AGENDA #17c
BUDGET WORKING PAPER
TO: W. Calvin Horton, Town Manager
FROM: Mary Lou Kuschatka, Transportation Director
SUBJECT: Transit Advertising Rates
DATE: April 27, 2005
Chapel Hill Transit sells interior card advertising that is displayed inside the buses. The current rates have been in effect since July 1, 2004 and were established for a fleet of 83 buses. We are recommending a 50% increase in the rates charged for placing advertising in our buses and a width limit of 20 inches for fiscal year 2005-2006.
BACKGROUND AND DISCUSSION
Selling interior advertising on transit buses is a means to increase revenue to the system. Advertisers purchase the space – usually 11 inches x 25 inches – and enter into a contract to have their advertising message displayed for a predetermined number of months. The rates currently used by Chapel Hill Transit were established July 1, 2004.
The current advertising rates are based on a monthly rate of $91 per advertisement for the entire fleet. A sliding scale provides for discounts for advertisements running for consecutive months. Please see the chart below. The interior card advertising revenue in FY 2003-04 was $10,252.
CURRENT ADVERTISING RATES
|
FULL SHOWING 83 Buses |
HALF SHOWING 40 Buses |
||
|
1-5 months |
$91.00/month |
1-5 months |
$61.00/month |
|
6-11 months |
$86.50/month |
6-11 months |
$58.00/month |
|
12 months + |
$82.00/month |
12 months + |
$55.00/month |
Bulkhead Cards (Full Showing Only)
1-2 Months………….$140/mth
PROPOSED ADVERTISING RATES
|
FULL SHOWING 83 Buses |
HALF SHOWING 40 Buses |
||
|
1-5 months |
$136.00/month |
1-5 months |
$91.00/month |
|
6-11 months |
$129.00/month |
6-11 months |
$86.00/month |
|
12 months + |
$123.00/month |
12 months + |
$82.00/month |
Bulkhead Cards (Full Showing Only)
1-2 Months………….$210/mth
As of April 20, 2005, there were four advertisers contracted in the 6-11 month range and nine contracted in the 12 month plus range. Assuming the partial year contracts are for six months, annual revenue would be approximately $17,160 at the current advertising rates. Using the same contract terms and the proposed rates, revenue would increase to approximately $25,668, an $8,508 increase.
If the signs are limited to a 20” length, an estimated two additional signs could be placed on each bus. Assuming the additional advertisers would enter into twelve month contracts, additional revenue with the proposed rates would be approximately $2,952. If both the rate and size proposals are enacted, the total revenue increase would be approximately $11,460.
Because the Town partners with the Town of Carrboro and UNC for transit services, the Town would not benefit from the entire $11,460. Any additional revenue reduces the partner’s share of expenses. The Town’s portion of transit services is about 32% therefore, the Town would benefit by approximately $3,697 of the total revenue increase. Of the remaining $7,763, UNC would receive a benefit of $6,500 and the Town of Carrboro would benefit by $1,263.
RECOMMENDATION
We are recommending this increase because that we have approximately 30 potential advertisers on a waiting list and very little movement of advertisers off of the list. We are also recommending that all new advertising signs be limited to 20 inches in width to allow for more signs. The new fee structure would become effective on any new contracts and upon the renewal date of the existing advertisers beginning in fiscal year 2005-2006.