Advertising

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Many transit agencies use advertising on vehicles as an additional source of revenue. Source: George Lumbreras

Introduction

Many transit agencies use advertising on or it vehicles and facilities as a way to generate additional revenue. While this is typically a very small source of funding, there is potential for agencies to increase ad revenue as advertisers move away from traditional venues like television and print media. Transit advertising is nearly a $1 billion industry<ref name="one33">TCRP Report 133: Practical Measures to Increase Transit Advertising Revenues. 2009.</ref>. With improved practices, agencies are often capable of increasing their ad revenues.

Benefits of Advertising

There are plenty of reasons for transit agencies to offer advertising. The costs are relatively low, and agencies have access to a captive audience that advertisers value. Transit advertising is a growth industry with significant potential for increasing revenues.

Challenges to Advertising

On the other hand, transit advertising faces a variety of challenges. Transit has not typically been viewed as a good medium for advertising because of negative social connotations with transit and the lack of good audience engagement metrics. In addition, advertising creates significant legal hurdles for agencies. As public organizations, courts often hold transit agencies to fairly strict free speech standards. This means that agencies can be unable to refuse ads that they find to be offensive. While properly structured ad policies can give agencies more leeway in rejecting certain content, free speech requirements must be kept in mind when addressing advertising<ref>McDaniel, J.B. (2010). "TCRP Legal Research Digest 33: Developing and Implementing a Transit Advertising Policy". Transit Cooperative Research Program.</ref>.

Key Considerations

Need to Restructure

While there are a number of measures an advertising sales department can implement on their own, TCRP Report 133 makes several suggestions that require buy-in or actions from upper management, including restructuring the entire department or contracting out the function.<ref name="one33" />

Advertising Policy

Government-run transit agencies must consider how the first amendment affects their ability to approve or deny advertisements based on content alone. Generally, transit agencies will need well-defined standards and a system in place to determine compliance with those standards. Have your inside or outside council review this TCRP Legal Research Digest 33 on developing and implementing a transit advertising policy.

Operating a Transit Advertising Sales Program

With few exceptions, transit operators that offer out-of-home advertising opportunities generally bid out their programs using a competitive process. Companies handling advertising sales on a contract basis include CBS Outdoor, Titan Advertising, Lamar Advertising, and Clear Channel.

References

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Additional Reading

Alpers, J. (2009). "TCRP Report 133: Practical Measures to Increase Transit Advertising Revenues." Transit Cooperative Research Program.

This report is a starting point for consultants, department heads, and agency management considering restructuring an agencies advertising sales operations in order to maximize revenue.

McDaniel, J.B. (2010). "TCRP Legal Research Digest 33: Developing and Implementing a Transit Advertising Policy". Transit Cooperative Research Program.

This research digest summarizing important cases in the history of transit advertising law.

Schaller, B. (2004). "TCRP Synthesis 51: Transit Advertising Sales Agreements." Transit Cooperative Research Program.

This report contains specific guidance on how an advertising sales department can structure agreements and consider how to balance revenue generating advertisements with public service advertisements.