Collier County
FL

Action Item
9187

Recommendation to approve a Resolution superseding Resolution No. 2016-140, establishing the Collier Area Transit Advertising Policy and Standards, Fee Policy and the Agreed Terms and Conditions for Advertising on Transit assets and facilities, to expand the advertising policy, standards and fees to include fixed route exterior bus wraps and digital advertising. (Michelle Arnold, Public Transit and Neighborhood Enhancement Division Director)

Information

Department:Public Transit & Neighborhood EnhancementSponsors:
Category:11 County Manager's Report

Executive Summary

EXECUTIVE SUMMARY

Recommendation to approve a Resolution superseding Resolution No. 2016-140, establishing the Collier Area Transit Advertising Policy and Standards, Fee Policy and the Agreed Terms and Conditions for Advertising on Transit assets and facilities, to expand the advertising policy, standards and fees to include fixed route exterior bus wraps and digital advertising.

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OBJECTIVE: To approve a resolution that provides an opportunity for alternative revenue generation to be utilized for Collier Area Transit (“CAT”) operations.

CONSIDERATIONS: CAT is funded by a combination of federal, State, and local funds, as well as farebox revenue. In 2014, the Board of County Commissioners (the “Board”) established a Transit Advertising policy to provide a framework for the sale of advertising inside the transit buses and at transfer terminals to generate revenues to supplement fares and cover unfunded operating costs. Since that time, the program has been managed in a manner that brought in as much revenue as practicable, while ensuring that the advertising does not discourage the use of the County transit system, diminish CAT’s reputation in the community, or weaken the goodwill of its patrons.

Since the inception of this policy, the program has only generated $54,988 of revenue to support the transit system. After conducting efforts to solicit a private entity for the sales of advertisement, staff concluded that there is only a small market interested in the limited scope of the advertisement permitted under the current policy. It appears that there is a greater market for advertising on the exterior of the buses.

The transit system currently has a fleet of 28 Fixed Route buses and 25 Paratransit buses on which advertising could be sold. Other transit agencies that utilize those resources for advertising have been able to increase the funding for the operations for their system with the added revenue. Research on the potential revenues to be raised if that option was implemented found that transit agencies charge the cost for the bus wrap to the advertiser (between $4,500 - $6,500), which results in cost savings to the transit agency. With the production cost of the wrap being charged to the advertiser, the monthly rate becomes 100% profit to the transit agency. Revenue potential on the existing Fixed Route fleet inventory would range from $250,000 to $850,000 annually, depending on the number of buses wrapped and the actual dimensions of the wraps purchased by the advertiser  (e.g.; full length, half-length or bottom length). Digital advertising is another potential source of revenue with limited production costs. Advertisements would be sold on monitors that would be placed in the terminals and on the buses. This is fairly a new media for transit agencies, so there is limited research available in the market.

If Collier County pursues those options, the rates included in the proposed policy will be utilized by Public Transit & Neighborhood Enhancement (“PTNE”) staff when the sale of advertisement is initiated by the County staff.  Ultimately, the PTNE Division recommends hiring a private advertising agency to conduct sales and production for CAT whereby it is contemplated that a portion of the revenues collected through the sales would go to the advertising agency in the form of a commission.  Working with the Procurement Division, PTNE staff presumes that a percentage sales commission would comprise a critical element of a solicitation to receive bids seeking firms to sell advertisements for CAT.

In December 2017 and November 2018, CAT wrapped two “Beach Buses” in a beach-themed design as part of the seasonal Beach Bus route promotion (see attachment for photo). The Beach Bus has been well received by the public as it is visually appealing. Staff ensured that the wrap maintained the beautiful aesthetic of Collier County and it has garnered a lot of positive interest. The Beach Bus is in its third year of service and had a ridership of over 6,000 more passengers than in its initial year of service.

The current advertising options (Interior Bus Signs, Terminal Bus Signs, Voiceovers, Bus Schedules, and Smart Cards) offered to potential advertisers generated a very limited amount of revenue. The desired demographics for most advertisers include the entire population of Collier County, rather than just the passengers that ride the bus.

As noted above, the transit system has 28 Fixed Route buses and 25 Paratransit buses available for the sale of ad space to generate additional revenue for the system.  Staff would initially limit advertising to bus wrap sales to the Fixed Route buses. In Collier County, there is no significant outdoor advertising, therefore the County has the potential to leverage that untapped market for a higher revenue stream. 

If the Board approves the proposed policy, Staff will also initiate the solicitation process to obtain an advertising agency to market the sale of CAT advertising consistent with the proposed policy.  Revenues for this process will likely not be realized until the second quarter of FY 2020. The potential revenues could be a funding source for the enhanced transit service desired by the community.

The attached proposed Resolution submitted for Board approval supersedes the prior Resolution and reflects the proposed new fees for Bus Wraps, Digital Advertising, as well as revised Package Offerings.  The Resolution also includes as incorporated exhibits the revised CAT Advertising Policy and Standards and the Agreed Terms and Conditions for transit advertisements, reflecting additions to the Policy with underscoring and redactions from the policy with strikethrough notations.

As part of the advertising approval process, PTNE staff will continue to coordinate with the County Attorney’s Office to ensure that the proposed advertisements comply with the standards established in the Board approved policy.  

FISCAL IMPACT: Approval of this item may result in an estimated $190,00 to $350,000 of additional revenue during the first year of offering this type of advertising service. This amount is based on space available on the buses utilized in the system. After two (2) to three (3) years, CAT has the potential to bring in up to $600,000 in additional revenue annually.

GROWTH MANAGEMENT IMPACT: There is no Growth Management impact associated with this Executive Summary.

LEGAL CONSIDERATIONS:    This item has been reviewed by the County Attorney, is approved as to form and legality, and requires majority vote for approval. -JAK.   

RECOMMENDATION: To approve a Resolution superseding Resolution No. 2016-140, establishing the Collier Area Transit Advertising Policy and Standards, Fee Policy and the Agreed Terms and Conditions for Advertising on Transit assets and facilities, to expand the advertising policy, standards and fees to include the sale of fixed route exterior bus wraps and digital advertising.

 

Prepared By: Elena Ortiz Rosado, Events, Sales, & Marketing Coordinator, Public Transit & Neighborhood Enhancement Division.

Discussion