Meeting_Body
REGULAR BOARD MEETING
FEBRUARY 23, 2017
Subject/Action
SUBJECT: METRO SYSTEM ADVERTISING POLICY
ACTION: APPROVE REVISED METRO SYSTEM ADVERTISING POLICY
Heading
RECOMMENDATION
Title
ADOPT revisions to Metro’s System Advertising Policy in order to update policy and expand Metro’s current advertising opportunities to generate additional revenue - as recommended in the Risk Allocation Matrix (RAM) process approved at the January 2016 Board meeting.
Issue
ISSUE
Metro’s System Advertising Policy provides the agency with a significant opportunity to generate advertising revenue as a way to leverage and optimize sales tax revenues, state and local funds, fare revenues and other forms of agency funding.
In January 2016, the Metro Board of Directors approved the Risk Allocation Matrix (RAM) where staff identified cost saving and revenue generating initiatives, and created the Internal Savings Account - intended as tools to ensure long-term financial stability and mitigate projected budget shortfalls. Among some of the financially significant initiatives is the expansion of advertising on the Metro system to include digital advertising, opportunities at parking structures, facilities and buildings, and other Metro-owned properties.
Revision of the Metro System Advertising Policy would enable staff to explore expanded advertising opportunities on Metro’s system in order to generate additional and significant revenue for the agency. This revised policy positions the agency to benefit from expanded advertising opportunities.
Discussion
DISCUSSION
Background
Metro’s System Advertising Policy was last revised June 2013 to permit advertising from non-profit organizations, and strengthen content restrictions on tobacco products, firearms and gun violence, demeaning or disparaging statements, adult entertainment, political endorsements, religious issues, and unsafe or disruptive transit behavior.
In January 2016, the last and final option with Outfront Media’s advertising contract was approved and will have generated $24,000,000 in revenue for Metro from January to December 2017. Some of the additional techniques include advertising space on bike racks on Metro buses and additional 2-sheet ad panels on the Expo, Gold, Blue, and Green Line stations.
Policy Update
While Metro’s System Advertising Policy has successfully provided the structure to responsibly generate revenue using Metro’s capital assets, it is necessary to revisit the policy so it may address new products, new technologies, and keep in alignment with agency progress.
Restriction Additions
• The emergence of electronic cigarettes and cannabis have become more prevalent as a smoking device and activity, thusly, language has been added to include prohibition of electronic cigarettes and cannabis in the content restrictions, Section 2.1.1. Alcohol, Tobacco, and Cannabis Adverting.
Restriction Removals
• When the Orange Line originally opened in 2005, advertising was not permitted on Metro’s rail system. To be consistent with Metro Rail guidelines, advertising was also not permitted on the Orange Line. In 2006 the Board directed advertising to be permitted on Metro’s rail system including stations and trains.
Staff recommends removing the restriction to place advertising on the Orange Line since advertising has been permitted on Metro’s fixed-route rail system. Since its expansion to Chatsworth in 2012, the Orange Line receives an estimated 8.4 million annual ridership; and may potentially generate $200,000 additional annual revenue for the agency.
Metro Communications staff will conduct community outreach within the Orange Line surrounding communities about Metro’s updated Advertising Policy that brings the Orange Line in alignment with advertising on the rail system.
• Metro Rapid buses currently do not include advertising. There are no safety, nor logistical issues with placing advertising on Rapid busses, it simply has not been done in the past. An estimated additional 500 Rapid and articulated vehicles may receive advertising, with the potential to earn $250,000 annually.
• Articulated buses have been prohibited from being wrapped but currently have external advertising. Staff recommends removing the restriction of wrapping articulated buses.
Expanded Properties
• Advertising placed on Metro’s digital assets such as websites, social media platforms, blogs, and mobiles apps already generate revenue; and staff have added language to explicitly include these digital platforms in the policy.
• Advertising on Metro’s facilities and other properties such as maintenance buildings and facilities, parking structures and lots, and other properties as recommended by the Risk Allocation Matrix (RAM). Staff has added language to include physical and virtual property in the policy.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Revision of this policy does not have impact on safety. Staff will consult Risk Management and Safety to review final advertising scopes of work, and individual deliverables such as digital advertising.
Financial_Impact
FINANCIAL IMPACT
Impact to Budget
No impact to the FY17 or FY18 Budget is anticipated as a result of approval of the policy.
Upon approval of the policy, it may warrant evaluation of staffing to manage the execution of contracts and business needs associated with expanded advertising.
Alternatives_Considered
ALTERNATIVES CONSIDERED
Decline to adopt the revised Metro System Advertising Policy.
This is not recommended as the proposed policy changes enable staff to fulfill the Board’s previous directive of implementing the 2016 RAM/Internal Savings Account as a tool to ensure long-term financial stability and mitigate projected budget shortfalls.
Next_Steps
NEXT STEPS
Upon Board approval, staff will work to issue a competitive Request for Proposals (RFP) for Advertising on Metro’s System and conduct outreach for communities along the Orange Line. Recommendations will be presented for Board review and approval of new advertising contract(s) before the current contracts expires in December 2017.
Attachments
ATTACHMENTS
Attachment A - Metro System Advertising Policy (COM6)-Changes
Attachment B - Metro System Advertising (COM6)-2017
Prepared_by
Prepared by: Lan-Chi Lam, Director of Communications, (213) 922-2349
Glen Becerra, DEO of Communications, (213) 922-5661
Reviewed_By
Reviewed by: Pauletta Tonilas, Chief Communications Officer, (213) 922-3777
