Digital advertising provides more inventory, more options, and more opportunity to earn.
By Matt Schroeder
Director of Marketing, ETA Transit Systems
I love starting off blogs with a statistic like this one…
According to our 2018 survey, 91 percent of transit operators state that fares alone do not cover the operating costs of their agency. In fact, 72 percent state that fares cover less than 51 percent of their costs. That’s a lot of cheddar that needs to be made up through other means such as grants, public funding, and … advertising.
We’re probably all familiar with the bus-length advertisements plastered to the side of a vehicle as it drives along its route promoting the latest movie release, tourist attraction, or local news team. That’s a good, time-tested use of turning available space into a source of income.
For a long time, that’s really been the only option for transit agencies to leverage space on its vehicles to generate revenue. It’s been effective, too. For decades the public at large has become accustomed to consuming these mobile billboards; thousands upon thousands of eyeballs every day. Cost effective for advertisers; an in-demand resource for agencies. It’s no wonder that 82.5 percent of transit agencies provide this option to advertisers.
But there’s always been one problem—inventory.
One bus. One ad. One at a time. That’s it, so regardless of how many vehicles an agency operates, there’s a cap on potential revenue that can be earned.
At ETA, we’re always looking for those forward-thinking opportunities that can make a meaningful impact to our customers. Digital advertising is one of those emerging technologies that we feel can help move the needle—not just toward revenue, but toward improving the overall passenger experience.
What is digital advertising?
Digital advertising (also known as infotainment) leverage onboard displays (typically LCD) or public address systems to provide riders with route updates, news, weather, sports, local events, and local advertising. Unlike the traditional printed advertising, digital advertising doesn’t have an inventory problem. A transit agency can sell multiple ads on to any screen.
What’s more, is that they can leverage a vehicles onboard GPS technology to trigger a specific ad or announcement at a given time or location; making the message more relevant and timelier to the rider.
The technology is very easy to use. Back office systems allow for the creation of playlists—a sequence of uploaded media files to be deployed in a specific order or under certain conditions. Depending upon the selected infotainment solution, these media files and playlists can be transmitted wirelessly or uploaded via a USB flash drive. Once the files are on a vehicle, the media package can be executed on schedule and in the sequence dictated by the playlist.
Five-, 10-, and 20-ad sequences are no problem for these digital advertising systems, and it exponentially increases the amount of inventory available for each bus or route.
Traditional print advertising simply can’t keep up.
Digital advertising has been initially embraced by our theme park and airport customers. They see the wisdom and potential to drive traffic to other locations on their properties such as the terminal restaurant and shopping options, or featuring the next big ride or attraction. These types of customers make sense to be early adopters of this technology because their business model is highly depending upon driving revenue and engagement to specific areas.
Overall, this same concept has been slow to catch on in the public transit market, with only 5 percent of agencies leveraging their onboard digital displays as a revenue-generating resource. However, just because so few have adopted this tech, doesn’t mean that the market isn’t interested. Digital advertising is being looked at as a way for agencies to enhance their offerings, improve reputation, build brand value, and of course, create a new revenue channel they can use to help cover operating costs and invest more proactively in their service.
- In 2017, 38.9 percent of agencies said they’d be interested in creating a new revenue channel using infotainment.
- 33 percent of agencies stated they wanted to use the technology to improve rider communication.
- Only 5.6 percent said they had no interest in digital advertising whatsoever.
- 76.9 percent of transit riders expressed interest in having onboard infotainment available during their travel.
There are success stories in digital display advertising.
- The Metro in Washington D.C. earns $20 million annually in digital ads on its vehicles and stations. It found that digital advertising outperformed print advertising by 400 percent.
- In Minneapolis, Metro Transit realized that 65 percent of its overall revenue came from digital advertising on just 38 displays at two stations.
At this point the potential benefit of digital advertising should be obvious. But what about obstacles? What barriers to adoption exist for this emerging technology?
Barrier #1: Cost
It takes resources to procure and install the digital displays and procure the back-office systems. We’ve already established that most transit agencies aren’t exactly rolling in a surplus of funds, so a way to pay for the up-front investment may be a challenge.
The good news is that digital display technology has decreased in price, which makes it more affordable to purchase and deploy. A budget can be stretched to cover more station and vehicles with less cost.
Additionally, advancements in e-paper and solar power technology can help mitigate installation and infrastructure costs. New wiring, power, and connectivity considerations can be overcome with Wi-Fi or cellular communications.
Barrier #2: Sales
An agency can invest in digital advertising technology, but that means that they also must SELL the ad space. In many transit agencies, employees often must wear multiple hats and serve several different job functions. Adding a time-intensive requirement like sales could dissuade adoption of the very solution that could ultimately make everyone’s job easier.
Fortunately, there are options. An agency doesn’t have to bear this burden by itself. In some cases, an agency is merely the media channel—an outside partnership can handle the sales and placement responsibilities in exchange for a percentage of the revenue. In practice, there is little difference from selling digital ads on a vehicle than selling print ads on a bus. Advertising and media firms who specialize in placement can handle the load once an agreement is in place.
Barrier #3: Accountability
Look, we all know just how many day-to-day demands are placed on transit administrators. Adding advertising to the mix also introduces concepts like frequency, run, and media audits. It would be easy to say ‘Hey, that’s just one more thing I don’t have time to do.’ This would be a reasonable and understandable objection.
A good solution to this concern is to make sure that your infotainment platform includes a media management and reporting dashboard that can handle these obligations with automated efficiency.
Digital advertising on vehicles is coming. It’s already been adopted heavily in Europe, and the United States is gradually warming to the idea. Of course, the need and application for such a solution is completely dependent upon the operational and revenue realities of the individual agency. But there is a strong case to be made that the technology can add a new, profitable revenue stream to any advertising agency, and that there is a public demand for such a system.
Why would you adopt a digital advertising system? Why wouldn’t you? What pros and cons did we not consider?