sr-120611-8aCity of City Council Report
Santa Monica,
City Council Meeting: December 6, 2011
Agenda Item: 8-A
To: Mayor and City Council
From: Martin Pastucha, Director of Public Works
Subject: Expansion of the Refuse Truck Advertising Program
Recommended Action
Staff recommends that the City Council approve expanding the refuse truck advertising
program to permit the sale of 50% of the advertising panels to outside marketers and use
the remaining 50% to promote Resource Recovery and Recycling and Office of
Sustainability and the Environment programs.
Executive Summary
This report provides information on the possible expansion of the Resource Recovery and
Recycling (RRR) Division's current refuse truck advertising program. Based on
information gathered from research and analysis on various options, staff recommends
selling 50% of available ad space to outside marketers and reserving the other 50% for
City programs, activities, and environmental messages. Sale of advertising panels has
significant potential to generate revenue. New revenue would be used to offset the cost of
RRR programs.
Background
RRR refuse trucks operate exclusively in Santa Monica and are on the road year round
servicing residents, businesses, and commercial areas including downtown, shopping
districts, the Pier, and beach.
There are 39 refuse trucks in the RRR fleet, with 78 spaces available (one on each side)
for advertisement. RRR and the Office of Sustainability and the Environment (OSE) have
been using this space to promote recycling and environmental messages since 1998. This
communication mechanism has offered visible, timely, and relevant messages to the local
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community. The messages currently being displayed on the side panels are: 'Rent -a -Bin
Service "; "Does Your Sprinkler Geyser "; and "Leaf Blowers Are ?"
Discussion
In January 2011, RRR staff contacted Big Blue Bus (BBB) marketing staff in order to
obtain background information on their advertising program, how it worked, who managed
the program, and how the rates were established, as staff was looking for ways to boost
revenues to potentially off -set costs for implementing zero waste programs. Based on the
information obtained from the meetings, staff investigated the feasibility of expanding its
current advertising program to include the selling of advertising space to outside
marketers.
Staff researched other jurisdictions and reached out to the current advertising vendor,
Roadway Displays. The research demonstrated that there are several cities throughout
the United States that are considering selling advertising space on their refuse trucks in
order to generate revenue to offset program costs. Major U.S. cities such as New York
and San Diego have successfully piloted outside advertising programs in recent years.
Roadway Displays, a contractor working with over 50 cities nationwide, verified that cities
have successfully established similar advertising programs. Roadway Displays is currently
working with the City of Los Angeles to partner advertisers with their refuse vehicles. The
City of Los Angeles has committed 68% of their fleet for outside advertising and is
considering_partnering with New York for a coast -to -coast promotion.
To test the market, staff contacted several businesses including Allan Company and the
LA Marathon, LLC, and all have expressed interest in advertising on the refuse trucks if the
ad panels became available.
The advertising panels, which have great reach and frequency, would offer outside
marketers an alternative to both print and broadcast media, as a low- budget solution for
getting a message across to the community. The ads would be visible in densely
populated areas with a high degree of frequency.
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Staff looked at several options for the operation of the program, including the number of
panels to be made available to outside marketers. The following options were considered
for comparative purposes:
1) Selling 100% of the available ad space panels (78) to outside marketers;
2) Selling 75% of the ad space to outside marketers with the remaining 25% to be used
by RRR, OSE and other City Departments;
3) Selling 50% of the ad space to outside marketers with the remaining 50% to be used
by RRR, OSE and other City Departments; and
4) Making no change to the existing program.
New revenue from the proposed advertising program would be used to offset the cost of
RRR programs that help to divert refuse from landfills such as free electronic recycling,
carpet and textile recycling, shred -it events, composting give -a -ways, and outreach and
education programs. If Council authorizes the proposed program, staff recommends
Option 3 because it offers the opportunity to continue environmental message outreach as
well as creating a new revenue source.
Advertising guidelines are being developed to ensure that the panels would be used as
intended and that legal requirements are met. Panels would be made available to outside
marketers on a first come first serve basis. In the case of concurrent applications, the
priority acceptance would be granted as follows:
Panels allocated to Outside Marketers:
1) Local Businesses
A) City co- sponsored events and activities
B) Buy Local campaign
C) Promotions targeting residents and businesses
2) Non -Santa Monica Businesses
Panels allocated to City Departments:
1) Environmental messages
2) Public safety
3) City Programs and activities
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Based on the BBB rate model and assumptions of outside marketers advertising needs
(i.e. concentrated versus continuous), it is projected that the City could generate revenues
up to $105,368, assuming a program start date of January 2012. The cost for printing, on-
going maintenance, and installation of these 78 available panels is estimated at $48,750
based on the projected advertising needs where concentrated messages would have a
one to two month turnover, while the continuous messages would turnover every three to
six months.
Staff looked at different options for managing the refuse truck advertising program. BBB
staff and Roadway Displays are both interested in managing the program for RRR under a
revenue sharing mix. Roadway Displays proposed recovery at 30% of gross revenues.
BBB proposed to assist RRR with the initial set -up at no cost and then negotiate on -going
fees for services after analyzing revenues received from the program. RRR also looked
into managing the program with existing RRR administrative staff - 10% of Business
Supervisor and 20% of Billing Specialist time. Future management of the advertising
program would be determined after RRR and BBB negotiate a cost for service. RRR's
decision to manage the program either through RRR or BBB would be based on the most
cost effective means available.
Until the expansion is approved, fully developed, and implemented, staff would continue to
promote RRR and OSE messages on all the panels. It is projected that the new ad panels
could be in place by January 2012.
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Financial Impacts& Budget Actions
The refuse truck advertising program expansion is projected to generate additional
revenues of up to $210,735 depending on the program's success. Account 27441.405690
would increase by $105,368 for FY2011 -12 and $210,735 in FY2012 -13. The FY2011 -12
program cost for the production, maintenance, and placement of the 78 new advertising
panels is prorated at $48,750. The funds are available in the FY2011 -12 budget at
account 27441.544010. Future cost for a full year of implementation is anticipated at
$97,500 and is contingent on Council approval of budget authority in subsequent budget
cycles.
Prepared by: Kim Braun, Resource Recovery & Recycling Manager
Approved: .
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Martin Pastucha
Director of Public Works
Forwarded to Council:
Rod Gould
City Manager
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