Meeting_Body
REGULAR BOARD MEETING
DECEMBER 2, 2021
Subject
SUBJECT: LONG-TERM ADVERTISING - CULVER CITY STATION
Action
ACTION: APPROVE RECOMMENDATION
Heading
RECOMMENDATION
Title
APPROVE a long-term advertising purchase, up to 12 months, at Culver City Station from HBO, generating up to $400,000 plus, estimated net revenues for Metro. This is not a title sponsorship, and will not affect Culver City Station’s title nor the adjacent private property’s title, Ivy Station.
Issue
ISSUE
In compliance with the Commercial Sponsorship and Adoption Policy, ‘station activation’ advertising beyond 90 days require Board approval (Attachment A). Staff is bringing to the Board’s attention a request for long-term advertising and activity from HBO at Culver City Station on the Metro E Line (Expo). Approval of this long-term advertising purchase will authorize Metro’s rail advertising broker, Intersection, to manage the extended 12-month purchase and advertising activities stated in this report.
Background
BACKGROUND
In February 2021, the Board approved the Commercial Sponsorship and Adoption Policy. The policy enables Marketing Communications to establish a sponsorship program to generate additional revenues for the agency.
Discussion
DISCUSSION
Findings
HBO has moved their corporate headquarters to the newly completed Ivy Station - a mixed-use complex adjacent to Culver City Station on the E Line; and has purchased a station activation beginning fall 2021. Metro’s rail advertising broker, Intersection, has also been coordinating with HBO on purchasing long-term advertising beyond the maximum 90 days as authorized in the current advertising contract - the inquiry in summary:
• Buyer: Home Box Office, Inc (media and entertainment company)
• Duration: HBO previously entered into a 90-day agreement with Intersection for advertising at Culver City Station. Approval is now sought to extend the program for an additional nine months beginning in early 2022 and extending through fall 2022.
• Revenue to Metro: Up to $400,000 plus, estimated net revenues (total advertising buy ranging from $500,000-$750,000 of which Metro will receive 55%)
• Advertising Activities: Station Activation - The advertising purchase will include various large-format media on station elements such as columns wraps, pillar wraps, trestle wraps, and a wallscape via direct decal to the surfaces of station property. Visual samples are provided in Attachment A - HBO Advertising - Culver City, displaying the type of creative content HBO and Intersection may post. Within the 12-month duration, creative content may be updated at the discretion of HBO and Intersection. All creative content will comply with Metro’s System Advertising Policy and be vetted by the Content Advertising Committee.
Metro Communications (Marketing and Community Relations) reached out to Culver City with the advertising proposal and have received a green light to proceed from Culver City Community Development, City Manager, and City Attorney.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
The contractor will install advertising following Rail Safety Policy and Guidelines to ensure the safety of Metro’s riders and employees.
Financial_Impact
FINANCIAL IMPACT
There is no negative financial impact with the approval of this item. The contractor is responsible for material costs and maintenance of HBO advertising for the duration of the sale.
Revenues generated from this long-term advertising sale will be designated as Commercial Sponsorship and will be tracked separately from Commercial Advertising.
The project manager and the Accounting department will be responsible for monitoring performance, compliance, costs, and resources in support of this task. Since this sale will extend over two fiscal years, the program manager, cost center manager, and Chief Communications Officer will ensure all project resources are budgeted in future fiscal years.
Impact to Budget
Commercial Advertising and Sponsorships are revenue-generating programs and do not incur capital costs to Metro; however, labor support is warranted to ensure safety compliance during material installations. Metro will receive 55% revenue share, approximately $412,500, and the contractor will receive 45% revenue share, approximately $337,500, from the total gross sale of $750,000; with an estimated $5,000 in Metro labor expenditure.
Summary of estimated revenues and expenditures:
$750,000 Advertising Buy (gross sale)
$337,500 Contractor’s 45% revenue share
$412,500 Metro’s 55% revenue share
$5,000 Metro Expenditures (Operations labor support)
Equity_Platform
EQUITY PLATFORM
Long-term advertising purchases generate significant revenues upfront and they also command the attention of future media buyers. This initial media purchase may be a catalyst for consistent and long-term revenues generated through advertising and sponsorship at a singular station - creating a reliable funding source for equitable initiatives. At this time, there are no equity impacts anticipated as a result of this action.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
The revenue advertising program supports the Strategic Plan by fulfilling Goal 5.2 - Exercising good public policy judgment and sound fiscal stewardship by monetizing Metro’s capital assets to generate non-tax revenues.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board may choose not to approve this long-term advertising request, however, this is not recommended. Metro would be turning away up to $400,000 plus estimated revenue earnings from an individual station, and miss other fruitful opportunities to generate unrestricted local funding.
Next_Steps
NEXT STEPS
Upon Board approval, staff will authorize the advertising broker to complete the advertising sale and begin executing the long-term media placement with HBO and Culver City Station on E Line.
Attachments
ATTACHMENTS
Attachment A - Commercial Sponsorship and Adoption Policy
Attachment B - HBO Advertising-Culver City Station
Prepared_by
Prepared by: Lan-Chi Lam, Director of Communications, (213) 922-2349
Glen Becerra, Executive Officer of Marketing, (213) 418-3265
Reviewed_By
Reviewed by: Yvette Rapose, Chief Communications Officer, (213) 418-3154
