Transport for London (TfL) has invited media companies to bid for one of the world’s largest advertising contracts, thought to be worth around £1bn over eight years.
Under the deal TfL would enter into a new partnership arrangement with the successful bidder, which would split the cost of investment and the revenues from the advertising business.
The current contract model is based on minimum guarantees and proved costly for London Underground’s holders Exterion Media after advertising revenue fell in the wake of the financial crisis.
TfL is now ‘willing to accept a much greater degree of risk’ according to its director of commercial development, Graeme Craig.
TfL hopes another advantage of the partnership arrangement is that it will foster more innovation and encourage more imaginative thinking about the station spaces and the ‘barriers between retail and advertising’.
A spokeswoman told Transport Network this could make more use of the Click and Collect service run by TfL, so passengers could potentially order products they have seen advertised in stations and pick them up at the end of their journey.
Mr Craig said: ‘Advertising is at the centre of our plans to innovate in order to raise revenue that we can reinvest in London’s transport network.
‘We know that commercial media will change dramatically over the next few years, and we want TfL and London to be at the forefront of that revolution. We have huge footfall on a daily basis and the best assets in London, and are keen to find a partner who shares our ambitions.’
The contract is particularly large as for the first time TfL is combining advertising in a single contract across London Underground, London Overground, Tramlink, Docklands Light Railway, Victoria Coach Station and once it is operational, Crossrail.
Proceeds from the move will form part of TfL’s commercial approach to try and generate £3.4bn in non-fare revenue over the next decade to be reinvested back into the transport network, delivering improved services for customers and users.
TfL’s transport network supports over 30 million journeys every day allowing its successful partner to offer lucrative advertising space at stations with an audience of over 1.5 billion each year. The tender process is due to be completed by April 2016 with the appointed partner in post by 1 October 2016.