MediaWorks will look after all the advertising on Auckland Transport buses and other facilities. Photo / Michael Craig
The outdoor advertising sector faces a big shake-up with news today that MediaWorks has scooped up all of the prized Auckland Transport contracts.
MediaWorks has won the portfolio of lucrative contracts to look after outdoor advertising for Auckland Transport across its buses, billboards, bus shelters and train stations for the next 10 years.
It is a massive boost for the outdoor advertising and radio business, with the contracts valued by some in the industry at $350 million over the next decade.
The four contracts are to look after advertising on street furniture (including 970 shelters), vehicles (such as buses and trains), transport hubs and stations, and billboards. The new deal comes into place on October 16.
MediaWorks is now 100% owned by Australian outdoor firm QMS, and the announcement will lead to inevitable speculation about whether its New Zealand subsidiary retains its radio arm, or spins it off to focus on its outdoor advertising business.
MediaWorks – which owns a suite of entertainment radio brands including the Breeze, More FM, The Rock and The Edge – has been adamant that it is an integrated company.
MediaWorks currently looks after advertising on Auckland Transport (AT) buses and some billboards and was long rumoured to be the front-runner to win the lion’s share of the AT contracts.
But there have been a number of other industry players who have also been in the running, such as oOhmedia – which currently looks after advertising at bus shelters – JCDecaux and Go Media.
The announcement today will be a blow for oOhmedia, especially.
“We are thrilled to announce our partnership with MediaWorks to manage what is New Zealand’s largest out-of-home asset portfolio, following a very competitive process,” said AT chief financial officer Mark Laing.
“The out-of-home media industry is experiencing exciting growth and MediaWorks’ proposal demonstrated strong delivery capability and alignment with AT’s strategic objectives.”
Laing said the partnership with MediaWorks would deliver a substantial increase in advertising revenue and described it as an excellent outcome for ratepayers.
“Under the new agreement, AT expects to receive a minimum of $220 million revenue over the next 10 years. Revenue will be higher than this if the market continues to grow as forecast.”
He said AT currently received about a quarter of the gross advertising revenue generated from its out-of-home media assets. Under the new deal, it would receive more than half.
“Last year, AT earned $7 million in advertising revenue. This coming year this will more than double,” Laing said.
“Every additional dollar brought in through advertisements across the public transport network helps to offset the costs of operating our services and gets Auckland closer to meeting the Government’s ‘private share’ targets for public transport.”
MediaWorks chief executive Wendy Palmer said the company was “absolutely thrilled” with the news.
“This win is a game-changer and reshapes the way New Zealand out-of-home will be planned and bought by advertisers.
“Our team approached the tender strategically to demonstrate the value and growth we can provide both Auckland Transport and our clients with a new exciting offering that sees street furniture integrated into our existing Auckland Transport portfolio.”
The new partnership gave MediaWorks exclusive rights to represent AT’s street furniture network, “encompassing an existing asset base of almost 2000 advertising panels across the greater Auckland region, with plans to add more digital assets to the network”.
“Our plan is to increase the digital capabilities of the street furniture network with enhanced strategic solutions, as we introduce new audience-informed packs across all concessions that will make it even easier for advertisers to do business with us and deliver on their campaign objectives.”
MediaWorks and QMS chairman Barclay Nettlefold said: “We are proud to be entrusted to operate the coveted Auckland Transport street furniture concession and are excited about the development plans that we have for the network.”
He said the new deal firmly established MediaWorks as the number one out-of-home operator in New Zealand.
“With the growing trend towards transtasman trading, our shared expertise between QMS and MediaWorks will provide greater opportunities for our media agency partners and their clients to plan and buy across both markets.
The tender process has been a long, drawn-out affair, with today’s announcement marking almost a 12-month delay.
The new deals were due to be operational from January 1 this year but AT has been taking the outdoor companies on a not-so-merry ride.
In December, when AT suddenly pulled the pin on the already 18-month Request for Proposal (RFP) process, it refused, publicly, to say why. A media manager said at the time this was “confidential”.
AT’s decision left the industry outraged and bamboozled, although few of the companies have been prepared to go on the record for fear it would harm future opportunities.
“It’s been a clusterf***,” one source told Media Insider.
“They’ve had no idea what they’ve been doing. They had no idea of the scope of the project. And that is very evident in the fact that we are now going back to an RFP again with new parameters after 18 months.”
AT had taken almost three months to release limited details to the NZ Herald under an Official Information Act request, including a notice that it sent to outdoor companies on December 10.
In that notice, AT told RFP participants that it had decided to “extend” the procurement process based on a “further review of market dynamics and transition risk, as well as market feedback. This review also suggested the RFP process would benefit from some modifications”.
The use of the term “extend” might be considered a stretch, given that the RFP was to be reissued with “modified evaluation criteria and bid structure”.
The process essentially had to start all over again, although AT said in the notice it would “endeavour to minimise any additional effort required from participants”.
The notice said: “This is not a decision that AT has taken lightly, considering the amount of effort to date from all parties involved. We understand that this is disappointing for participants and the out-of-home media sector.”
AT media partnerships and experience lead Simon Soulsby said in a statement today: “After an incredibly competitive process, we are very pleased with the outcome. This is New Zealand’s largest-ever single media pitch and the appointment brings certainty for the industry, as well as great outcomes for Auckland ratepayers.
“MediaWorks has delivered numerous high-profile client campaigns across our public transport assets over the past few years that have captured headlines and captivated our customers.
“Whether it’s the ‘Barbie bus’ or the fleet of police recruitment buses and trains patrolling our city, unique advertising on our public transport network has created huge cut-through ... ”
Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
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