Tapping into Transit Fall...California Transit Association . November 18, 2015 . ... Advertising --...

Tapping into Transit

San Diego MTS Naming Rights

California Transit Association November 18, 2015

The Dark Days of 2009

– State took our money – We were all scrambling to

reduce costs • Employee layoffs

– MTS reduced management positions by 20%

• Reduced employee benefits • Fare increases

– From $64/mo to $72/mo in 2 yrs.

– Service reductions

– Rethink non-fare revenue strategies

Diverse non-fare revenue sources – Railroad Right of Way -- $1 million – Real Estate -- $1.9 million – Advertising -- $2 million – Station Activations -- $250,000 – Concessions/Vending -- $500,000 – MTS-TV -- TBD

Bus Advertising Policy

The Naming Rights Deal – RFP for a firm with Naming Rights

expertise – Superlative Group

• Did the Health Line in Cleveland plus sports • Teamed up with IMG

– The Superlative process • Asset Evaluation • Letters of Interest vs. RFP • Negotiations • CEO/Board member participation in meetings

Rapid Network

Monetizing Assets Trolley Map

Mid-Coast Extension • 11.5 miles • 20,000+ new riders • UC San Diego

– 60,000 students, faculty and staff

• Major Employment • Dense Residential • One-seat ride from

border • Direct link to downtown

and Trolley network

Based on 324 million impressions per year, what would an advertiser expect to pay?

Based on 81,000,000 impressions in each medium

Media CPM Cost

Radio $12.92 $1,000,000 TV $12.03 $1,000,000 Billboard $ 2.56 $ 200,000 Print (UT) $10.28 $ 800,000 Total $3,000,000

Considerations – That’s a lot of money!

• MTS wanted at least $1 million per year

– It’s a big commitment for agency • Reprinting signs at stations • Reprinting timetables and other collateral • Meeting with local planning groups

– Big commitment for Naming Rights Partner • MTS wanted a long-term commitment of at

least 10 years

Creating Impressions

Trolley Wraps (6) Station Names (3) Freeway/Street Bridges (3) Station Activations (6) Station Signage

• Destination • Line Designation • Route Maps • System Maps

On-Board Signage • Route Maps • System Maps

Printed/Web/Digital • Timetable • Pocket Guide • One-way Tickets • WiFi and Digital Ads

$36 Million Contract – 30 years – $675,000/year until Mid-Coast is

complete – $945,000/year upon completion – Increases with CPI

• Uses historical average of 3%

– Value increases to $1.85 million/year by end of contract

Who We Are – UC San Diego Health

15

7500+ Employees

850+ Physicians

563-bed Health System

$1.7+ Billion Operating

Budget

Two Campuses: La Jolla and Hillcrest

Business Drivers for Partnership Strategy

One of the most competitive health care markets in the U.S. Some of the most expensive advertising rates in the U.S.

Two well established competitors with mature positioning and high level of brand awareness

2011-2015

Partnership 1 – North County Transit District

Partnership 2 – UC San Diego Campus Buses

Summary County discharges peaked in 2011 and

have trended down 3.0% through 2014 while we grew 6.5% from 2011 to 2014

Market share grew from 9.2% to 10.1% over the same period

Transportation partnerships are undervalued marketing assets

Accurate valuations of transportation assets allow them to be competitive with traditional advertising