Report to/Rapport au:

 

Finance and Economic Development Committee

Comité des finances et du développement économique

and Council / et au Conseil

 

February 1, 2011 / le 1 février 2011

 

Submitted by/Soumis par : Steve Kanellakos, Deputy City Manager/Directeur municipal adjoint, City Operations/Opérations municipales

 

Contact Person/Personne-ressource : Donna Gray, Director/directrice

Organizational Development and Performance/Service du développement et du rendement organisationnels

613‑580‑2424, ext./poste 25684

 

City Wide/ À l’échelle de la Ville

Ref N°: ACS2011-COS-ODP-0002

 

 

SUBJECT:

Corporate ADVERTISING Opportunities

 

 

OBJET :

POSSIBILITÉS DE PUBLICITÉ D’ENTREPRISE

 

 

REPORT RECOMMENDATION

 

That the Finance and Economic Development Committee recommend that Council approve the 2011 to 2015 Marketing Plan attached as Document 1 and as outlined in this report including expanding the scope of the Corporate Sponsorship and Advertising Policy to include all opportunity types identified in the Marketing Plan and the list of community facilities identified in the report as venues to be marketed for potential naming rights, subject to approval of funding in the 2011 budget.

 

 

RECOMMANDATION DU RAPPORT

 

Que le Comité des finances et du développement économique recommande au Conseil d’approuver le plan de marketing de 2011 à 2015, décrit dans le présent rapport et joint au titre du Document 1, ce plan proposant notamment l’extension du champ d’application de la Politique de la Ville sur les commandites et la publicité à tous les types de possibilités mentionnées dans le plan ainsi qu’à toutes les installations communautaires énumérées dans le rapport comme des sites dont il y a lieu de favoriser l’acquisition de droits associés aux appellations; sous réserve de l’approbation du financement dans le budget de 2011.

 

 

EXECUTIVE SUMMARY

 

Since 2005, City Council has set aggressive productivity improvement targets to reduce the cost of providing municipal services. By the end of 2010, the accumulated efficiency target will be $137.8 million.

 

During the 2010 budget, a revised approach to efficiency savings was approved by Council which called for $85.4 million in savings over the next five years (2010 to 2014). The single largest component of the Efficiency Savings Program is $39.1 million under the umbrella of Service Excellence.

 

One of the nine initiatives that comprise the Service Excellence Plan is corporate sponsorship and advertising. This initiative involves the development of a comprehensive sponsorship and advertising framework to pursue additional sources of revenue from city assets and facilities. Although the City currently receives combined revenues from sponsorship and advertising in the range of $5 million annually, additional opportunities exist to increase revenues. It has been estimated that additional (gross) revenues of $3.7 million annually can be generated by 2015 or $12.7 million over the next five years through a combination of sponsorship and advertising opportunities such as naming rights of community facilities, advertising on interior signage, websites and publications, and sponsorship of programs.

 

The purpose of this report is to provide Council with information on the various opportunities that will be marketed to enable the achievement of the revenue targets in 2011 and over the next five years and to seek approval for the community facilities available for naming by sponsors.

 

 

RÉSUMÉ

 

Depuis 2005, le Conseil municipal se fixe des objectifs pour le moins ambitieux quant à l’amélioration de la productivité, afin de réduire le coût de prestation des services municipaux. D’ici la fin de 2010, le Conseil vise des gains en efficiences cumulatifs totalisant 137,8 millions de dollars.

 

Lors de l’établissement du budget de 2011, le Conseil a approuvé une stratégie revue et corrigée en matière d’efficience, laquelle devrait permettre d’économiser 85,4 millions de dollars au cours des cinq prochaines années (de 2010 à 2014). La plus grande composante du Programme sur les économies d’efficience concerne l’excellence du service et vise l’épargne de 39,1 millions de dollars. 

 

L’une des neuf initiatives s’inscrivant dans le plan d’excellence du service a trait aux commandites et à la publicité. Cette initiative prévoit la création d’un cadre global de commandites et de promotion en vue de tirer des revenus supplémentaires des biens et des installations de la Ville. Bien que ses activités liées aux commandites et à la publicité permettent actuellement à la Ville d’engranger des recettes totales annuelles de l’ordre de cinq millions de dollars, il existe des possibilités encore inexploitées d’augmenter ce total. On estime possible de générer des recettes brutes additionnelles de 3,7 millions par année d’ici 2015, pour un gain de 12,7 millions au cours des cinq prochaines années, en combinant les possibilités de commandites et de publicité, notamment celles relatives aux droits associés aux appellations des installations communautaires, à la publicité affichée par la signalisation intérieure, aux sites Web et aux autres moyens de publication ainsi qu’aux programmes de commandites.  

 

Le présent rapport vise à renseigner le Conseil sur les différentes possibilités qui seront mises de l’avant pour atteindre, en ce qui concerne les recettes, les objectifs fixés pour 2011 et les cinq prochaines années, ainsi qu’à solliciter l’approbation du Conseil quant aux installations communautaires disponibles aux fins d’appellation par les commanditaires.

 

 

BACKGROUND

 

Since 2003, Council has approved efficiency targets totalling $137.8 million to be achieved from productivity improvements, procurement savings and, to a lesser extent, investments in technology and asset rationalization.

 

In May 2009, the City engaged the services of IBM Global Business Services to provide an independent perspective on identifying and implementing realistic efficiency improvements that could drive service excellence and result in meeting the remaining $49.9 million target.

 

Following a structured evaluation and consultation process, nine initiatives were identified as having the greatest potential to generate efficiencies, cost savings and to generate additional revenues. While many of these initiatives require a significant investment in technology to improve service delivery, all were based on sound business cases that showed a positive return on investment. In total, the nine initiatives approved by Council as part of the 2010 budget are expected to contribute $39.1 million in savings over a five year period (2010 – 2014).

 

One of these nine initiatives is building on the successes of sponsorship and advertising in the City and establishing a sustainable, long-term program to maximize revenues from the City’s assets.

 

The purpose of this report is to provide Council with an update on the progress of the sponsorship and advertising initiative, to identify the opportunities to be actively marketed in 2011 and the staffing and budgetary requirements to establish a sustained sponsorship and advertising program that will generate a long-term positive revenue stream.

 

Sponsorship and advertising in the City of Ottawa

 

Sponsorship and advertising in the City must comply with the Sponsorship and Advertising Policy approved by Council in July, 2005 (ASC2005-CRS-CSO-0001). The objective of the policy is to safeguard the corporate values, images, assets and interests while increasing the opportunities for revenue generation. The Policy establishes the principles and conditions under which the City will pursue and enter into sponsorship and advertising agreements and sets out the responsibilities and delegated authorities to ensure consistency with the City’s vision, mission and values.

 

The current policy applies to the following types of sponsorship and advertising agreements:

·         Program and special event sponsorship,

·         Naming/renaming of City property, buildings, and structures,

·         Pouring rights,

·         Paid advertising on City property, at City events, and in City publications, and

·         Preferred supplier status.

 

The opportunities presented in the 2011 - 2015 marketing plan later in this report represent existing components of the above types of sponsorship and advertising except for new opportunities related to an Employee Discount Program and for mailing inserts.  Subject to Council approval, the policy will be amended to allow for these new sponsorship opportunities.

 

Many City departments have already successfully integrated sponsorship[1] and advertising[2] initiatives into their program and service delivery and have been able to reduce their program funding requirements, enhance the scope of program delivery and defer capital spending due to revenues received from these initiatives.

 

Between 2005 and 2008, sponsorship revenues of cash and service-in-kind have generated, on average, $2.2 million annually. Three examples of the successful partnerships with sponsors are:

·         The Ottawa Fire Service’s Wake Up working smoke alarm program. This program has received cash and services over a five year period (2006 – 2010) from CTV Ottawa, Duracell, the Public Fire Safety Council, the Ottawa Senators and the Ottawa Senator’s Foundation and the Insurance Adjusters of Canada. The sponsorship dollars have allowed Council’s initial investment of $200,000 to be leveraged six times to about $1.3 million.

 

·         The Spring and Fall Clean-up the Capital and an anti-litter campaign by Public Works has been successful in attracting long term sponsorship funding. In 2009, over $216,000 was received from Tim Horton’s, 1-800-GOT-JUNK, Clorox/Glad and a variety of local media outlets – The Ottawa Citizen, CHUM, CIMF, CTV, Pattison Outdoor Advertising, Astral Radio INC and Newcap Radio.

 

·         Morguard Real Estate Investment provided $30,000 for the design and construction of a bicycle motocross (BMX) riding track in Presland Park in Overbrook.

 

The involvement by these partners and all other partners who have sponsored various city programs or services have led to the success of the delivery of the programs. In return for the media exposure of their names and products being connected with a City program or service, the City has been able to reduce the amount of tax dollars required to fund programs or to provide an enhanced level of service.

 

Likewise, advertising on city assets such as on city buses, publications and billboards generates about $2.8 million annually. Examples of advertising revenues are the following:

·         Advertisements on buses are the most significant source of advertising revenues for the City at around $2.7 million annually.

 

·         Advertising from billboards on city owned properties are another source of revenues. The first phase of the billboard program, approved by Council in 2006, is generating about $226,000 annually ($1.1 million over five years) for 19 sites. The second phase of the program, approved by Council in July, 2010, will generate an average of $115,000 annually ($577,000) over five years for seven locations.

 

·         Further revenues are generated from a minor amount of advertising in City publications (Collection Calendar, Recreation Guide, etc.)

 

Together, revenue from existing sponsorship and advertising agreements is estimated at $5 million annually.

 

While $5 million annually is an impressive amount, IBM identified that the volume and diversity of the City’s physical assets (land and buildings) and the range of programs offered to residents provides additional opportunities to generate revenue without detracting from service delivery and messaging to the community. The business case identified a potential of $3.4 million in additional revenue annually by steady state (2014).

 

The investigation of additional opportunities also highlighted some shortfalls in the City’s ability to expand from the current level of sponsorship and advertising to increase revenues, such as:

·         a lack of a coordinated approach to soliciting potential sponsors and advertisers,

·         that there is no city-wide strategy to maximize revenues,

·         a lack of a centralized database to systematically record, track, analyze and report on sponsorship and advertising activities - consequently there may be donor fatigue due to multiple departments contacting the same sponsors,

·         missed revenue on some of the significant opportunities,

·         a lack of a comprehensive asset inventory to market opportunities,

·         a lack of consistent valuations of similar sponsorship from one program to another, and

·         little, if any, sharing of information on successes and lessons learned across departments. 

 

IBM’s work identified that the City should identify new sources of sponsorship and advertising based on the assets and proven approaches by other municipalities and should strengthen the capabilities to undertake sponsorship and advertising activities through the creation of a centralized office. The areas providing the greatest opportunity were those that have the potential to generate sufficient revenue to make the effort worthwhile, that can be scalable and expanded and those which reflects the City’s culture and policies, namely, naming rights; advertising on interior signage, plasma screens, publications and on the City websites; program sponsorships; transit station sponsorships and billboards on city-owned properties.

 

Based on the work undertaken, the Corporate Efficiency Saving Program report (ASC2009-COS-ODP-0016) was received by Council and the initiatives identified in the report moved from the concept stage to detailed planning and implementation.

 

Under the direction of the Service Ottawa Program Steering Committee, a project Steering Committee of senior management (directors and general managers) was established and chaired by the Director of Organizational Development and Performance (ODP) to oversee the development of the sponsorship and advertising program. An internal project team was established in the Corporate Business Services Branch of ODP and an inter-departmental working group was created with representatives from departments with active or previous sponsorship and advertising activities. The role of the working group is to identify, discuss and evaluate potential revenue generating opportunities and potential risks that may be encountered. The Colterman Marketing Group, an Ottawa-based company, was retained to provide consulting expertise to bring a sustainable sponsorship and advertising program to fruition. The company brought familiarity and experience in sponsorship and advertising strategies and opportunities in the public and private sector. CMG had previously provided advice to IBM on potential sponsorship and advertising opportunities within the City.

 

The work undertaken by CMG included the following:

1.        Develop an overall sponsorship/advertising strategic plan including:

a.       Review the list of sponsorship and advertising opportunities and confirm that these opportunities are of sufficient interest and value on the open market to solicit serious and competitive proposals.

b.      Identify any additional City facilities, assets or programs or changes which should be considered for inclusion/deletion from the list.

c.       Develop a master inventory of City programs/assets that could be leveraged under the program and determine the fair market value of these assets.

d.      Develop an overall sponsorship framework that provides context for the program and integrates current City initiatives with future activities.

e.       Develop sponsorship packages and benefits for all core properties.

f.       Identify top prospects for sponsorship and advertising opportunities.

g.      Identify any city staff resources required to assist in implementing the marketing, sales and servicing of the sponsorship and advertising opportunities, the responsibilities of the city staff and anticipated timeframes for their involvement.

h.      Recommend overall positioning of the program and key messages.

i.        Recommend a five year roll-out strategy.

 

2.        Design a sponsorship/advertising sales strategy and promotion plan that includes specific approaches for contacting and recruiting sponsors/advertisers.

 

3.        Manage the implementation of the sponsorship/advertising promotion and sales programs to achieve revenue.

 

4.        Identify opportunities and the advantages/disadvantages for managing the sponsorship and advertising program in future years, either through external vendor services or by implementing an internal, centralized sponsorship office.

 

5.        Provide a clear, easy to understand sponsorship and advertising agreement template that can be used between a sponsorship and advertising proponent and the City.

 

The Sponsorship Environment

 

It is important to understand the sponsorship and advertising environment when establishing a long-term marketing plan for the City’s assets.

 

Sponsorship and advertising – the marketplace

 

Even with the current shift to online marketing away from traditional mediums such as newspaper advertising, sponsorship spending continues to grow in North America as companies look for new ways to connect with audiences and differentiate themselves from their competitors. Some of the key industry-wide trends include:

·         Corporations are taking a more strategic approach towards sponsorship spending by aligning sponsorships more closely with business objectives and increasing the emphasis on measuring the performance of their investments,

·         Growth of cause-related sponsorships as a means of associating a brand with a worthwhile cause that is viewed as important by the customer,

·         Increased emphasis on “activating” sponsorships to leverage opportunities and increase audience impact.

 

In addition, recent research (Canadian Sponsorship Landscape Study) indicates:

·         Sponsorship spending has remained basically steady throughout the recent economic challenges, with an average of 15.4% of marketing and communication budgets being allocated to sponsorship marketing,

·         Significant increase in the leveraging of in-kind resources,

·         Most popular sponsorship properties include sports, causes and festivals and events,

·         The biggest issues sponsors are facing include maintaining budgets in a tight economy, measuring price justification and return on investment on sponsorships, activating sponsorships to leverage each opportunity and how to integrate new media/social media,

·         Biggest growth areas in the next five years include digital marketing, social media, cause marketing and experiential marketing.

 

Despite the recent economic turmoil, corporations are still willing to invest in sponsorship, but there is clearly a shift from the traditional “signs and banners” to a more comprehensive approach that includes adding value to the customer experience so that they are ultimately more receptive to sponsor messaging. This shift will have an impact on the way the City approaches sponsorships in order to be successful.

 

Sponsorship and advertising - other municipalities

 

In a recent survey conducted by Colterman Marketing Group of municipal sponsorship activities nation-wide, it was found that 81% of municipalities are involved in some form of sponsorship engagement, whether it is seeking naming rights for facilities or other community assets or generating financial and in-kind support for programs, events and other community initiatives. The survey also indicated varying levels of corporate engagement at the municipal level, with some municipalities such as Burlington, Calgary, Mississauga and Winnipeg taking a very active role in recruiting sponsors, while others are taking a more passive approach.

 

Current corporate revenue practices in municipalities include:

·         26.5% actively recruit corporate sponsors;

·         45% offer naming rights for their facilities;

·         24.3% offer advertising or sponsorships for assets outside of major facilities;

·         47% sell advertising in their arenas;

·         29% sell advertising in their municipal publications.

 

Research of some of the other municipalities (see Table 1 below) indicates varying degrees of sponsorship engagement. Among them:

 

Table 1 - Other municipalities sponsorship engagement

The City of Calgary’s Adopt-A-Park Program educates volunteers and users about appropriate park use and recognizes sponsors on their website, newsletter, park bulletin boards, community meetings, sponsored projects and media coverage. In 2009, the City of Calgary generated $500,000 in sponsorship revenue.

 

The City of Toronto offers a wide range of sponsorship opportunities including its Trees Across Toronto environmental initiative, Doors Open Toronto and other special events. In 2009, the City of Toronto generated $35.8 million in sponsorship and advertising revenue.

 

The City of Whitby has a wide range of advertising, sponsorship and naming rights opportunities. Sponsorship revenue directly benefits the community by enhancing sport and recreation facilities, supporting festivals and events, and by keeping rates and fees affordable. In 2009, the City of Whitby generated $442,500 in sponsorship and advertising revenue.

 

The City of Winnipeg has one of the most pro-active sponsorship programs in the country. Branded “Sponsor Winnipeg” opportunities include sponsorship/naming rights for greenspace/parks/environment; high traffic infrastructure and city marketing-related assets; health, wellness and safety; recreation facilities; transportation; sports facilities and programs; social/community services; animal services and literacy. In 2009, the City of Winnipeg generated $500,000 in sponsorship revenue.

 

The City of San Diego’s Corporate Partnership Program promotes mutually beneficial business arrangements between the City and organizations which generate non-tax revenue or new resources for the City and provides marketing benefits to the partners. The City states that it will work closely with partners to develop a package of benefits that fit the specific marketing needs of its partners. In 2009, the City of San Diego generated $2 million in sponsorship and advertising revenue.

 

The City of Chicago offers a wide range of sponsorships for its special event program through the Mayor’s Office of Special Events. In 2009, the City of Chicago generated $14.5 million in sponsorship and advertising revenue.

 

The City of Denver offers a wide range of opportunities including event, project and program sponsorship, site sponsorship; community sports teams, cultural institutions, concessionaires and associated park conservancies.

 

 

Sponsorship and advertising – the public

 

Industry-wide research also indicates that the public is supportive of corporate sponsorships that contribute to an activity or cause that they deem worthwhile. According to Profit magazine (March, 2009), 68% of Canadians said they would remain loyal to a brand through a recession if it supports a good cause, even if lower prices were available. This and other studies show an appetite for sponsorships in both the part of consumers and corporations, provided that there is a strong association between the investment and the sponsored activity.

 

Based on their research and expertise in the field, CMG indicated the City’s sponsorship and advertising program, will need:

·         to be mindful that there must be a strong value proposition attached to the opportunity for companies to invest in the opportunities,

·         to balance good policy and governance with the goal of leveraging these collaborative arrangements to provide citizens with cost-effective, high quality programs and services,

·         to be cognizant that Ottawa does not have an abundance of companies with “deep pockets” and therefore need to be flexible to develop partnership packages to meet specific and unique needs, and

·         to develop an integrated plan that effectively positions the opportunities for corporate partners while the City takes a responsible attitude towards corporate engagement.

 

Guiding Principles

 

To support the implementation of a sustainable sponsorship and advertising program, a number of principles that may be useful when considering potential sponsorship relationships and for the program as a whole:

 

1.                              Sponsorships need to include a “value-add” to the citizens/individual participant(s) involved in the sponsored program. If the direct participant/citizens overall benefit in some way from the sponsorship, they will be more likely to view the sponsorship as a benefit rather than as an intrusion. This is viewed as a critical element in ensuring that the City’s program is positively received.

2.                              Sponsorship collaborations need to focus on “audience fit”. The City’s strongest selling point is the ability to reach large numbers of audiences with specific needs and interests. By matching company products/services with audience needs/interests, the City will likely have a higher success rate with potential sponsors as well as a higher level of interest and acceptability from the audiences participating in these programs.

3.                              Sponsor visibility and advertising needs to be thoughtfully integrated so the delivery of content is clear and doesn’t negatively impact the audience experience. To ensure a rich and meaningful experience for participants, interruptive messaging and aggressive promotion of sponsor products will not be permitted.

4.                              The sponsorship program needs to be positioned as a positive collaboration between the City and its corporate partners. To be successful, the program cannot be positioned solely as a corporate efficiency project, but rather as an initiative to involve the corporate community in building a better Ottawa.

5.                              The contributions of companies need to be publicly acknowledged. By constantly reinforcing the value that the corporate sponsorship and advertising program has brought to the City’s service delivery, the more positively the public, the City and the corporate partner will view these collaborative arrangements.

 

These principles and the Council approved Policy and Procedures will form the framework to be followed for a successful sponsorship and advertising program.

 

Internal Consultation

 

Interviews were held with senior departmental staff and management to explore and document potential sponsorship and advertising opportunities. A detailed inventory of city programs, facilities and assets, and publications along with the metrics (number of program participants, type and volume of print media produced, number of website visits, etc.) which would be used for valuing and marketing the assets to potential sponsors was produced.  

 

This internal consultation was very important from a number of perspectives. First, it served to validate that the opportunities (programs, publications, assets, etc.) being explored were still current, no changes were being considered to the program or asset (not being cancelled or sold) and that it was reasonable to proceed with that asset being available for a potential sponsorship or for advertising. Second, it provided an opportunity for departments to identify new or different assets/programs that could be included that had not previously been raised. Third, the department could identify the risks or sensitivities that proceeding with a potential sponsorship agreement may encounter. Fourth, it ensured that the department was fully aware that the opportunity was being explored and that there was management buy-in to the concept.

 

Based on the best practice research, the internal consultations and their expertise in the area of marketing, the consultant was able to confirm that the City has:

·         a tremendous number of properties and assets that can be leveraged with the private sector;

·         a variety of sponsorship and advertising opportunities for almost any business operating in the area given the ranges of programs and services delivered by the City and the locations of the facilities; and

·         the asset mix can meet a wide range of corporate objectives ranging from branding and image-building to marketing specific products and services to cause marketing.

 

For these reasons, the City is well positioned to respond to the marketing and communications needs of potential sponsors and advertisers and is a major point of differentiation in the market.

 

It became apparent in reviewing the inventory that given the exhaustive range of potential sponsorship and advertising opportunities, the approach will be to implement the program in phases. In order to ensure the success and sustainability of the Program, a phase roll-out of opportunities will be necessary to focus on the opportunities that have the greatest likelihood to meet the revenue targets. While unsolicited proposals for sponsorships and advertising will be evaluated and new opportunities will be aggressively explored to utilize the City’s assets, the focus in the first years of the Program will be those presented in this report.

 

The result of CMG’s work confirmed that the types of opportunities presented earlier were reasonable. Additionally, they identified:

·         specific programs that should be targeted for sponsorships;

·         the publications which could be marketed for additional advertisement revenues;

·         facilities appropriate for marketing for naming rights;

·         new opportunities which should be marketed to make full use of the City’s assets.

 

Another aspect of the project included determining the value of the municipal assets for sponsorship and advertising purposes. The dollar value of the opportunities was based on a combination of the tangible and intangible benefits. Tangible benefits refer to quantitative elements that may be measured (e.g. media/print circulation) as well as non-measured elements (impressions). These include such elements as logo ID impressions, media advertising and sampling opportunities. Tangible benefits, without the associative or “relationship” element inherent in sponsorships, are similar to other forms of advertising or promotion. If the sponsorship opportunity doesn’t present a strong link between the corporate partner and the audience and/or their “experience”, the City’s prospects will likely compare its offering against other traditional advertising options.

 

Intangible values are those associative or qualitative benefits that add value to a benefits package and the tangible value rating. Key elements considered in the intangible assessment include the uniqueness of the opportunity, quality of the audience, reputation of the organization that can be leveraged by the corporate partner, the experience the partner can deliver to the audience, amount of sponsorship “clutter” and the potential for leveraging the associative elements to the benefit of the partner.

 

This information provides the City with a firm understanding of the value of its assets - important information when considering future sponsorship and advertising opportunities.

 

 

DISCUSSION

 

Table 2 below identifies the opportunities to be marketed in 2011 along with a brief description and the potential revenues to be achieved. A detailed description of these opportunities appears in Document 1.

 

Table 2 - Sponsorship and advertising opportunities to be marketed in 2011

Opportunity Type

(revenue at steady state  -  2015)

Description of the opportunity

Naming rights

($575,000)

an exclusive opportunity for a sponsor’s name to be a prefix to the name of a municipal facility, such as a pool, arena or community centre

Program sponsorship ($500,000)

sponsorship of a City-wide program or service offered to citizens such as the Wading Pool Program.

Advertising within facilities

($287,000)

the installation of plasma screens for display advertising and city messaging in City facilities, and advertising within arenas

Advertising in parking operations

($200,000)

advertising in both covered City-owned parking lots and on the new Pay and Display terminals.

Publications advertising ($200,000)

advertising in City printed brochures and publications.

Website advertising ($187,500)

advertising on City websites.

Employee Discount Program

($150,000)

the City has a large contingent of staff that could be leveraged with several companies to provide offers to City employees (both active and retired) that meet or exceed “best on street” offerings.

Billboards

($120,000)

installation and management of billboard advertising signs on City owned properties.

 

Facility sponsorship ($100,000)

sponsorship of a facility where naming rights are not possible due to an existing commemorative naming.

Official supplier status ($100,000)

recognition on the City’s website that a specific company is an exclusive supplier to the City of a particular good or service.

Pouring rights

($100,000)

the negotiation of exclusive product rights (normally beverages) for vending machines and concession operations in City facilities.

Mailing inserts

($60,000)

an opportunity for selected companies to provide advertising in the form of mail inserts into regular City mailings.

Special events sponsorships

($50,000)

sponsorship of one or more special events held by the City such as an event held for United Way fund raising and the Mayor’s annual Halloween, Christmas and Canada Day parties.

Facility signage advertising

(To be confirmed)

incorporate advertising/company logos on facility signage that requires replacement (life-cycle replacements or pre-amalgamation signage) in exchange for revenue or cost of the sign installation and maintenance.

Revenue opportunities using Transit’s assets ($878,500)

opportunities being explored include advertising that moves away from the traditional printed media to transit-oriented dynamic streaming that leverages investments in web, PDA’s and dynamic signage. This leverages the technology roadmap approved by Council to earn revenue.

Transit Station Domination

($200,000)

advertising opportunities at City transit stations where the advertiser would have the exclusive rights to advertising at one or more properties for a period of up to two weeks using a variety of traditional and non-traditional media.

 

Revenue targets over five years

 

The information in Document 1 identifies the components of the marketing plan and the revenues that each will generate over the next five years.

 

The revenue targets do not include existing sponsorship agreements or advertising arrangements currently in place. The advertising contracts for transit shelters, litter and recycling bins and bike racks under the Integrated Street Furniture program have been or are currently being renegotiated.

 

The revenue projections are based on a program start-up for marketing in 2011 and reflect an annual increase in revenue as marketing is broadened and more companies become aware of the benefits of aligning their marketing plans with the City’s assets. The first few years will focus on building awareness of the City’s program and securing agreements which are relatively easy to implement. Early wins will demonstrate the positive aspects of the program and with that, more companies will explore the opportunities and come on-board. At the same time, the centralized office will be building their internal capacity to effectively manage the program and developing the marketing campaign to increase participation.

 

It is essential that the City starts to actively market its sponsorship opportunities to achieve the revenue targets for 2011 and beyond. Unlike the other opportunities, reaching a sponsorship agreement for the naming of a community facility requires a significant marketing effort because of the high dollar value, the long-term commitment being sought and the marketing decisions and budget availability of potential sponsors. Added to this is the requirement that all naming right agreements must be approved by Council. To ensure that marketing resources are expended where there is a likelihood of obtaining a revenue stream, Council approval of the following facilities (identified in Table 3 below) is required at this time.

 

Table 3 - Venues to be marketed for potential naming rights

·         Nepean Sportsplex (complex plus individual facilities)

·         Walter Baker arenas, pool, fitness centre

·         Kanata Leisure Centre

·         Splash

·         Kanata Recreation Centre

·         Sandy Hill arena

·         Goulbourn Complex

·         Ray Friel arenas and pool

·         Plant (individual facilities)

·         Bob MacQuarrie pool

·         Canterbury (complex and pool)

·         St. Laurent complex

·         Pinecrest Complex

·         Stittsville Arena

·         Richmond Arena

·         Brewer Pool and Arena

 

Naming rights agreements will not be negotiated for facilities previously named through the Commemorative Naming Policy. Specific components with the building, however, will be available for naming.  For example, the pool at the Bob MacQuarrie Recreation Complex – Orléans is available for naming but the Complex name will not be offered for sponsorship.

 

The Sponsorship and Advertising Policy and Procedures set out the evaluation criteria for consideration of the potential naming of a facility. Once a draft agreement has been reached with a sponsor, public consultation will be undertaken and a report will be submitted to Council for approval.

 

Establishing a centralized office

The Colterman Marketing Group also determined that the City needs to take a strategic, coordinated approach towards its sponsorship and advertising efforts from both recruitment and servicing perspectives. If the City is to present a professionally operated and branded program, it will be necessary to put the processes and tools in place that ensure consistency in how the program is implemented. A centralized corporate office is required to oversee the City’s overall efforts in this area. A review of best practices of municipalities with sponsorship program strongly suggest that the success of the program is enhanced when there is a centralized point of contact for enquiries, coordination, consistency in valuations and on-going support and liaison with existing sponsors to maintain and build on the existing partnerships. The research also shows a strong correlation between the number of staff and the sponsorship revenues being generated. The City of Toronto has five and a half FTE’s in their sponsorship office and generates about $35 million annually. The City of San Diego has four FTE’s and generates approximately $2 million annually. On the other hand, Calgary and Winnipeg have one FTE and generate about $500,000 annually.

The centralized office will be responsible for any/all of the following:

·      recruiting sponsors,

·      establishing agreements,

·      internal staff training,

·      servicing City-wide sponsorship programs,

·      managing contractor agreements,

·      marketing the program internally and externally, and

·      reporting on the progress of the program.

To successfully establish, market the number and variety of opportunities and manage the sponsorship and advertising program, the centralized office will require three staff positions and a budget to retain, on an as-needed basis, consulting services for future valuations of assets and marketing and sales of the significant sponsorship opportunities. Currently there are no resources committed to the responsibilities required to sustain a corporate sponsorship and advertising program.

The cost of the staff and operation of the office are identified in the 2011 budget as operating pressures of $795,000. Compensation costs will be $230,000 and $565,000 will be required for implementation of the sales program, sales commissions, external consultation services for valuations of new or changing corporate assets and the operating costs for the centralized office. By steady state (2015), the administration costs to support the sponsorship and advertising program will be about 30% of the benefits realized. That cost is in line with marketing sponsorship programs on an industry-wide basis.  The overall cost of the Program during the five years and the revenue targets are identified on Table 4 below.

 

Table 4 – Costs and Benefits associated with

the Sponsorship and Advertising Program (000’s)

Year

2010

2011

2012

2013

2014

2015

Annual Benefits

 

$981

$1,743

$2,745

$3,531

$3,708

Annual Operating Costs

 

$795

$1,030

$1,160

$1,200

$1,226

One time costs

$300

 

 

 

 

 

 

 

 

 

 

 

 

Net Benefits

$186

$713

$1,585

$2,331

$2,482

At present staff are completing the research and internal consultations required to determine the optimal organizational placement of the centralized office. It is anticipated that a recommendation will be considered by the Project Steering Committee in Q1of 2011, with staffing to follow, subject to the approval of the 2011 operating budget pressures.

 

Issues and Risks

 

The establishment and reliance on revenue from an enhanced sponsorship and advertising program is not without its issues and risks.

 

1.      One of the major risks is whether there will be uptake on the opportunities being presented by the City. In order to get a better sense on the degree of potential participation by local and national companies of these opportunities, some selected market testing of the program is being completed. The purpose of the market testing is to gather industry feedback on the overall program as well as specific opportunities. The results of the business intelligence will allow the City to:

·      Gage overall potential response to the program;

·      Determine what types of opportunities and benefits will carry the most weight with potential sponsors and advertisers;

·      Gather industry intelligence as it relates to competitive factors as well as other barriers to take-up;

·      Provide City staff with business intelligence that supports the overall project (due diligence).

 

Initial market testing will be completed by the end of January 2011. While the overall reaction is expected to be positive, it is anticipated that the feedback received will provide the City with useful information to fine-tune the program prior to launching the full initiative.

 

2.      The revenue projections are based on the programs and services currently being provided by the City. If there are program changes (new or cancelled programs), print publication volumes change or there is a change in the method of communicating to the targets audiences, or assets no longer available, revenues will be affected. If, for example, community facilities are no longer available for naming rights because they have been selected for a commemorative naming or there is no community and Council support for a proposed naming rights agreement, the ability to achieve the revenue targets from this valuable type of opportunity is lost. On the other hand, billboard revenues may increase if the digital billboard project approved by Council in August, 2010 results in a change of the Sign By-law and some of the convention billboards located on City lands are converted to the higher revenue generating digital boards.

 

3.      In the event that sponsorship or advertising revenues cease for a specific program, there will be an impact on budgets if the program is to continue.

 

Financial model

 

A financial model has been developed to ensure that the maximum possible revenues from new sponsorship and advertising opportunities are credited to the corporate efficiency target. The model respects that there are some existing Council policies that require sponsorship and advertising dollars to stay in the departments where the revenue was generated. Council approved the Parks and Recreation Master Plan report (ASC2009-COS-PRC-0013) in December, 2009 and it states “that sponsorship and advertising revenues generated by parks and recreation be retained for the provision of recreation services”.

 

It is important to reiterate that new sponsorship and advertising revenues will not mean that new money will be available to be spent by departments where the sponsors were generated. The revenues will reduce net tax requirement and the departmental bottom line will be reduced. The real benefit is that a sponsor is paying for program costs rather than the taxpayer.

 

The corporate savings targets will be achieved when sponsorship revenues are obtained for:

·      an existing program and no new costs to deliver the program are incurred – revenues will be allocated to the department and used to offset a corresponding efficiency target;

·      a new/enhanced program and exceeds the incremental costs to deliver the program - net revenues will be credited as corporate efficiency savings.

 


Corporate savings will not be achieved when:

·      Sponsorship revenues are obtained for a new or enhanced program – revenues will be used to fund the new program costs; and

·      Council policy directs that revenues be allocated for another use.

 

At present sponsorship and advertising revenues generated are retained by the respective departments to achieve budgeted revenue amounts. This arrangement will continue until such time as the agreements lapse.

 

Work to be completed in 2011

 

During Council’s consideration of the Phase 2 billboard report in July, 2010 (ASC2010-COS-ODP-0011), the following motion was approved:

 

“That City assets be reviewed in an integrated fashion for advertising revenue.”

 

The sponsorship and advertising project team and CMG confirms that all City assets must be available to meet the varying needs of potential sponsors and to maximize and generate new revenues for the City. CMG is of the opinion that the advertising contracts for transit shelters, litter and recycling bins and bike racks currently in place and being renegotiated and extended will not impact the sponsorship and advertising opportunities to be pursued in the five-year marketing plan. However, to ensure that the City’s assets are successfully being marketed to potential national and local advertisers in the appropriate phasing and bundling, a comprehensive strategy focused solely on advertising opportunities is required. The terms of reference for the strategy will be developed in collaboration with internal and external stakeholders and the strategy completed in 2011.

 

Implementation of the opportunities

 

Marketing the opportunities presented in this report will vary based on their uniqueness. As per the Sponsorship and Advertising Policy, opportunities will generally be competed that offer significant corporate profile; have agreements of three or more years and allow some exclusivity of benefits and recognition. In other instances external companies may be asked to seek out and negotiate potential sponsors or advertisers in exchange for sales commissions.

 

 

RURAL IMPLICATIONS

 

There are no unique implications on the rural areas of the City.

 

 

CONSULTATION

 

An internal Working Group and Project Steering Committee have been actively involved in the evolution of this program. The Service Ottawa Program Steering Committee has been receiving updates on the project.

 

Subject matter experts within departments which provide support for the success of this program have been consulted in the development of the sponsorship and advertising opportunities.

 

The Sponsorship and Advertising Policy requires that Council approve the naming/renaming of City properties. Public consultation will be undertaken prior to a report(s) coming forward to Council.

 

 

LEGAL/RISK MANAGEMENT IMPLICATIONS

 

Risks and mitigation factors have been considered in the development of the opportunities being presented in this report. Risks will be considered in the consideration of any new or unsolicited sponsorship proposals.

 

 

TECHNICAL IMPLICATIONS

 

Design moderation to accommodate advertising on Ottawa.ca will be completed as part of the redesign of the City’s website.

 

 

FINANCIAL IMPLICATIONS

 

If Council does not approve the Program as recommended or eliminates potential revenue opportunities, the ability of achieving the efficiency targets will be directly impacted.

 

The draft 2011 operating budget includes a pressure of $795,000 for the sponsorship and advertising program (located in the Communications budget). This consists of $230,000 in compensation for three FTE’s and operating funds of $565,000 to support the program. All costs contained in the operating pressures are directly related to achieving efficiency savings. Efficiency savings will not be realized if these costs are not approved. The savings target of $12.7 million over the next five years will not be achieved if the FTE’s are not approved and funded.

 

 

SUPPORTING DOCUMENTATION

 

Document 1 - 2011 – 2015 Marketing Plan and Fact sheets on sponsorship and advertising opportunities

 

 

DISPOSITION

 

Staff will action any direction received as part of consideration of this report.

 


Document 1 - 2011 – 2015 Marketing Plan and Fact sheets on sponsorship and advertising opportunities

 

Marketing Plan revenue generation over five years

Opportunity Type

2011

2012

2013

2014

2015

Total Revenue Potential

Naming Rights

$100,000

$250,000

$425,000

$575,000

$575,000

$1,925,000

Program Sponsorship

$100,000

$250,000

$500,000

$500,000

$500,000

$1,850,000

Interior Signage/screens

$206,250

$226,450

$246,500

$287,000

$287,000

$1,253,200

Parking Operations Advertising

$50,000

$100,000

$100,000

$150,000

$200,000

$600,000

Publications Advertising

$65,000

$150,000

$250,000

$200,000

$200,000

$865,000

Website Advertising

$0

$0

$75,000

$150,000

$187,500

$412,500

Employee Discount Program

$50,000

$100,000

$100,000

$150,000

$150,000

$550,000

Outdoor Billboards

$111,000

$113,000

$115,500

$118,000

$120,000

$577,500

Facility Sponsorship

$0

$0

$50,000

$75,000

$100,000

$225,000

Official Supplier Status

$50,000

$75,000

$100,000

$100,000

$100,000

$425,000

Pouring Rights (Vending)

$75,000

$75,000

$75,000

$100,000

$100,000

$425,000

Mailing Inserts

$30,000

$30,000

$30,000

$60,000

$60,000

$210,000

Special Events

$25,000

$50,000

$50,000

$50,000

$50,000

$225,000

Facility signage advertising

TBC

TBC

TBC

TBC

TBC

TBC

Transit opportunity

$68,750

$248,500

$478,500

$816,000

$816,000

$2,427,750

 (Website Ads)

$25,000

$50,000

$62,500

$137,500

Transit Station Domination

$50,000

$75,000

$125,000

$150,000

$200,000

$600,000

TOTAL

$981,000

$1,742,950

$2,745,500

$3,531,000

$3,708,000

$12,708,450


 

Opportunity Description

Revenue

Naming Rights

Year 1

2011

$100,000

Definition: An exclusive opportunity in which a sponsor’s name can be added as a prefix to the name of a property, event or other initiative.

Achieve Steady State – Year 2015

 

$575,000

Opportunity Highlights:

This is a new program opportunity. Naming Rights would be negotiated for a minimum five year commitment with exclusivity given to one sponsor.

 

Prospective sponsors include companies with strong roots in Ottawa, national consumer brands and national retailers.

 

Known constraints include the current economy which may impact a company’s ability to commit to long-term agreements, the longer sales cycle that will likely be required for decision-making.

 

Additional corporate concerns include Councillor concurrence requirements and potential resident disapproval of naming rights for facilities.

 

Total 5 Year Revenue

$1,925,000

Cost to Implement

Activation costs (5%) and sales commissions (15%) for a total of $115,000.

Baseline Benefits

Sponsors would receive a wide range of supporting visibility opportunities over an extended term such as:

·         Name as a prefix on a facility

·         A backlit sign in the main entrance or lobby

·         A static display in lobby or main entrance

·         Name and logo in print publications and the City’s website

·         Corporate profile on all print publications and web (where applicable)

·         Distribution opportunities

·         An official ceremony and news release

Targeted City Assets

Venues to be marketed include:

·         Nepean Sportsplex (complex plus individual facilities)

·         Kanata Leisure Centre

·         Kanata Recreation Centre

·         Goulbourn Complex

·         Plant (individual facilities)

·         Canterbury (complex and pool)

·         Pinecrest Complex

·         Richmond Arena

·         Brewer Pool and Arena

 

 

·         Splash

·         Walter Baker arenas, pool, fitness centre

·         Sandy Hill arena

·         Ray Friel arenas and pool

·         Bob MacQuarrie pool

·         St. Laurent complex

·         Stittsville Arena

Policy Implications

Implementation Method

·         Former municipality branded naming considerations

·         Commemoratively named facilities would not be included as options for naming

 

The Naming Rights opportunity is slated for a Phase One release of selected high profile, high traffic facilities; Nepean Sportsplex, Kanata Recreation Complex, Kanata Leisure Centre and Wave Pool, Centrepointe Theatre, Goulbourn Complex, St. Laurent and Pinecrest Complex.

 

 

 

Key Stakeholders

·         Parks, Recreation and Culture

Opportunity Description

Revenue

Program Sponsorship

Year 1

2011

$100,000

Definition:   Opportunities for sponsorship of a City-wide program or service that is offered to citizens under a centralized or common delivery system e.g. Wading Pool Program

Achieve Steady State – Year 2015

 

$500,000

Opportunity Highlights:

Companies are demonstrating increased interest in sponsorships and other forms of partnerships as a core business model. Sponsorship growth has remained steady despite economic challenges and research indicates this segment will continue to grow.

 

However, in the current City culture, there has not been a strong mandate to develop these types of revenue streams. As such, corporate culture will have to be addressed to develop the entrepreneurial approach, policies (procurement, sponsorship, financial, business engagement), and senior management support necessary to adopt this mode of operation.

 

Revenue projections are deemed highly achievable but will depend on the City’s ability to provide “value driven” benefits to partners that go beyond logos and signs.

 

Total 5 Year Revenue

$1,850,000

Cost to Implement

Activation costs equivalent to 10% of revenues and sales commissions of 15% for a total of $125,000

Baseline Benefits

·         Logo ID on all print publications, websites, specific ads

·         Ad in recreation guides

·         Ad in facility guides where applicable

·         Sign at sponsored venues

·         Logo ID on uniforms, report cards, certificates

·         Distribution opportunity by staff

·         Complimentary passes for distribution to clients and customers

·         Verbal acknowledgement

Targeted City Assets/Programs

·         Adult Programs (Non-Fitness and Wellness)

·         Fitness and Wellness Programs

·         50+ Adult Programs

·         Children’s Programs (aimed at families) and Pre-school Programs (aimed at parents)

·         Aquatic and Skating Programs

·         Pet and Business Licensing

·         Building and Pool Permits

·         City-wide campaigns bundled under to reach target markets (An Active Ottawa – active living initiatives; A Healthy Ottawa – health promotion initiatives; A Safe Ottawa – emergency and safety initiatives; A Clean and Green Ottawa – environmental and beautification initiatives; A Pet-Friendly Ottawa – animal services initiatives

 

Policy Implications

·         Procurement Policy

·         Sponsorship Policy

Implementation Method

Key Stakeholders

Sponsorship revenue City-wide programs and services are identified as opportunities to implement in Phase 1(Year 1 of the program)

·         All departments


 

Opportunity Description

Revenue

Interior Signage/Plasma Screens

Year 1

2011

$206,250

Definition:   The installation of interior signs and plasma screens for display advertising and city messaging in City facilities.

Achieve Steady State – Year 2015

 

$287,000

Opportunity Highlights:

The City currently has interior advertisements along arena boards and wall space at the majority of arenas and plasma screens in multi-recreational venues such as Ray Friel, Orleans Recreation Centre and Nepean Sportsplex. The City has an existing relationship with Chamber TV who installed screens in limited community facility locations. This is not generating revenue as it was part of a pilot project. City programming is provided to Chamber TV and broadcast in addition to advertisements (revenue retained by Chamber TV).

 

Advertising within arenas, predominately on rink boards has existed since pre-amalgamation. Many of the signs are dated, in need of replacement and may be in place beyond the term of the original agreement. Proactive identification of potential locations for on-ice logos and wall space for new companies advertising and removal of ads without existing agreements will generate new revenue streams and improve the visual appeal inside the arenas.

 

The out of home advertising industry is highly competitive and volatile affecting potential revenues. Potential revenues will be dependent on the number of marketable locations for signs based on daily average number of visitors and the state of the local/national economy.

 

Revenue estimates included an investigation of existing plasma screen inventory, existing contracts, number of exposures and level of visibility, as well as potential new locations for plasma screens based on high volume traffic locations.

Total 5 Year Revenue

$1,253,200

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $57,400

Baseline Benefits

A wide range of retail and consumer brands will be displayed to a captive audience of public visitors and/or users of city facilities.

 

For plasma screen signage, the agreements with the selected vendor(s) would require a portion of the advertising space to be provided to the City for facility and other messaging.

Targeted City Assets

City facilities with a high volume of public visitors and/or amenity users.

Policy Implications

Implementation Method

 

A request for proposal (RFP) would be prepared to seek any additional opportunities for this initiative.

Key Stakeholders

·      Parks, Recreation and Culture

·      Parks, Buildings and Grounds

 

Opportunity Description

Revenue

Advertising – Parking Operations

Year 1

2011

$50,000

Definition: Advertising and exclusive rights to contracted space in both covered City-owned parking lots and Pay and Display terminals.

Achieve Steady State – Year 2015

 

$200,000

Opportunity Highlights:

This is a new opportunity for a corporate sponsor to have exclusivity in a designated area in a covered City-owned parking lot, on the Pay and Display terminals and on the reverse side of the Pay and Display windshield ticket for a minimum of one month to a maximum of three years.

 

This opportunity would appeal to sponsors/advertisers of a wide range of retail and consumer brands.

Total 5 Year Revenue

$600,000

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $40,000

Baseline Benefits

Sponsors/advertisers to have exclusive rights to market advertising within a determined contracted space in both covered lots and the Pay and Display terminals.

Targeted City Assets

·      City-owned covered parking lots

 

·      Pay and Display terminals across the city

Policy Implications

Implementation Method

 

Planned for Phase One release.

Key Stakeholders

Public Works - Parking Operations

 

 

 

 

Opportunity Description

Revenue

Advertising - Publications

Year 1

2011

$65,000

Definition: Advertising in City printed brochures and publications.

Achieve Steady State – Year 2015

 

$200,000

Opportunity Highlights:

 

Despite an overall drop in print advertising, specialty publication advertising remains strong in most markets, especially publications attached to specific lifestyle interests.

 

The City’s Recreation Guide is viewed as an important element in this opportunity but its current format will need to be addressed in order to accommodate expanded advertising opportunities.

 

The projected revenue from this opportunity is deemed highly achievable, however the revenues are subject to any changes in the volume of publications printed or change in the distribution channel.

Total 5 Year Revenue

$865,000

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $40,000

Baseline Benefits

·      Advertisers have the potential to reach target markets associated with their products

·      Full page, half page, quarter page, coupon depending on format of publication.

Policy Implications

·      Procurement Policy

·      Sponsorship Policy

 

Targeted City Assets

·         Recreation Guide Fall/Winter and Spring/Summer editions

·         Multi-purpose Facility Publications

·         Multi-purpose Facility Handouts

·         Collection Calendar

·         Take-It-Back Directory

·         March Break publications

·         OC Transpo System Map

·         OC Transpo Food Drive Brochure

·         OC Transpo Service Change Brochure

Key Stakeholders

·         Corporate Communications

·         Parks, Recreation and Culture

·         Transit Services

·         Public Works

Implementation Method

Advertising revenue from city-wide brochures and publications are identified as opportunities to implement in Phase 1 (Year 1 of the program)

Opportunity Description

Revenue

Advertising - Website

Year 1

2011

$0

Definition: Advertising on City websites

Achieve Steady State – Year 2015

 

$187,500

Opportunity Highlights:

Growth of online advertising demonstrates demand for this medium, especially where message can be targeted to specific audience. The City’s varied programs listed on Ottawa.ca and other websites offer unique opportunities for marketers to reach their market audiences.

 

Redesign of the Ottawa.ca make some assumptions on site traffic difficult to validate at this time. Due to this and concerns about commercialization of the City’s website, it is recommended that website advertising be limited to companies sponsoring programs, such as Clean-up the Capital. Opportunities for third-party advertisers not associated with any sponsorships will be implemented gradually starting in Year 3.

 

Generally, advertisements will not be placed in application based websites such as online recreation registration and parking ticket payment due to programming difficulties.

 

Overall, projected revenue is deemed to be very achievable with even greater potential growth as new advertising assets come online.

Total 5 Year Revenue

$412,500

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $37,500

Baseline Benefits

·         Text with name and link

·         Logo with ID and link

·         Banner ad or promotional space

·         Value-added sponsor offer

Targeted City Assets

Policy Implications

·         Recreation Home Page

·         Swimming Schedules

·         E-Maps

·         Recycling/Garbage

·         Garbage Collection Calendar

·         Traffic Reports

·         Ottawa Public Health Home Page (text link only)

·         Specialized Recreation Home Pages

·         Procurement Policy

·         Sponsorship Policy (advertisements subject to the general advertising standards set out in the Policy as well as those of the Canadian Advertising Standards Council)

Key Stakeholders

·         Information Technology

·         Corporate Communications

Implementation Method

·         Fully integrated advertising program implemented Year 2 with web-based advertising program implemented Year 3


 

Opportunity Description

Revenue

Employee Discount Program

Year 1

2011

$50,000

Definition: The City has a large workforce that could be leveraged with several companies to provide offers to City employees (both active and retired) that meet or exceed “best on street” offerings.

Achieve Steady State – Year 2015

 

$150,000

Opportunity Highlights:

The City would receive ongoing revenue from these corporate partners.

 

Offers by potential partners may include educational sessions of interest to employees, such as managing debt, retirement planning and health improvements.

 

Similar programs are offered to members of staff associations, unions, educational alumni, municipalities and other public sector (hospitals and universities) and many private sector companies and professional associations. Discounts offered to employees in some other Ontario municipalities are aimed at wellness and active living memberships/activities, transit fares and computer purchases.

 

A discount program available to employees is a positive staff retention and talent management opportunity.

Total 5 Year Revenue

$550,000

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $30,000

 

 

Baseline Benefits

·         Logo on all print publications, websites

·         Product description, link to company’s website and offers on internal website

·         Product profile in employee newsletter

·         Distribution of discount program brochure

·         Opportunity for product demonstrations and educational seminars and other promotions

Targeted City Assets

·         Internal websites

·         Printed employee publications

 

Policy Implications

·         Procurement Policy

·         Sponsorship Policy

Implementation Method

Sponsorship and advertising revenues from opportunities that do not necessarily impact the public such as employee affinity programs are identified as opportunities to implement in Year 1 of the program.

 

Companies would be selected to participate in the Program through an RFP.

Key Stakeholders

·         Human Resources

·         Staff associations/unions


 

Opportunity Description

Revenue

Billboards

Year 1

2011

$111,000

Definition: Installation and management of billboard advertising signs on City owned properties.

Achieve Steady State – Year 2015

 

$120,000

Opportunity Highlights:

In July of 2010, City Council approved 12 City-owned properties as potential sites billboard. A request for proposal (RFP) was issued in September, 2010 seeking the highest revenue bids for each site. The successful proponent has provided a financial submission for 7 City owned properties.

 

All sites must comply with the City’s zoning and Sign By-law, which generally restrict billboards to commercial/industrial areas. The Sign By-law also establishes setback and limitations related to proximity of other signs, villages, places of national significance, buildings with heritage designations, etc.

 

Up to three of the approved sites may be locations for digital billboard signs as part of a pilot project to test community acceptance of these advertising structures. Additional lease revenues may be possible on the sites with digital billboards due to higher advertising revenue by the sign companies.

 

City-owned sites will continue to be explored as candidate locations for billboards.

 

Total 5 Year Revenue

$577,500

Cost to Implement

The installation, operation and maintenance cost is borne by the outdoor advertising company that leases the city property.

Baseline Benefits

Firms will bid for the exclusive right to install and manage billboard signs advertising signs on City-owned properties.

Policy Implications

The City’s Signs by-law may be changed to allow for digital billboard signs to be installed on public and private land. If so, additional revenues may be possible on some of the billboards previously leased.

 

The Corporate Sponsorship and Advertising Policy along with the Canadian Advertising Standards Council, regulate the message and content that is permitted on billboards.

 

Targeted City Assets

City-owned properties that meet all of the City’s requirements as per the City’s Sign and zoning by-laws and are also marketable locations to the outdoor sign industry.

 

Implementation Method

A request for proposal (RFP) was prepared to seek a preferred supplier for this initiative. If additional sites are identified, an RFP will be the method of selecting a preferred proponent.

Key Stakeholders

·      Real Estate Services

·      Building Code Services

·      Parks, Buildings and Grounds - Forestry Services

·      Traffic Operations

·      Planning and Growth Mgmt


 

Opportunity Description

Revenue

Facility Sponsorship

Year 1

2011

$0

Definition: Sponsorship of a facility where naming rights are not possible due to an existing commemoratively named facility.

Achieve Steady State – Year 2015

 

$100,000

Opportunity Highlights:

This is a new program opportunity. Although a community facility may be named through the commemorative naming process, there may be a portion of the facility that a sponsor may be interested in partnering with the City for an enhancement to the site. For example, a company may be interested in sponsoring the installation and maintenance of new spectator seating in an arena previously “named”.

 

Prospective sponsors include companies with strong roots in Ottawa, national consumer brands and national retailers.

 

Known constraints include a soft economy which may impact a company’s ability to commit to long-term agreements, the longer sales cycle that will likely be required for decision making and the potential fear of companies that any naming rights opportunity will need to be approved by Council.

 

 

Total 5 Year Revenue

$225,000

Cost to Implement (Steady State)

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $20,000

Baseline Benefits

Sponsors would receive a wide range of supporting visibility opportunities over an extended term such as:

·         A backlit sign in the main entrance or lobby

·         A static display in lobby or main entrance

·         Name and or logo id on all print publications and website

·         Corporate profile on all print publications and web (where applicable)

·         Distribution opportunities

·         An official ceremony and news release

 

Targeted City Assets

Recreation facilities that are commemoratively named.

Policy Implications

Implementation Method

 

Facility sponsorship would have a positive revenue stream beginning in Year Three.

Key Stakeholders

·      Parks, Recreation and Culture

 

Opportunity Description

Revenue

Official Supplier Status

Year 1

2011

$50,000

Definition: Recognition on the City’s website that a specific company is an exclusive supplier to the City of a particular good or service.

Achieve Steady State – Year 2015

$100,000

Opportunity Highlights:

This is a new program opportunity.

 

Prospective sponsors include national consumer brands and national retailers.

 

This could either exist as a standalone opportunity (i.e. negotiating an official supplier of office equipment, or construction equipment, etc), or as a feature of another opportunity (i.e. pouring rights).

 

The Sponsorship Policy approved by Council in 2005 contemplated a “Preferred Supplier” status in which a company provided the City with product or service discounts as well as generate revenue in exchange for the designation of Preferred Supplier. As per the Policy, such as designation does not “act as the City’s endorsement of any one product or service over another”.

 

Total 5 Year Revenue

$425,000

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $20,000

Baseline Benefits

In exchange for revenue for the designation of Official Supplier to the City of Ottawa, the company would identified as such on the City’s website and provide a company profile, short description of the services offered and a link to their website.

 

The page would contain a disclaimer statement that the City is not endorsing any goods or service offered by companies listed or of the company’s.

Targeted City Assets

 

Policy Implications

Implementation Method

 

Preferably, staff from the Corporate Partnership Office will negotiate directly with the successful supplier of a goods or service tender (in which case no marketing sales commission will be due. External marketing support may be required for negotiating significant agreement.

 

Key Stakeholders

·           Finance Department – Supply Branch

 

 

Opportunity Description

Revenue

Opportunity Description

Revenue

Pouring Rights

Year 1

2011

$75,000

Definition: The negotiation of exclusive product rights (normally beverages) for vending machines within City facilities and concession operations.

Achieve Steady State – Year 2015

 

$100,000

Opportunity Highlights:

The City has a tremendous number of vending machine locations (provided through a contracted service) that could be leveraged for additional sponsorship revenue (beyond existing sales commission agreements) by providing exclusivity to one company (typically one of the major beverage companies).

 

The estimated revenue stream is $100,000 annually based on the progressive revenue stream. Additional revenues could be obtained through a process where in return for “exclusive City rights”, the RFP could include a clause that addresses supplier rights fees (i.e. to one of the major beverage suppliers) that could be paid to the City as a sponsorship as a one-time fee or on an annual basis.

 

The basis for this revenue estimate is the analysis of the current market and a review of existing contracts.

 

The state of the economy will have a direct impact on the amount of revenue companies are willing to provide for the exclusivity.

Total 5 Year Revenue

$425,000

Cost to Implement

N/A

Baseline Benefits

Firms will bid through the RFP process for exclusive product rights to manage vending machines in City locations and the concession operations.

Policy Implications

The concessions in some City facilities (Nepean Sportsplex, Kanata Rec Centre) have been contracted to either private operators or community organizations and they rely on this revenue as a source of personal income or to fund their operations.

Targeted City Assets

All vending machines and commission operations, most of which currently reside in Parks and Recreational facilities.

 

 

Implementation Method

A Request for Proposal (RFP) will seek exclusive suppliers for this initiative.  As existing concession contracts come due, exclusivity of beverage providers will be incorporated into the contract leases to maximize revenue for the City.

Key Stakeholders

·      Parks, Recreation and Culture

·      Parks, Building and Grounds

 

 


 

Opportunity Description

Revenue

Mailing Inserts

Year 1

2011

$30,000

Definition: An opportunity for selected companies to provide advertising in the form of mail inserts into regular City mailings.

Achieve Steady State – Year 2015

 

$60,000

Opportunity Highlights:

This is a new opportunity.

 

Prospective sponsors include financial institutions, real estate, legal services and home/auto insurance companies.

Total 5 Year Revenue

$210,000

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $12,000

 

Any additional costs of mailing caused by the ad content would be the responsibility of the advertiser.

Baseline Benefits

Sponsors would focus their marketing to the nature of the mailing and would provide discounts or information of value to the recipient.

Targeted City Assets

Any regular mailing sent by the City.

Policy Implications

Implementation Method

The revenue stream will be dependent on the volume of mailings and may be affected by resident’s preference to receive City mailings through epost mailers.

 

Mail inserts would only be permitted where the City’s postage costs would not increase.

 

Identified as a top prospect for Phase One roll-out.

Key Stakeholders

·      All departments

 


 

Opportunity Description

Revenue

Special Events

Year 1

2011

$25,000

Definition: Sponsorship of one or more special events held by the City, such as an event held for United Way fundraising and the Mayors’ annual Halloween, Christmas and Canada Day parties.

Achieve Steady State – Year 2015

 

$50,000

Opportunity Highlights:

This is an existing program opportunity. The revenue outlined in this opportunity is additional to the revenue currently being generated.

 

Prospective sponsors include companies with strong roots in Ottawa, national consumer brands and national retailers.

 

A number of companies already sponsor major special events, like United Way events, and the Halloween, Christmas and Canada Day parties hosted by the Mayor. In its current form, corporate sponsors generally donate in-kind food, beverages or merchandise to support these events.

 

Known constraints include a soft economy which may impact a company’s ability to commit to sponsoring large special events.

 

Total 5 Year Revenue

$225,000

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $10,000.

 

Direct negotiation or communications by City staff with potential suppliers/sponsors will result in a savings of sales commissions.

 

Baseline Benefits

Benefits include an ability to run special events at little or no cost to taxpayers, as well as offering quality food, beverages and/or services to participants in City special events.

Targeted City Assets

Existing and new special events present an opportunity for increased/new revenues.

 

 

Policy Implications

Implementation Method

 

 

 

 

 

 

Key Stakeholders

·                                                                    Mayor’s Office/City Council

·      Protocol Office

·      Any department hosting a special event


 

Opportunity Description

Revenue

Advertising on Facility Signage

Year 1

2011

TBD

Definition: Incorporate advertising/company logos on facility signage that requires replacement (life-cycle replacements or pre-amalgamation signage) in exchange for revenue or cost of sign installation and maintenance.

Achieve Steady State – Year 2015

 

TBD

Opportunity Highlights:

This is a new opportunity still under consideration.

 

Over the next ten years, numerous signs at municipal facilities will require replacement under the cycle replacement program. Also, some facility signage requires updating as a result of amalgamation. Where permitted by the City’s Sign By-law, there may be a potential to provide a portion of the space on signs for advertising in exchange for replacement and long term maintenance provided by the advertising company. The intent would be that the City would be provided a portion of the advertising time to publicize the programs provided in the facility.

 

Achieving revenue or sign replacement may be dependent on the results of the digital billboard project currently underway. If the pilot is successful and the Sign By-law amended, digital advertising on smaller signs may also be permitted in certain locations (major roads, specific zones, etc.).

 

 

Total 5 Year Revenue

TBD

Cost to Implement (Steady State)

TBD. The cost for installation, operation and maintenance of new signage would be the responsibility of the advertising company.

Baseline Benefits

Companies will have static logos/advertising space available on the replacement signs to promote their company and/or service.

Targeted City Assets

Facilities with signs that requires replacement under the life-cycle replacement program and those requiring replacement due to amalgamation.

Policy Implications

Implementation Method

The Sign By-law requirements for signage and advertising will identify potential locations where advertising may be permitted on municipal facility signs.

 

A project team will be established to identify the scope of this opportunity and whether there are any constraints to an early implementation.

Key Stakeholders

·      Parks, Recreation and Culture

·      Fire Services (fire station signage)

 

 

 

 


 

Opportunity Description

Revenue

Transit Opportunities

Year 1

2011

$68,750

Definition: These opportunities will utilize transit assets and bus information to maximize revenue generation.

Achieve Steady State – Year 2015

 

$878,500

Opportunity Highlights:

 

The details of the revenue opportunities have yet to be developed. The strategy will be to allow the market to bid for current, new and future streams of advertising moving away from fixed print to transit orientated dynamic streams. This will leverage investment in web, PDA and dynamic signs as approved by council in the Technology roadmap.

 

Total 5 Year Revenue

$2,565,250

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $175,700

Baseline Benefits

 

Policy Implications

 

Targeted City Assets

 

Implementation Method

 

Key Stakeholders

·      Transit Services

·      Organizational Development and Performance/Centralized Partnership Office


 

Opportunity Description

Revenue

Transit Station Domination

Year 1

2011

$50,000

Definition: Advertising opportunities at transit stations where the advertiser would have the exclusive rights to advertising at one or more properties for a period of up to two weeks using a variety of traditional and non-traditional media.

Achieve Steady State – Year 2015

 

$200,000

Opportunity Highlights:

This opportunity is supported by Transit Services as it compliments their own branding and communications efforts.

 

The concept of station domination has successfully been implemented by the Toronto Transit Commission and GO Transit in the GTA and other transit markets. It offers a high impact targeted media campaign for advertisers.

 

NOTE: During the internal validation of opportunities with client departments, Transit Services identified concerns of the impact of the proposed transit station sponsorship and the associated changes of a transit station name (which typically are geographic referenced - Baseline, Hurdman, St. Laurent) on their product branding. Also, the potential placement of plasma screens for purely advertising purposes may detract from the ability of transit riders quickly obtaining way-finding or bus arrival/departure information. Consequently, Transit Services agreed to support this and other advertising initiatives to generate an equal amount or more revenue than previously anticipated from transit assets.

 

Total 5 Year Revenue

$600,000

Cost to Implement

Activation costs equivalent to 5% of revenues and sales commissions of 15% for a total of $40,000

Baseline Benefits

·         Branding element at sponsored station

·         Opportunity to reach regular commuting riders

·         High impact media vehicle

·         Opportunity to support a geographic target

Policy Implications

·         Procurement Policy

·         Sponsorship Policy

Targeted City Assets

All major City transit stations

Implementation Method

Program will be implemented in Year 1 but due to some complexity of the model it will be ramped up gradually, achieving steady-state revenue in Year 5.

Key Stakeholders

·         Transit Services

 



[1] Sponsorship  is considered a mutually agreed to arrangement between the City of Ottawa and an external company, organization, enterprise, association or individual evidenced in writing whereby the external party (sponsor) contributes money, goods or services to a City of Ottawa facility, program, project, or special event in return for recognition, acknowledgement or other promotional considerations or benefits. This does not include donations and gifts to the City.

 

[2] Advertising is the sale to an external company, organization, enterprise, association or individual of advertising space on City printed materials or property, at City events or in conjunction with a City program. Unlike sponsorship, advertising involves the simple purchase by an advertiser of advertising space sold at rates determined by the City. The purchaser of this space is not entitled to any additional benefits other than those accruing from access to the space purchased.