The Washington Metropolitan Area Transit Authority (WMATA) has awarded a 10-year contract to OUTFRONT Media, Inc., to expand its digital advertising network, which will provide an infusion of revenue to support rail and bus services.
The contract is valued at more than $336 million over the next decade. In the contract, WMATA locked in a 25-percent increase in guaranteed revenue that can be used to fund services and keep fares affordable for customers during the next 10 years.
“The general manager made a commitment to maximize the revenue potential of our assets, and this agreement is a major part of our strategy,” said Lynn Bowersox, senior vice president for customer service, communications and marketing. “As a result of the investments in digital screens, [WMATA's] advertising inventory—the largest out-of-home platform in the region—becomes even more attractive to prospective ad buyers.”
An additional 1,500 new digital screens will be installed within five years, expanding WMATA’s digital network from 400 screens to 1,900 covering all Metrorail stations. Each digital screen generates up to four times the revenue of the static display it replaces.
The new agreement with OUTFRONT continues the firm’s relationship with WMATA, and includes the 10-year base contract, plus two five-year options. With options included, the contract has an estimated value of $812 million over 20 years, including:
- $325 million guaranteed to WMATA in the 10-year base contract, plus 70 percent of all revenue once each year’s guarantee is met;
- $1.1 million investment in technology infrastructure to support a state-of-the-art digital screen network; and
- $10 million in capital funding for advertising assets, and 30 percent funding support for ongoing capital projects to provide
- 1,500 new 65” LCD LiveBoards in the first five years of the contract;
- 24 LCD ribbons at escalator banks; and
- Large-format LEDs in selected locations.
Advertising is a significant and growing component of WMATA’s non-farebox commercial revenues with revenue to WMATA consistently exceeding the annual guarantee payments. These funds support operational expenses and help WMATA stay within the legally mandated three percent annual subsidy growth rate.
