At the moment, these companies are currently
battling to secure a contract with the Los Angeles County Metropolitan
Transportation Authority. CBS Outdoor
Group, the 32 year incumbent contractor, has offered a slightly lower bid than
newcomer Titan Outdoor. After being outbid in several other cities, Titan hopes
to secure the LA Metro by offering a higher guarantee plus a share of their
revenue over the course of the 5 year contract.
The
ethical decisions that each company has made during the recent economic
recession will definitely be considered during the bidding process. Although CBS
Outdoor failed to cover minimum annual guarantees in the current contract,
Titan Outdoor also experienced similar contract struggles during but
renegotiated with the transit authorities when they are unable to meet
obligations. By winning against the
incumbent, Titan would become the most powerful outdoor advertising company in
metropolitan transportation seeing as the company currently holds contracts for
5 of the 8 largest transit authorities. Since CBS Outdoor is responsible for
13% of its parent company’s annual revenue, CBS Corp stakeholders could
interpret losing this contract as instability and previous talks of selling the
division may reemerge.
Each
company has a lot at stake but regardless who wins, the rivalry between CBS
Outdoor and Titan Outdoor has helped facilitate industry wide growth and
highlights the advantages of outdoor advertising. According to the Wall Street
Journal, outdoor advertising has grown 17% since 2009. Much of the growth for
this medium is attributed to the fact that advertisers have a captive audience
while people are riding on subways and buses. Even though we are living in the
digital age, it is reassuring to know that traditional media outlets are still profitable
and effective when targeting urban dwellers.
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