AGENDA #17g
BUDGET WORKING PAPER
TO: W. Calvin Horton, Town Manager
FROM: Mary Lou Kuschatka, Transportation Director
SUBJECT: Transit Advertising Options
DATE: April 27, 2005
Chapel Hill Transit does not currently sell exterior or shelter placard advertising. We do sell interior advertising and realized $10,252 revenue in budget year 2003-04.
BACKGROUND
The sale of exterior advertising on buses to generate income for the transit system was previously considered by Town Council in 1995, 1998, and 2001. In the past, the Council chose not to implement an exterior advertising program on Town buses.
This type of external advertising has been a source of revenue for transit systems for decades. In order to institute a program of this type, we would recommend using an advertising agency to sell and develop the ads. The advertising agency would be responsible for selling, installing in frames, and removing all advertising displayed on frames on the exterior of the buses. There are three placard locations available on each bus; a large placard on the driver’s side, a medium placard on the curbside, and a placard on the rear of the bus.
Advantages: The revenue from the placard advertising would be a source of revenue that should increase throughout the life of the contract. The agency would provide the services (the sale, installation, maintenance, and removal) necessary to maintain the program.
Disadvantages: As buses move about town, the placards look similar to moving billboards. The placard advertising would not be aesthetically pleasing to all members of the community.
Revenues – Placard Advertising
In late 2001, Keystone Media Inc. submitted a preliminary proposal for a five-year contract period to sell and manage an exterior placard advertising program for the town. Keystone would have paid the Transit system 55% of actual revenues with a guarantee of $148,500 over the five-year period for the use of the transit buses in the fleet. This amount would translate into an average of $27,000 annually. We believe that the dollar amount would be slightly higher now as there are more buses in the fleet.
The following chart illustrates the revenues realized by other transit providers in the region.
Exterior Placard Advertising
|
Capital Area Transit |
Only wraps, no exterior placards. |
$0 |
Revenue: Only from interior and wraps. |
|
Durham Area Transit Authority |
Rear Placards Driver Placards Door Placards |
$220 per month $190 per month $190 per month Must buy 3 buses at least, min. – 3 months |
Revenue: $75,000. Does not separate revenues from interior, wraps, & exterior placards. |
|
Tar River Transit |
No Ext. Advert. |
NA |
NA |
|
Greensboro |
Only wraps, no exterior placards. |
$0 |
Revenue: $50,000 approx. - Only from interior and wraps. |
|
Fayetteville |
Rear Placards Driver Placards Door Placards |
$152 per month $156 per month $126 per month Minimum – 4 months |
Revenue: Most ever made in a year- $94,000. Did not separate revenues from interior, wraps, & exterior placards. |
|
Triangle Transit Authority |
No advertising |
NA |
NA |
Advantages: Chapel Hill Transit might receive 55 percent of the revenue from the sale of the advertising or a guarantee of at least $148,500 over a five-year period if the previous offer was renewed.
Disadvantages: In order to achieve the maximum amount of revenue, the entire fleet of buses would be part of the advertising program. This could detract from the appearance and look of the fleet.
This is a form of exterior advertising that consists of a vinyl material that is applied to the outside of the bus. Although it appears opaque from the outside, it does not obstruct a passenger’s view from the interior of the bus. We would manage this program with our marketing staff person and recoup 100 percent of the revenue. This type of advertising would be attractive to a small market of advertisers as it is fairly expensive. Council may decide to limit the number of buses available for wrapping, similar to the City of Raleigh’s program.
The Capital Area Transit in Raleigh started their bus wrap program in 1997. In the first year they sold all of their advertising to Channel 17. Since then, they have not been able to sell all of their available bus wrap opportunities. Capital Area Transit now handles the program in-house with their marketing person, and is authorized to have ten buses wrapped. They average six to seven buses under wrap at any given time. The revenue per bus per year is typically $15,000, and Capital Area Transit nets $60,000 to $70,000 annually from the bus wrap program. Durham, Greensboro, and Fayetteville have all in the last few years began working with advertising agencies in the sales of bus wrapping. Each system generates anywhere from $15,000 to $50,000 per year according to the number of buses wrapped. Fayetteville generated up to $94,000 in revenue in one year with combined wrap and placard sales.
Advantages: The revenue for the wrapped buses is considerably higher than for a bus with placard advertising. The wrap holds up through weather longer than placards. Wrapped buses invite a different customer base for advertising. If this were done in house, ads could be selected and guidelines more defined.
Disadvantages: The wrapped bus advertising would not be aesthetically pleasing to all members of the community. Sometimes the adhesive used to apply the vinyl will pull the paint off the bus when the wrap is removed. The advertising contract would require payment for paint repair if necessary after the vinyl is removed.
Revenues – Bus Wraps
We believe that we could generate up to $60,000 per year with an exterior advertising bus wrap program. We may not realize that the first year as we do not know if there is a market for this type of advertising in Chapel Hill. If we realized $60,000 in revenue it would offset the partner’s contributions to the system which are at the following percentages. UNC – 57 percent Chapel Hill – 32 percent Carrboro – 11 percent.
Other Area Transit Wrap Fees
|
Capital Area Transit |
3 mos 6 mos 1 year $6000, $9000, $15000 $2400, $4350, $7200 $2025, $3600, $6480 $1815, $3300, $6000 |
Full Bus Half Bus Full Rear ˝ Bus Rear |
3,6,months or 1 year + production/installation |
|
Durham Area Transit Authority |
$18,000 |
Full Wrap |
1 year minimum + production/installation |
|
Tar River Transit |
No Advertising |
NA |
NA |
|
Greensboro |
$1500 per month $1625 per month |
Full Wrap Rear Wrap |
1 year minimum + production/installation
|
|
Fayetteville |
$1200 per month |
Full Wrap |
1 year minimum + production/installation
|
|
Triangle Transit Authority |
No Advertising |
NA |
NA |
Shelters
Advertising Placards
Placard frames can be installed at bus shelters. This advertising can be sold in the same fashion as the interior placard advertising in order to generate advertising income. Placards can be mounted either on bench areas or mounted onto the shelter frame. This type of advertising is used in some systems in the country. None of the transit systems used for the comparison above sells any advertising in the bus shelters or on the benches.
The Town’s sign ordinance currently would not allow advertising placards on bus shelters or bus benches because Section 5.14.5(c) prohibits advertising signs in the public right-of-way.
Coffee Kiosks/Vending Machines
Kiosks would be a means of generating some revenue. The six other transit systems listed in the report do not have kiosks or vending machines at any stops or park and ride lots. Cost of providing power/water sources, uncertainty about demand, and concerns about vandalism have prohibited the other systems from pursuing kiosks and/or vending machines as a source of additional revenue. We would need more time to research the possibilities of leasing the space to an outside vendor for operating the coffee kiosks. We could report on this in the fall for consideration as a revenue source.
RECOMMENDATIONS
We recommend that advertising wraps be considered as a source for generating revenue. The transit marketing coordinator would be responsible for the advertising; wraps would be generated and installed by a contracted agency. Placement of ads would be handled in house and would generate 100 percent of revenue from the wraps as opposed to 55 percent by contracting with an advertising agency. We recommend, after researching 6 other systems in N.C. the following rates for placing advertising on the exterior of the Chapel Hill buses. We do not recommend exterior placards, kiosks, or vending machines at this time.
Proposed Wrap Fees
|
Full wraps |
$9000, $15000 |
|
6 months or 1 year + production/installation |
|
One side wrap |
$3500, $6000 per month |
|
6 months or 1 year + production/installation |
|
Rear wrap |
$4000, $7000 per month |
|
6 months or 1 year + production/installation |