Mobile Apps Driving $14M in Transit Sponsorships

Madrid’s public transit network is accepting corporate sponsorships to raise money for updates and maintenance costs. Learn about the different opportunities to generate revenue throughout the public network


What Happened?

Throughout Madrid’s public transportation network, corporate sponsorships have increased to help raise money to maintain and update the various lines. A three-year contract with Vodafone alone generated $3.8 million.

Goal

The impact of corporate sponsorships throughout Madrid has greatly altered the look of public transit amenities. Some sponsors are paying for their retail locations to be displayed on the public transit app, while others are offering more money to have various train stops’ names to include corporate branding. Even more, some physical public space has been rented out to sponsors for promotional events, CityLab reported.

While adding corporate promotions throughout a transit network isn’t visually appealing, the sponsorships are helping Madrid lower its debt and avoid ticket-price hikes. In 2013, the city’s transportation network made $14.4 million from corporate advertising, and even more revenue is anticipated next year with deals for sponsorship of the mobile app. The city hopes to make deals with enough sponsors to sustain low fares for residents while maintaining the transit infrastructure to meet demands, CityLab reported.

Pennsylvania Transit Sponsorship

The Pennsylvania Department of Transportation has announced a similar sponsorship effort to support transit costs through a public-private partnership. In 2012, a state law was enacted to authorize the use of public-private partnerships to build out or maintain infrastructure with collaborative sources of capital. The law focuses on enabling public-private partnerships to develop within the transportation industry to finance a variety of transit projects including:
  • Bridges
  • Roadways
  • Ports
  • Passenger and freight rail
  • Airports

The latest public-private partnership in Pennsylvania involves a three-year agreement between PennDOT and State Farm that will provide free motorist assistance on select expressways. The safety patrol will help motorists with common road side concerns including:

  • Towing
  • Jump start
  • Repair a flat tire

The sponsorship of the program will offset PennDOT’s roving safety patrol costs by 11 percent annually – or $4 million – and in return the initiative has been renamed the State Farm Safety Patrol.  All existing patrol vehicles will have a State Farm logo painted on for branding, and the sponsor will absorb all operational costs of the service.

The new public-private partnership law in Pennsylvania has generated an additional $2.4 billion in annual revenue for the Department of Transportation so far, with expectations to further narrow the state’s transit funding gap in the coming years.

NC Transit Gets Sponsored

The North Carolina Board of Transportation has also approved a policy enabling private sponsorships of the state’s Department of Transportation’s operational programs and services. The state recognized its transportation demands were increasing rapidly while funding was falling short. Injecting private sector funds into transit programs through sponsorships will allow projects to be completed without raising prices for passengers.

North Carolina is looking at a variety of sponsorship opportunities where companies can promote their brand along key transit networks. Areas being branded include:

  • Sponsor-A-Highway litter removal
  • Incident Management Assistance Patrols
  • Ferries
  • Travel Information Services
  • Rest areas
  • Highway beautification
  • Weigh stations

The state offers varying levels of sponsorship. Private organizations can provide capital to support specific programs, or offer volunteers to run operations. Both choices enable the group’s name to be displayed prominently in the community.

Tapping Into Private Funds

Gov1 has reported on several PP3 initiatives where municipalities are leveraging advertising opportunities to generate significant savings .

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