December 10, 2009

Chicago approves ad contract, DBE program

Chicago Transit Authority's (CTA) board approved a five-year contract with Titan Outdoor LLC, for the sale and placement of print and digital advertisements throughout the agency's properties. Under the terms of the print agreement, CTA is guaranteed a minimum of $80 million or 62.5 percent to 63.5 percent of net advertising receipts, whichever is greater, from print advertising over the next five years.

For digital advertising, CTA is guaranteed a minimum of $3.3 million for all five years of the base contract. Under the agreement, Titan must recoup all costs associated with the purchase and installation of the digital displays - through revenue generated from digital ads - before CTA begins receiving its share of guaranteed revenue from this portion of the contract. Currently, there are 92 digital displays at 17 rail stations, 25 king size digital displays on buses, one urban panel and one turnstile display at the 47th Street Red Line station.

Additionally, the contract contains five one-year renewal options for both print and digital advertising. In the event all five-year options are exercised for print advertising, the agency would be guaranteed a minimum total of $105 million or 65 percent of net advertising receipts, whichever is greater. For digital advertising, the additional five-year options for would provide a minimum of $7.6 million. If, however, revenues from digital advertising exceed the minimum guarantee, CTA would receive 55 percent of all revenues for the duration of the contract.

CTA's board also approved a new Disadvantaged Business Enterprise (DBE) program, which sets a 25 percent annual DBE agency goal in 2010 for contracts funded out of CTA's operating budget. An amendment to the Metropolitan Transit Authority Act in 2008 requires the CTA to establish a DBE program for non-federally funded contracts effective Jan. 18, 2010.

To determine what program requirements would work best, the CTA conducted a study of past operating contract expenditures and the current number of DBE firms. As a result of this study, the CTA established narrowly tailored goals for DBE participation on a contract-by-contract basis. The 25 percent annual goal is also based on historical purchasing data, subcontracting opportunities, and the availability of DBE firms for the industry and services being provided in a specific contract.

CTA has made a number of changes to its DBE program over the last few months in an effort to increase participation.

 

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