace of decision making at transit agencies and their need for competitive selection processes, can impede adoption of the new opportunities. Changes in the ownership of some companies have required transit agencies to re-start the procurement process, thus delaying selection of a ven- dor and installation of new technologies such as electronic signs. RFPs are sometimes revised as new companies ap- pear or existing companies gain new capabilities, thus cre- ating opportunities that make previous agency procurement plans obsolete. Despite these issues there have been nota- ble positive experiences, as illustrated in the case studies discussed here. BUS WRAPS Of transit agencies surveyed, 23% use bus wraps. As noted in chapter four, bus wraps command premium advertising rates and can be a good revenue generator. Several factors tend to limit the extent of bus wraps or may cause agencies to refrain from wrapping any buses. One set of issues concerns visibility and safety. Law en- forcement agencies want to be able to see into the bus, and passengers may want to be seen. In addition, wraps can re- duce visibility out of the bus and therefore impede passen- gers’ ability to determine their location. Aesthetic considerations may also play a role. Senior staff and/or agency board members sometimes simply de- cide that they prefer to limit the size of advertisements on the vehicles. Also, in some cases, transportation boards may decide to place a cap on the number of buses that are wrapped. For example, CityLink, at the direction of its board, limits bus wraps to 10 of the fleets 52 buses. Coordination issues with the bus operations division can also limit the number of buses that can be feasibly wrapped. It can be difficult to coordinate application of the vinyl with the advertising sales contractor. In addition, is- sues can arise when buses are in an accident and the adver- tisement (bus) is not on the street. Some transit agencies have found that depending on the quality of the original paint job buses may need to be re- painted after the wrap is removed. This cost can also limit the use of wraps. KAT buses, for example, needed to be re- painted after wraps were removed. KAT now limits the number of wrapped buses to 10 or 11. In their first adver- tising sales contract, KAT absorbed the repainting cost; in the subsequent contract, staff made the repainting cost the contractor’s responsibility. The number of advertisers willing to pay premium ad- vertising rates for wrapped buses may also be limited. Ad- vertisers tend to favor wraps for special circumstances, such as product rollout campaigns. For day-to-day adver- tising campaigns advertisers can make a greater impact by spending their dollars on a larger number of exterior adver- tisements than on a smaller number of wraps. The attrac- tiveness of wraps is also limited by a transit agencies’ po- tential inability to guarantee that the bus will run on a specific route or in a targeted area of town. Some agencies have benefited by targeting wrapped vehicles to certain types of events, vehicles, or advertisers. Wraps are sometimes limited to buses used for special events, thus targeting a desirable audience and facilitating coordination with the bus operations division. CityLink has started to market the wrapping of 18-passenger paratransit vans, which are more economical to wrap than regular buses.

34 The advertising sales staff is targeting nonprofit organizations or businesses that sell to the disabled community. STATION DOMINANCE This category is the station equivalent of the wrapped bus. As with bus wraps, the attraction to advertisers is the greater im- pact created for the advertising message, which produces premium pricing for the advertising sales contractor and the transit agency. Station dominance appeals to national advertis- ers and, in some cases, local advertisers as well. The CTA, MBTA, and BART have carried station domi- nance advertising, which is sometimes also called station blitz advertising or station saturation. In Chicago, a station blitz in- volves 1- and 2-sheet posters, backlit dioramas, and in some cases advertisements on step risers, thus including both tradi- tional and nontraditional displays. Four or five stations, lo- cated primarily in the Loop (downtown) area, and at O’Hare International Airport, have been involved. Station domination campaigns in Boston are comprised of 10 to 20 posters per station. Stations are located primar- ily in downtown Boston or in Harvard Square, which tar- gets a college-age demographic. On average, one campaign is run each month. VIDEO SCREENS AND ELECTRONIC SIGNS Video screens and electronic signs can be placed on board buses or trains, in rail stations and transit centers, or at bus stops. The programming typically combines news, weather, and entertainment and often a significant amount of advertising. Service information, sometimes including real- time bus or train arrival information, may also be offered. (Where service information is included as part of a nontra- ditional advertising project, an exit strategy may be needed to continue providing essential service information in the event that the partner company ceases operations.) There may be audio all of the time, some of the time, or not at all, or only through a separate FM broadcast. Several companies now offer video screen or electronic sign installation and operation in some or all of the possi- ble locations—on-board and in-station. A number of instal- lations have been completed or are in process. The follow- ing section reviews recent activity with video screens and electronic signs. Port Authority Trans Hudson: In-Station Video Screens Port Authority Trans Hudson (PATH) has one of the earli- est of the currently active installations of in-station video screens. PATH’s objective was to provide customer infor- mation to riders, including arrival times for the next train. The screens also offer news, weather, sports, and advertis- ing (Figure 14). The video system is installed in all 13 PATH stations in New York City and New Jersey and consists of 275 moni- tors installed on platforms and other locations that are gen- erally within the fare control area. There is no audio, partly in deference to the PSAs that are broadcast regularly throughout each station. This system was called MetroVision when it was in- stalled in about 1996. After several years, PATH operated the system by itself, without advertising, using the CNBC news feed. A new vendor started operating the system in June 2003, after a competitive selection process. The con- tract provides for a revenue guarantee to PATH of $10,000 per month, plus a 15% revenue share. PATH staff believes that advertising revenue would be higher if audio were added, at least for the advertisements, because audio en- hances the quality of communication and would eliminate the added cost of modifying television advertisements to run on the PATH system. MCTS: In-Bus Video Screens As of mid-2003, the MCTS was in the process of installing video screens on 400 of the agency’s 500 buses, with com- pletion scheduled by the end of 2003. These screens were installed in all buses except for 100 buses that will be re- tired within the 5-year life of the system. MCTS’s objectives are to comply with American’s with Disabilities Act stop announcement requirements, while also providing information and entertainment to customers and generating revenue for the agency. Programming in- cludes news, weather, sports, trivia, and next-stop informa- tion. The video is updated each morning before the buses leave the garage, with the intent to update the video at least twice a day by updating some buses at the garage and then spreading the new video among buses by means of prox- imity feeds. Information for automated next-stop an- nouncements is generated by means of GPS devices on each bus. Each bus is equipped with three flat screen television monitors and a central processing unit (Figure 15). The system runs 18 minutes of advertising per hour in 30- second advertisements. Audio is provided only for the ad- vertisements and next-stop announcements; other content is silent. The contractor’s installation and equipment costs in Milwaukee total approximately $11,000 per bus. The con-

35 FIGURE 14 PATH in-station video screen. FIGURE 15 Video screen installed in MCTS bus. tract provides for payment to MCTS of a 10% revenue share after advertising agency commissions. It remains to be seen how much money this revenue share will generate. There is no guaranteed revenue amount. Much of the initial customer reaction was positive as customers feel that the video enhances their ride. Some riders objected to the presence of advertising, however, and initially there were problems in getting the sound adjusted properly. Part of the system involves off-board audio an- nouncements for customers at bus stops. Drivers boosted the sound to a level where they could hear the exterior an- nouncements, which produced overly loud internal audio. Training of drivers and additional technical support has all but eliminated this problem. MCTS aims for a controlled volume that is appropriate to the level of ambient noise.

36 The electronic displays will integrate with existing light-emitting diode signs that convey real-time train arri- val information. The new displays will include service in- formation, news, weather, and advertising. The capability for displaying emergency messages is also included. A MCTS telephone survey of bus riders in the fall of 2003 showed very favorable customer response to the video screens. Seventy-six percent of bus riders had ridden a bus with the video screens in the past month. Of those exposed to the screens, 86% were very or somewhat satis- fied, 6% were neither satisfied nor dissatisfied, and only 7% were somewhat or very dissatisfied. Two-thirds of the customers reported that they preferred to ride in a bus with the video screens. In terms of content, the highest levels of interest were in weather reports and stop announcements, followed by news and sports headlines. MARTA: Video Screens on Rail Cars and Buses In 2003, MARTA issued an RFP on bus/rail car video screens, the primary intent being to take advantage of an emerging technology that can provide entertainment and improved communications to its riders along with generat- ing additional revenue. Greater Cleveland Regional Transit Authority: In-Station Electronic Signs The RFP required revenue guarantees, along with a per- cent revenue share after advertising agency fees, with no transit agency equipment or installation cost. It was antici- pated that this contract would be awarded in the fourth quarter of 2003. The Greater Cleveland Regional Transit Authority (GCRTA) is taking a two-prong approach to providing real-time customer information at rail stations and transfer points. One system is being installed by a commercial ven- dor and will generate modest revenues to the GCRTA. The other system will be installed at locations that are not at- tractive to advertisers—and thus not feasible for the com- mercial vendor—and will be paid for by the GCRTA. As of mid-2003, two companies had responded to the RFP. The companies can provide MARTA with the capabil- ity to provide entertainment and stop announcements (us- ing GPS devices) on buses, and entertainment, news, and information on rail cars. Both companies have proprietary methods of down loading video at multiple locations and times throughout the day and would be able to equip MARTA’s entire fleet. By the end of 2003, 25 stations in the GCRTA system will have electronic signs displaying news, weather, sports, and advertising. The signs will also display real-time ser- vice information supplied from GCRTA’s new bus and rail car vehicle locator system. Electronic signs will be in- stalled at rapid stops and major transfer centers where ad- vertising is attractive given ridership levels. The objective of the system is to provide customer information without incurring a cost to the GCRTA. Revenue will be computed based on a 10% revenue share. SEPTA: Electronic Displays SEPTA planned to issue an RFP in 2003 requesting elec- tronic displays, such as in-vehicle and in-station television monitors. The goals of this procurement are focused on bringing in new revenue to the agency and to addressing the need for real-time train and bus information. As with the MARTA RFP, SEPTA intends to provide vendors with the flexibility to submit a proposal for parts or all of the system, recognizing that some vendors have the capability to install video screens in some venues and not others; for example, in rail stations, but not on board buses. The system, which features two-line scrolling text, com- plements a separate real-time information system planned for other rail stations and transfer points and park and ride lots—locations relatively unattractive to advertisers. This system is being paid for and will be operated directly by the GCRTA. (The same contractor is also installing equip- ment for automated stop calls on buses and trains.) IN-TUNNEL ADVERTISING MARTA: Electronic Signs Throughout the Rail System In-tunnel advertising moves advertising displays from trains and stations into tunnels. The technology currently used in the United States works on the same principal as the zoetrope, the 19th century optical toy, and as flip-book animation. Images are placed inside the lighted boxes mounted in a subway tunnel. Similar to frames in a movie film, the image in each box is slightly different from the previous one, creating the illusion of a moving picture as passengers move past the series of boxes. Technologies in MARTA issued an RFP in the spring of 2003 for installa- tion of electronic displays throughout the bus and rail sys- tem. The RFP covers rail stations, bus bays, and on-board rail cars, and vendors will be required to provide service to all stations and trains. In addition, MARTA reserved the option to bid rail cars through a separate procurement. In the RFP, MARTA requested guaranteed revenues of $120,000 annually and a share of revenues.

37 Europe and Asia use strobes that are coordinated with the speed of the train. In-tunnel displays have been installed in New York and Atlanta, as well as in Canada, Europe, and Malaysia. MARTA The first in-tunnel advertisements in the United States were installed in 1,000 feet of tunnel in MARTA’s North Line in September 2001. The location was selected based on ease of vendor access for a test installation. The displays consist of a series of 7-in.-deep metal boxes. Each box is about the height of a rail car window. The enclosed boxes contain florescent back-lighting. Several thin, vertical slits in the front of the box align with images on the advertising cards (Butziger et al. 2001) (Figure 16). The advertising lasts ap- proximately 20 seconds as the train passes by. MARTA re- ports that the advertisements met immediately with posi- tive public response. Advertisers have included national automobile, food, and retail companies. MARTA revenues since installation (September 2001 to mid-2003) are more than $270,000. Current contract terms provide for a revenue guarantee of $5,700 per month or a 30% revenue share, whichever is greater. The vendor also reimburses MARTA approximately $1,800 per month for power consumption. MARTA intends to issue a new RFP for additional in- stallations in the subway system. Although initially envi- sioning as many as 16 displays, MARTA intends to allow vendors to propose the number and locations of installa- tions and the amount of revenue that will go to MARTA. PATH In 2001, PATH agreed to test in-tunnel advertisements in two locations. Installation was delayed by the attacks on the World Trade Center and the destruction of the World Trade Center PATH station in September 2001. The first location, on Sixth Avenue in Manhattan, was installed in 2002. The second location is under the Hudson River, just outside the Exchange Place station in Jersey City. Installation is relatively simple. Florescent boxes are mounted on the wall. The boxes contain plastic film with pictures, which are viewable through a narrow vertical slit. The boxes are bolted to I-beams in the middle of the tunnel between the tracks. Track workers must be mindful of the FIGURE 16 In-tunnel advertising boxes at MARTA.

38 need to crouch under the units as trains pass the location. Be- cause most PATH tunnels have very little clearance, only a few locations are considered to be candidates for installation. PATH staff reported that both customers and advertisers had favorable reactions to the in-tunnel advertisements. Advertisers have been major national automobile, clothing, food, and entertainment companies. The advertisements run for one month. The contractor reimburses PATH for installation-related labor costs, such as for the conductor and engineer who operated a flatbed train during installation. The contractor also agreed to pay a flat dollar sum for the test period. The original agreement was for a 1-year installation and pay- ment of $50,000, an amount that may be renegotiated. PATH staff anticipates bidding out a larger contract for a longer period of time, but no schedule for doing so has been set.