City Council Extends Under-Performing Bus Ad Contract Despite Opportunity to Get Better Deal

Council approved a City staff proposal to extend the current bus advertising contract with StreetSeen Media, despite the company failing to meet ad sale goals, and two other companies seeking to bid on the new five-year contract if the City follows proper procedure by tendering the contract.

The cost to taxpayers is not known, as City staff did not explore how to get the best value for the City.

Under the current contract, the City gets 60% of net revenue for advertising on the outside and inside of the City’s approximately 220 HSR buses. If the company fails to make $708,333 in net revenue in a year, the City receives a minimum of $425,000. In 2013 the City received the minimum.

StreetSeen approached City staff in June 2013 asking the City to not put the contract to competitive bidding. Staff responded in December 2013 offering a 21 month contract to StreetSeen – without starting a competitive bid process or following Council’s Procurement Policy 11 that guides non-competitive bid processes.

StreetSeen is offering the City an increase in the minimum of $15,000 per year.

Pattison advertising, which successfully runs advertising for many GTHA transit agencies including the TTC, and Corus Entertainment both approached the City seeking to bid on the contract when it went to competitive bidding.

City staff cite a good relationship with StreetSeen, a desire to further evaluate bringing bus advertising sales in-house to be run by City’s Corporate Services Department, and the expiration of the bus shelter advertising contract at the end of 2015 as reasons for not following procurement.

Among the benefits of the current contract, according to staff, is that the City gets “any unsold advertising space free of charge” on city buses. Staff note that many programs are advertised on city buses due to the amount of surplus ad space available.

Staff also cite a commitment by StreetSeen to working with local businesses to get them advertising on City buses.

If Council chooses to seek a competitive bidding process, Council will need to find funds to cover the lost of advertising on City buses during the bidding process.

The current contract expires on March 31st, and it is only now being brought to Council’s attention.

In 2009, the contract was extended for five years without competitive bids. At the time, Council was notified and approved the extension well in advance of the contracts expiry.