Pattison's $324M deal bags static and Digital OOH ad contract with Toronto transit system

July 7, 2011 by Dave Haynes

When Pattison Outdoor Advertising acquired Onestop Media Group earlier this year, a couple of thoughts jumped into my head:

1 – They were buying into a lot more technical insight and capability for Digital OOH than they had up to that point;

2 – They were positioning the company to win the renewal for the Toronto subway ad contract, which Onestop had on the digital side.

Well, many things would have come into play, but Pattison has indeed won the TTC ad contract.

News is on the street that the TTC has done a 12-year, $324-million contract with Pattison Outdoor Advertising that guarantees about $11-million more revenue for the transit commission in its first year than the current contract, which was with CBS.

Pattison, reports the National Post, controls the brokering of any “new initiatives,” such as 3D LCD screens, digital screens on the sides of buses and subway station or line naming rights.

With naming rights, that means the Yonge Street line or the King Street Station could be “brought to you by” Bell or Rogers or PizzaPizza.

Facing a $100-million budget hole next year, the TTC sees advertising as a way to bring in new money. The deal increases the number of buses, streetcars and subways cars that can be “wrapped” in ads, though the percentage of the overall stock is quite low.

The previous contract was seven years, and 12 years is seen as a way of offering more flexibility and allowing more cost-recovery/ROI time on the digital gear.

The deal specifically mentions the Onestop contract and how it is different from the one lapsing with CBS.

The Commission currently has a separate contract with the OneStop Media Group (OneStop) for advertising on the Platform Video Screens, Next Vehicle Arrival Screens and Customer Service Information Screens located on Commission property. The contract is due to expire on June 30, 2020 and at that time this work will be included in the advertising contract. Onestop was recently purchased by Pattison and following contract award, staff should discuss this issue with Pattison to determine whether this separate contract should be folded into the overall advertising contract beginning in 2012. This will be the subject of a separate contract amendment, as appropriate.

So, by the looks of it, it will just roll over and into the larger Pattison contract. The TTC’s intent was to have one throat to choke and this gets them there via Pattison. The TTC also has options to extend the contract for as much as 10 years beyond 2023.

While the incorporation of digital into the bid probably had a role, it’s also important to note that Pattison also offered by far the biggest financial guarantees to the TTC.

Pattison was $324 million. Next was Titan at $283 million. Way back were Lamar at $222 million and CBS Outdoor Canada (the incumbent) at $220 million.

What’s interesting in that is CBS, because they sell it now, are in the best position to do revenue projections. The counter-argument would be that CBS was “leaving money on the table.”