A Revolution in Transport Advertising

John Pizzamiglio

Why did Transport for London decide to take a

completely different approach when we

tendered the rail contract in 2015?

Because it was 2015

Not 2005

And it needs to work in 2025

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The media world had changed out of all recognition and we needed to change with it.

TfL was still stuck in a world of ;

asset based metrics of measurement

landlord / tenant relationships

non-commercial decision-making

a hands-off approach to advertising

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Capital investment also was going to be key

And our money is cheaper than any potential

media partner’s!

Significant

Market

Event

DOOH Value £

Premium Iconic Screens

Canary Wharf

7

TfL is now a more ambitious

organisation. We must take advantage

of the overlaps with other commercial

activity such as retail, sponsorship and

telecoms.

THE LONDON AUDIENCETRANSPORT FOR LONDON’S COMMERCIAL MEDIA PARTNERSHIP

Our challenge was to appoint a media partner who

understood;

• our commitment to sharing the risk and reward of a

partnership

• the value we can add as a partner in broader

commercial conversations

• our desire for a customer focused asset strategy

while optimising our commercial opportunity.

• the strategic need to utilise our audience insights

and data led ROI metrics to add real value to the

OOH industry

The Elizabeth Line

Launch Partners programme

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TfL decided to be hands on and add

value. OOH is not just about Media

Companies and Specialists.

Opportunity for Landlords to change the

dynamic and influence an industry.

If we force Media Companies to play the

same old games, we will see

diminishing returns OOH.

Shaun Gregory, CEO, Exterion Media

07/06/2017

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The pace of change is accelerating the need for flexibility, and relationships that foster innovation

Source: Company Information

1. Digital Out of Home or DOOH refers to digital media used for marketing purposes outside of the home. This excludes TV advertising and radio advertising, but includes digital signage.

The relationship between Franchise Partner and Media Owner has changed beyond recognition,

driven by macro trends

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� The security of a minimum

guaranteed payment

� Shared risk and reward - revenue share model with

higher risk and reward to TfL

� Media partner bears cost of investment in Capex;

payback requirements slants profile to early years of

concession

� TfL funding Capex, and mechanism to invest throughout

life of contract

� ‘Parent-child’ relationship � Genuine partnership, with Partnering Board and working

teams co-located

� Multiple concessions across rail

transport modes

� Integrated concession aggregating London

Underground, London Overground, Crossrail, plus others -

-- delivering ‘London Audience’ across all rail transport

modes

ToFrom

Confrontational and transactional (pre 2012) Fully fledged Partnership (2016)

Which is why we’ve made a massive shift in the way the relationship

drives value

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Financial structure

� Pure revenue share on gross revenue

� No minimum guarantee or performance bond

� Capex investment deducted from gross revenue

� EM responsible for Opex; Commissions; SG&A, and Direct costs

EM proposal and

commitment

� 5 Capex initiatives totalling £82.5M

� 3 Sales, Marketing and Insights initiatives to support revenue growth

� 3 Partnering initiatives to unlock new opportunities

� Partnership governance structure to facilitate joint decision making

Overview of Structure

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Assets going into the London Underground will re-define the sector

and provide inspiration that advertisers wait

And the deployment model is different

Significant

Market

Event

DOOH Value £

Enhanced targeting and effectiveness (DTE) Target outcome

� Enhanced and bespoke campaign targeting to increase advertisers’ return on investment, e.g.

- Journey based, geo/proximity-based, right-time and contextual targeting

� Essential to remain competitive given ad spend is increasingly migrating to mediums that

demonstrate ROI

Retain, grow

and attract new

ad spend

Audience Sell/packaging Target outcome

� Wholesale shift from selling panels and packs to selling audience impressions, priced in cost-per-

thousand (CPT) terms

� Align pricing/currency to other media to simplify comparability and

purchase and highlight OOH as a competitive alternative to other media

� Gives us flexibility to meet brief in most effective manner

Optimise inventory

and yields

New Routes to Markets Target outcome

� Introduction of automated and platform/exchange-based buying

- Simplifies buying/selling process

- Makes OOH accessible to broader range of clients

- Provides gateway to video ad budgets

- Creates outlet to monetise perishable unsold inventory

Steal share from other

media

Sales, Marketing and Insights initiativesFocus on enhancing ad effectiveness and equipping us to access new budgets (e.g. programmatic and video)

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Partnering initiativesCreating a new media channel for London, and a joint co-located TfL-EM team selling as one in the market

New Media Brand Target outcome

� Create the newest, most valuable, contemporary consumer engagement channel

- Transforms and clarifies our collective position in the market

� Begins with a focus on business-to-business; will then evaluate learnings before potentially extending to

business-to-consumer

� Need to ensure brand is flexible to house partnerships with other third parties

The one-stop

shop to engage the

London Audience

Team For London Target outcome

� Physical co-location of Exterion Media and TfL market facing functions…

� …and creation of a single team with an integrated commercial approach

� Team will:

- Create, market and sell an integrated product portfolio spanning media, sponsorship,

experiential, etc

- Offer Brands bespoke solutions

- Launch an innovative investment model: provide start-ups with media space in return for

revenue/equity share

Broader,

long-term,

higher value client

relationships

Data For London Target outcome

� Pooling Exterion Media and TfL data and insight to underpin all commercial initiatives

- Joint Data Forums and proof-of concepts

� Compliment EM investment in campaign targeting and flexible content playout with TfL data to measure

actual audience delivery

Most effective and

accountable media

channel

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Provide

guidance,

challenge and

approvals

Data Forum

Ensure the Partnership is maximising

the value of all internal and external

data sources

Innovation Steering Board

Arm the Partnership with broad

external perspective and view on

innovation, technologies and market

trends

Partnering

Board

Set strategic

direction,

allocate

resources

and empower

Working

Groups

Commercial Innovation Working Group

Maximise advertising revenue and unlock wider

commercial opportunities

Operational Activity Working Group

Oversee the delivery of capital programmes,

provision of services and driving of efficiencies

Technology and Innovation Working Group

Ensure TfL estate is at the forefront of

technological developments for commercial and

consumer gain

Contract Management Team

Ensure compliance to contract and provide

robust reporting

Outlined in Schedule 5 of the Commercial Advertising Partnering Contract

Activities supported by Innovation Landscape Reviews and Strategic Away Days

Partnering structureThe new structure requires joint working and decision making spanning investment, commercial strategy, innovation, and

operations

Additional proposed

Submit

� Capex initiatives

� Annual Business Plan

� Ongoing updates

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The vision is ambitious…We established multiple initiatives with revenue sizing and capex requirements, and demonstrated we were

already progressing the highest value proposition

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We believe in making the

everyday inspirational

We aim to transform ordinary

journeys into extraordinary

experiences

Every journey matters: the

service, the information, the

experience and the environment

Work with ambitious partners

who can help better serve the

customers and optimise the

commercial income for

reinvestment

It’s been a long process to get here, but we’ve created something unique.

THANK YOU!