As transit systems have searched for new revenue streams to offset lower sales tax revenue and state funds, they have turned to unconventional methods to bring in extra money. New green and online technologies are opening up avenues for cash flow.
The atypical methods have also added convenience to the customers’ riding experience. Virtual grocery stores allow customers to shop while commuting. Regenerative braking on some of those commuter trains makes the ride greener, and offering passes through deal-of-the-day websites makes it easier for out-of-town customers visiting for the weekend to purchase their passes.
Some transit agencies have been able to maximize ad space in their rail stations, which has upped revenue and allowed riders to be more productive during their commute.
Transportation media sales company Titan, online grocery store company Peapod.com, and transit agencies — including Southeastern Pennsylvania Transportation Authority (SEPTA), Chicago Transit Authority (CTA) and Massachusetts Bay Transportation Authority (MBTA) — have partnered to use ad space to more closely engage riders and their ever-present smartphones during their commute as well as help increase ad revenue.
Peapod launched more than 100 sites at commuter rail stations in Boston, Connecticut, New York, New Jersey, Philadelphia, Washington, D.C., and Chicago.
The virtual store technology features billboards with grocery “aisles” on the train platforms. Commuters with iPhones, iPads, or Android phones scan a QR code on the billboards to download a free PeapodMobile app and shop by scanning bar codes of the products displayed in the aisles.
Commuters can make selections from Peapod’s online store after registering on its website and schedule home deliveries for next day, or days or weeks in advance, during their train rides.
Once on the PeapodMobile app, customers have access to more than 11,000 popular and store-brand products. Peapod partnered with national consumer products brands, including Barilla, Coca-Cola, Kimberly Clark and Proctor & Gamble for the project.
In particular, SEPTA was able to bring in more advertising revenue this way through its relationship with Titan, which created the ads and the app for the Peapod campaign.
Early last year, Titan was approached by Crain Communications, the local ad agency for Peapod and Giant supermarket, looking to create an interactive idea to reach SEPTA riders and promote Peapod service for on-the-go supermarket shopping, Jon Roche, VP/GM, Titan, explains.
Titan shared a concept that started in South Korea with British supermarket Tesco. Tesco tested the use of QR codes as a way for people to buy groceries as they waited for trains to arrive, Dave Etherington, Titan’s senior VP, marketing, says.
“Since we spend increasingly longer amounts of time at work and commuting, simple things like shopping are stressful,” he adds. “This was a way of reimagining the transit commute through advertising to allow people to shop virtually.”
The campaign uses space that normally holds ads for branding and creating virtual shopping shelves, where riders can purchase items from them directly using QR codes.
DART asked Titan what it could create on a similar scope using its media assets. Titan suggested a train station platform ad, known as a two-sheet poster with side-by-side placements; one of the posters looks like a supermarket shelf holding products that include QR codes riders can scan to buy products with their smartphones, and the other ad has a description of Peapod and how to use the service.
“It’s a new way to make the advertising more exciting to the consumer and the companies that advertise in the market,” Roche says.
The initial campaign with SEPTA started in early 2012. Peapod bought ad placements at approximately 20 stations and ran multiple campaigns of 12 weeks each. The campaigns generate advertising revenue on a monthly basis.
SEPTA was the first market that Titan tested, Etherington says. Since that first campaign was so successful, Peapod asked Titan about other markets where similar campaigns could be conducted. The ad agency soon struck similar agreements with NJ Transit, MBTA and CTA.
“From the perspective of revenue generation, this is the kind of front runner we imagine is going to be a real step-change in the way transit advertising is seen by brands and consumers,” Etherington says. “Advertising used to just be about branding or strategic information [reaching] audiences. It’s still about that, of course, but now it’s a conduit [for] engagement through smartphones. Smartphone shopping and payments are a really exciting place for us to be, particularly when you consider the long dwell times and captive audiences that transit brings….where posters become a point of purchase as well as branding.”
CTA’s most recent campaign, for two sheets at several stations, ran at the end of last year. The agency also added a tunnel wrap, covering the entire tunnel walkway, creating a visually arresting and interactive experience, like walking through a supermarket, at one of its main hub stations. [PAGEBREAK]
Meanwhile, SEPTA tapped another revenue stream, turning energy from brake regeneration into dollars.
Stemming from a partnership with Philadelphia-based smart grid company Viridity Energy, the agency is saving and making money from wayside energy storage. SEPTA’s trains turn electricity into braking energy that gets stored. The brake creates electricity, which goes into a battery that is installed at a substation, Andrew Gillespie, chief power engineer, SEPTA, explains.
Five years ago, when SEPTA initially looked into capturing regenerated energy using a battery wayside storage device, the financial return on investment showed that it washed, because the cost to build the system would equal the cost savings over the life of the system, Gillespie recalls. More recently, Viridity approached SEPTA and proposed a dual-use of the battery by participating in the Microgrid market to double the economic value. Viridity also won a $900,000 grant through the Pennsylvania Energy Development Authority, which made the option more feasible.
The system is installed on the Market-Frankford line and has been running for about seven months.
A revenue stream is created by utilizing the battery to participate in a microgrid market — integrated energy systems made up of distributed energy resources and multiple electrical loads operating as a single grid.
The microgrid manager, PJM, manages all the major power suppliers in the Northeast, which produce energy at various rates, balancing the supply and demand. PJM pays SEPTA to charge and discharge the battery at the rate they need to help balance the load. Over the last decade, as new sources of energy come online — particularly renewables, such as wind and solar — the ability to regulate energy became more difficult.
“You can’t make the wind blow harder when you need more power,” Gillespie says. “Frequency regulation balances the load and supply.”
The battery is projected to decrease the agency’s electric bills, promising a savings of about $190,000 per year. The savings generated from the regenerative braking will be used to help fund SEPTA’s sustainability initiatives.
“We’re doubling the benefit of the battery, financially, [with] this multi-purpose use,” Gillespie says.[PAGEBREAK]
Daily deal promotion
While looking into different revenue opportunities to diversify its non-farebox revenue last year, CTA decided to make some of its passes available through Groupon, the popular deal-of-the-day website.
With Groupon’s estimated 36.9 million active customers and nearly 900,000 daily page views, CTA spotted an opportunity to advertise to a national and international audience.
CTA partnered with Groupon to offer discounted 3-Day passes to riders, marking the first-ever partnership between the Chicago-based daily deal site and a U.S. transit agency to sell fare media, according to CTA. The ongoing discount started at the end of June.
Groupon pre-purchased 250,000 3-Day passes and paid CTA $1.8 million upfront. Each pass is sold for $7.53 wholesale and offered to Groupon members for $9 instead of $14, the current price of a 3-Day pass. The offer has a limit of four per person. Groupon will own the cards it purchases until they are sold and is responsible for selling the passes.
The deal was a win-win for the agency, bringing it an immediate influx of capital and hundreds of thousands of potential new riders over the summer.
Additionally, the discounted rate will encourage more people to use the 3-Day pass, which offers a better value than the pay-as-you-go option. The CTA Groupon also cultivates new riders and eventually captures permanent local customers, expanding the ridership base.
Groupon is selling the passes on its Chicago, Indianapolis, Milwaukee and Detroit websites, as well as travel discount sites. The deal-of-the day service also reaches out-of-towners through the company’s “Getaways” section, which offers deals on hotels and travel.
CTA’s 3-Day passes are heavily used by tourists and this deal will help further expand that market, particularly for festivals and weekend activities, such as the Air and Water Show, or Lollapalooza, that draw large numbers of out-of-town visitors.
“We felt [the deal] best aligned with out-of-town visitors coming to town for summer vacation or the holiday season,” Eric Reese, GM, business development, CTA, says. “If you’re coming in for a three-day weekend, you’ll have an easy way to get around the system.”
Groupon can mail the fare cards to customers so they can get them before they even arrive in Chicago, making it easier for them to use CTA trains and buses.
“[It’s] a great way to get to a different customer base than we normally have an opportunity to [reach],” Reese says.
The contract allows Groupon and CTA to offer the passes for the same price within the next 12 months.
CTA is watching the results of the partnership and will re-evaluate whether it makes sense to do again after all the passes are sold.
Customers and tourists have received the deal very positively, Reese says.
“In general, it has helped CTA overcome the hurdle of getting out-of-town guests on the system more easily, because they don’t have to figure out how to buy a pass,” he explains. “There’s one option for them, they know where to get it and it’s easy to purchase. It’s already in their pocket when they arrive at the station.”