Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
3 CHAPTER ONE INTRODUCTION The large majority of transit agencies accept advertise- ments on and/or inside buses, rail cars, and stations. Changing attitudes toward advertising and the need to find new revenue sources has led the few transit agencies that do not display advertising to reconsider their policies. Bus exterior, rail car, and rail station advertising are the mainstays of transit advertising and account for most of the advertising space and revenue. These and other advertising displays have long been a visually prominent source of small but significant revenues for transit agencies in the United States. Recent years have brought significant changes that af- fect the types of advertising on transit property and the amount of advertising revenue. Growth in the outdoor ad- vertising industry, which includes billboards, newsstands, phone booths, taxis, and bus shelters, as well as buses, rail cars, and rail stations, has helped to significantly expand the amount of revenue that transit agencies derive from advertis- ing sales. Mergers and acquisitions of advertising sales com- panies have brought new sales capabilities to transit agencies and the financial benefits of advertising from national brands. Nontraditional forms of advertising, including in-tunnel ad- vertisements, in-vehicle television, station domination, and bus wraps, may provide increased revenues, although ques- tions ranging from the magnitude of the revenue that can be generated to public acceptance still remain. Advertising can bring not only revenues but also con- troversy to transit agencies. Acceptance of advertisements on emotionally charged issues such as abortion and those that show violence or scantily clad models can stir contro- versy. Rejecting such advertisements, however, can involve transit agencies in costly litigation. Therefore, transit agen- cies face a number of important issues about their advertis- ing programs, including ⢠Should they accept and display advertisements? ⢠Should they accept noncommercial and public ser- vice advertising? ⢠Where should advertisements be displayed? ⢠How can agencies evaluate potential revenues from advertising sales? ⢠How can agencies maximize their revenues from ad- vertising? ⢠Should transit agencies sell advertisements using their own staff or should sales be contracted to a company specializing in this area? ⢠If the agency chooses to contract advertising sales, what should be the length of the contract, how should revenue to the transit agency be determined, and what should other terms of the contract provide for? ⢠How should agencies evaluate competing proposals to handle advertising sales? ⢠In addition to generating revenue, how should agencies handle co-promotions, media trades, and the display of public service announcements (PSAs)? How much space should be set aside for these pur- poses? ⢠What nontraditional forms of advertising are worth- while to pursue? What is the best way to pursue those opportunities? To what degree will nontraditional forms of advertising add to sales revenue versus shifting advertising revenue from traditional to non- traditional forms? This report documents and summarizes transit agency experience with advertising sales and synthesizes current practices for advertising sales, contracting, and display. Transit agency staff responsible for advertising sales can use this report to learn from and compare their experiences with the experiences of other agencies. METHODOLOGY Findings in this report are based on a literature review, a survey of transit agencies, analysis of documentation sub- mitted by transit agencies, and interviews with transit agency staff and other professionals involved in the sale of transit advertising. Information for this report was provided by 53 transit agencies, including 45 that completed a written question- naire (see Appendix A). Other information provided by transit agencies included ⢠Advertising sales policies, ⢠Advertising rate cards, ⢠Contracts with advertising sales companies, ⢠Requests for proposals (RFPs), and ⢠Photographs and illustrations of transit advertising. Participating agencies represent a cross section of the transit industry in terms of agency size, location, and mode. Table 1 profiles key characteristics of participating agencies.
4 TABLE 1 CHARACTERISTICS OF TRANSIT AGENCIES RETURNING COMPLETED QUESTIONNAIRES* Agency size (no. of buses and rail cars) No. Percent Less than 100 13 30 100â499 17 40 500â999 7 16 1,000+ 6 14 Total 43 100 In top 20 media market** Yes 21 49 No 22 51 Total 43 100 Mode Bus only 31 72 Rail and bus 11 26 Rail only 1 2 Total 43 100 *Excludes agencies that do not sell advertising. **Top 20 media markets based on Arbitron classification (Arbitron 2003). See Appendix B for list of survey respondents. ORGANIZATION OF THE REPORT This report is organized topically, synthesizing information from the literature review, survey, interviews, and docu- ments submitted by transit agencies. Chapter two provides an overview of current practices in transit advertising, in- cluding the use of advertising space, the types of displays used, and the methods of selling advertising. Chapter three delves into the market for transit advertising, highlighting recent developments in outdoor advertising that affect the transit industry and profiling advertising sales contractors that serve transit agencies. Chapters four and five focus on dollars and contracts. Chapter four presents and analyzes the amount of revenue that transit agencies derive from ad- vertising sales and the rates charged. Chapter five dis- cusses a range of contracting issues confronting agencies that contract out the sales function. Chapter six addresses key issues related to advertising acceptance policies, reasons agencies sometimes reject advertisements, and how agency policies can prevent successful challenges to agency deci- sions. Chapter seven discusses several nontraditional forms of transit advertising, including bus wraps, station dominance, video screens, and electronic signs and in-tunnel adver- tisements that show promise for expanding advertising revenues. This chapter profiles transit agency experience with each of these new advertising venues. Finally, chapter eight presents conclusions from the research and further research needs.