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Few places are grittier, dirtier and slimier than a subway tunnel. Yet, that's where Peter Corrigan, CEO of Sub-Media LLC, is testing his new advertising product. Boots brown with the subterranean muck, Corrigan helps hang what appears to be a thin, rectangular box on the wall of a tunnel deep beneath the streets of Manhattan. But this is no ordinary box. Corrigan hopes that it will shine a new light on subway ads.

To a rider on the uptown PATH train between 14th and 23rd streets, the view is stunning. A moving picture unfolds outside the window of the train car, displaying a commercial for Snapple. Based on the same illusion that makes zoetropes and flip books appear to be moving pictures, these “films� are in fact a series of light boxes, sometimes hundreds of them, each with a slightly different poster. The motion of the train turns the series of pictures into a moving image.

“The amazing part of it is that it's always an enjoyable experience for the viewer,� says Corrigan. Not only is it fun, but it's effective too. Citing a market survey done by Burke Research of Cincinnati, he says 84 percent of riders remembered the product linked to the ad.


Why would a company like Snapple, a division of Cadbury Schweppes Plc., invest thousands of dollars to put a newfangled technology in a subway tunnel? After all, mass transit ads, and outdoor advertising as a whole, haven't historically evoked Madison Avenue's glitz and glamour. A peeling poster for a dermatologist's nail fungus removal treatment in a subway car, or a poster on a city bus for a movie that premiered months ago exemplify where transit ads have ranked in most blue-chip advertisers' strategic marketing food chain.

Not anymore. “Transit advertising is a forgotten medium that people are just now realizing gives a great bang for your buck,� says Cheryl Poss, a research associate at Lamar Transit Advertising in San Antonio. “It's the undiscovered gem of the whole outdoor advertising industry.�

Advertisers are looking anew at transit advertising as technologies make them more exciting and attractive, better ways are being created to measure their reach, and more commuters see them. Interest has grown so much that Clear Channel recently signed a $15 million contract with the Manhattan Transportation Authority to put electronic billboards at the entrances to more than 80 subway stations. Transit advertising was barely visible as a slice of the pie twenty years ago, but today it consists of 17 percent of all outdoor advertising, according to the Outdoor Advertising Association of America.

“People are spending more time out of home,� says Stephen Freitas, OAAA's chief marketing officer. “Advertisers are spending more time trying to penetrate the marketplace; they want to surround the consumer with the message. There's been so much urban sprawl and it's often difficult to build new billboard signage, so one way to grow outdoor displays is to use transit advertising.�

Mass transit is also an effective way for advertisers to reach varied demographic groups: the executive commuting on the train from the suburbs to the city, or a janitor taking the crosstown. The number of passenger trips on the nation's mass transit buses and subways rose to 9.7 billion in 2001 from 7.5 billion in 1997, according to the Federal Transit Administration, an arm of the Department of Transportation. In the past five years, mass transit ridership has risen 24 percent, faster than air travel or highway usage. Every day, 14 million Americans ride public transit. Another 25 million use it at least once a week.

Half of the nation's Fortune 500 companies are located in areas where mass transit is available and commonly used by employees, according to the American Public Transportation Association (APTA) in Washington, D.C. In cities with populations of 1 million or more, 57 percent of transit riders made between $25,000 and $50,000, 18 percent made more than $50,000 and 25 percent made less than $25,000. Female riders account for between 52 percent and 60 percent of all riders (depending on the year of the study and the size of the metropolitan area). Only 7 percent of transit riders are over the age of 65. And a mere 10 percent are under the age of 18.

And all of those people are usually held captive for a good half-hour stretch, desperately looking for something on which to rest their eyes. As a result, advertising revenue rose by 20 percent in more than half of the nation's transit agencies in the two years between 1999 and 2002.

Mass transit ridership has been rising steadily since the mid-1990s at the same time that highway and urban congestion have gotten worse. “You look at a city like Phoenix, where the population is expected to double in the next 20 years,� says Kathryn DeBoer, a marketing consultant with West Group Research in Arizona. “People are finally realizing that you just can't pave your way out of that.�


Corrigan discovered his diamond in the rough two years ago. At the time, he was a lawyer for a venture capital firm, one of whose clients was Sub-Media. When he took a ride on the Atlanta subway system to check out the test run of the company's technology, he noticed commuters' reaction to the movie-like ads. “I saw a gaggle of teenage girls reboard the train at the end of the line just to watch the ad again,� he says. “I realized that this was something enjoyable and entertaining.�

Betting that the company had profit potential, Corrigan left the VC firm to head the startup. He eventually replaced the founder of the company and inventor of the technology Joshua Spodek, who moved up to become chairman of the firm. Sub-Media now has half dozen employees. Its first client is the Port Authority Trans-Hudson, or PATH.

Sub-Media light boxes have shown moving ads for national advertisers, including Snapple, Target, American Express and Calvin Klein, among others. Rates can vary between $35,000 and $250,000, depending on location and length of the ad. Corrigan wouldn't reveal revenue figures, but he says the firm made a profit last year. Plans are now in place to set up new systems in Ankara, Istanbul, Hong Kong, Tokyo and Paris. Corrigan also says Sub-Media is in advanced negotiations with several undisclosed American cities. The market could eventually sustain as much as $300 million a year in ad revenue, according to Corrigan. “Transit agencies are really eager to try this out, and those that do are very pleased with the results,� he says.

Part of the new focus on mass transit advertising is the increase in outdoor advertising as consumers block pop-up ads on the Internet or use TiVo to fast-forward through TV commercials. “There aren't many times left for an advertiser to reach a person while they are comfortable and receptive to the message,� says Corrigan.


In addition, one of the last obstacles to selling outdoor advertising — the lack of an effective method to metering and measuring population response — is finally falling. This month, Nielsen Outdoor, a unit of VNU Media Measurement & Information, will test a new people-meter system in Chicago to measure the number of billboards consumers are exposed to during the day. Results are due in June. Nielsen will roll out the system throughout major metropolitan markets over the next few years. Much as “Nielsen families� have TV programming choices metered, a group of more than 700 testers will carry Nielsen Personal Outdoor Device (Npod for short). The handheld, always-on machines are the size of a deck of cards. The devices are logged on to the Global Positioning System — a satellite-driven network that pinpoints the exact location of each device and each billboard.

The system already had a successful trial run in South Africa. “Nothing like this has ever been done before,� says Will Thoretz, a spokesman for Nielsen Outdoor. “We intend to make outdoor advertising as measurable as any other format.�

At the moment, the system is testing billboards' exposure, but it could be retrofitted for other forms of outdoor advertising, such as bus ads, if they are outfitted with a GPS device. Thoretz says plans are in the works to correlate the data with known bus routes to help determine the effectiveness of bus advertising. Nielsen is also working on a next-generation system — and a partnership with the Chicago Transit Association — that will check underground billboards. Currently, the moment a user goes underground, the Npod loses touch with the satellites. “We expect to have that included in the next generation,� says Thoretz.


Advertisers have to depend on data from the transit agencies themselves regarding who is riding which train and bus lines. To get such information, transit agencies do old-fashioned surveys, either handed out on the bus or subway car, or passed out by workers next to the turnstiles.

Such research is costly. The San Francisco Bay Area Rapid Transportation District (BART) does both types of surveys. Onboard surveys are done every other year. The turnstile surveys haven't been done since 2001. The data that such studies provide can be very useful. (Participation rates are around 25 percent.) For example, BART knows that 63 percent of its riders use e-mail regularly, and that 48 percent of riders that get off at the Orinda station have a family income of $100,000 or more.

Results of the voluminous Station Report (BART's term for turnstile surveys) are so large that the electronic version will be rejected by most e-mail systems because of the size of the file. Nevertheless, quantity doesn't automatically mean quality. “The accuracy in the station report can be of a lesser quality than on-train surveys because we're depending on the respondents to return the survey forms,� says Lockhart. “The non-responders also tend to be the busiest people with the highest-income jobs.�

BART's statistics allowed the system to pull off one of its most successful advertising promotions in its history earlier this year, when ING, an international bank, subsidized a free-ride morning on January 4th to promote its online banking. Every rider that morning was given free entry to the train. ING was trying to target Net-savvy commuters who made more than $50,000 a year. “All the turnstiles were open, but ING blanketed the stations where they knew the target demographic was with hundreds of pamphleteers wearing orange ING jackets,� says Lockhart. “It was one of the best promotions I've ever seen.�

Even if they don't have huge market studies, most transit systems have at least some sort of demographic data to provide advertisers. Such information can then let them target ads for specific markets to specific bus lines or train routes. “That's why you see DeBeer's diamond ads on the Metro-North rail lines into Westchester County [in New York state] and ads for cut-rate liquors on certain subway lines,� says Corrigan of Sub-Media “The demographic picture keeps getting clearer every year.�

DeBoer points out information provided by Arizona's Valley Metro, the Maricopa County bus and light rail system, which shows a particularly low-income segment riding a specific bus line that cuts through the heart of Phoenix. But on closer examination, the numbers reveal that the majority of riders are native Spanish speakers. “Advertisers can get a rare opportunity to market to an underserved minority group which spends a lot of money in this area,� she says. “If the information is used in an intelligent manner, it can make for very effective advertising.�

Nevertheless, transit agencies still make a very small amount of money from selling ad space. A study by the APTA shows that ad revenues contributed only 1.1 percent to the top line of the average transit agency. That translates into about 3.5 cents per passenger trip, but that's almost all profit. “The costs to transit agencies are negligible, and anything that can add to the revenue pot in these days of economic hard times is very welcome,� says Donna Aggazio, a spokeswoman with the APTA.

If anything, transit advertising is an under-utilized resource that is just beginning to get serious treatment from marketers, says DeBoer. Even if systems like the Nielsen study fail to take off, there's lots of data to be mined from systems already in place. “If the transit system has electronic card readers and a good computer network, it's relatively easy to get a lot of information,� says DeBoer. For instance, she points out that a high proportion of student passes suggests a young demographic, while a line that gets a lot of senior passes might prove a good place for a completely different set of advertisers. “The information is out there just waiting to be used.�

Sam Jaffe is a business writer who lives in Philadelphia. His work has appeared in BusinessWeek, Smart Money and Philadelphia magazine.

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