AGENDA #2c
BUDGET WORKING PAPER
TO: W. Calvin Horton, Town Manager
FROM: Mary Lou Kuschatka, Transportation Director
SUBJECT: Transit Advertising Rates
DATE: June 12, 2002
Chapel Hill Transit sells interior card advertising that is displayed inside the buses. The current rates have been in effect since 1998 and were established for a fleet of 54 buses. The transit fleet has grown to 70 buses, which increases the exposure to an interior advertising card by 16 buses or 23%. We are recommending a 10% increase in the rates charged for placing advertising in our buses.
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 pre-determined number of months. The rates currently used by Chapel Hill Transit have not been increased since 1998, and were based on a fleet size of 54 buses. Due to expansion, we currently operate 70 buses, and this number is likely to increase with resumption of school in the fall.
The current advertising rates are based on a monthly rate of $69 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 last year was $3,029.
CURRENT ADVERTISING RATES
|
FULL SHOWING 54 Buses |
HALF SHOWING 27 Buses |
||
|
1-2 Months |
$69.00/month |
1-2 Months |
$42.00/month |
|
3-5 Months |
$65.00/month |
3-5 Months |
$39.00/month |
|
6-8 Months |
$62.00/month |
6-8 Months |
$37.00/month |
|
9-11 Months |
$59.00/month |
9-11 Months |
$25.00/month |
|
12 Months + |
$55.00/month |
12 Months + |
$33.00/month |
Other area transit providers were contacted to determine their rates. The results are summarized in the table below.
|
|
Cost/month |
# of Buses |
Cost/bus/month |
|
TTA |
Does not accept advertising |
NA |
|
|
CAT (Raleigh) |
Does not accept advertising |
NA |
|
|
DATA (Durham) |
$50.00 |
40 |
$1.25 |
|
Winston-Salem* Greensboro* High Point* |
$25.00** $25.00** $25.00** |
56 28 16 |
$0.44 $0.89 $1.56 |
|
CHT (now) |
$69.00 |
54 |
$1.28 |
*These properties are handled by the same advertising agency. The rate shown excludes a charge of $5/bus for actual placement of the ad card.
**The placement fee is a one time charge and would be difficult to factor into the cost per month as it would depend on how many months the ad is running to accurately distribute the cost on a per month basis.
We believe that a 10% increase in advertising rates would be reasonable. The following chart lists the monthly cost differences for increases of 5, 10 or 15%.
COMPARISON OF % INCREASES
|
% of increase |
Base rate/month |
Cost/bus/month |
|
5% increase |
$72.45 |
$1.04 |
|
10% increase |
$75.90 |
$1.08 |
|
15% increase |
$79.35 |
$1.13 |
We believe that a 10% increase in cost would provide additional revenue while giving the buyer a lower per-exposure cost because of the increase in the number of buses available to display the advertisements.