CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM Digital Wayfinding & Out of Home
Advertising Kiosk Program
The Superlative Group, Inc.
Sanford House
2843 Franklin Blvd.
Cleveland, OH 44113
City of Santa Monica
Program Proposal Review
FINAL 12.07.2022
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM Contents
1 Executive Summary 2
2 Background & Methodology 4
3 Proposals 7
4 Case Studies 20
5 Conclusions and Recommendations 31
Appendices
A City of Santa Monica’s Evaluation Criteria 33
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 2 1.1 Introduction
In April 2015, the City of Santa Monica (“the City”) commissioned The Superlative Group (“Superlative”) to provide professional services to the City in connection with procuring sponsors for the City’s bikeshare system. Superlative facilitated a five-year, $3.375 million agreement between the City and Hulu in October 2015.
In June 2020, the original agreement was modified to commission Superlative to conduct a valuation of advertising, naming rights and sponsorship opportunities relating to the City’s assets. That report, submitted to City personnel December 2020, presented the detailed results from Superlative’s preliminary valuation and recommendations for a strategic Naming Rights and Corporate Sponsorship sales campaign.
In April 2022, the City approved a second modification to the agreement for Superlative to conduct a valuation of viable advertising, naming rights and other sponsorship opportunities related to the City’s assets.
The key objectives of this exercise are to:
• Complete a comprehensive review of the Proposals received by the City; • Provide an analysis of each Proposal’s overall financial benefit to the City; • Provide an analysis of the proposed equipment and technology to be used by each proposer; • Compare the proposed timelines for Project implementation included in each Proposal to the realistic timelines needed for Project implementation;
• Provide case studies of similar project arrangements from across the United States; and • Provide recommendations to the City, as requested, on the approach to negotiations with the proposers.
This report presents the findings from Superlative’s valuation process.
1.2 Background of Project
To ensure that the City is able to maximize revenue generation through an OOH digital network, the City requested that Superlative conduct an independent assessment that identified a comprehensive list of digital kiosk and potentially small format sign locations across the City, as well as their revenue potential based on comparable agreements in the marketplace. The City has also expressed interest in contracting Superlative to manage the network through a Phase II Strategic Sales Campaign. To complete its assessment, the Superlative project team met with City personnel on October 12, 2020, to tour high traffic areas around Santa Monica to identify the most lucrative locations for kiosks and small format signs.
Superlative’s analysis was included in the December 2020 report, which included 50 total kiosks, their proposed locations and their revenue potential, as well as the implementation strategy for network deployment requested by the City. This analysis formed the basis of the City’s RFP.
The original analysis included the following implementation strategies, each presented in two and three phases:
1) Geographical Approach – starting from Santa Monica Pier and downtown Santa Monica, then expanding geographically into high traffic areas of the City; and 2) Market Coverage Approach – targeting strategic high-trafficked locations to maximize potential exposure, then adding digital faces or kiosks in those locations.
Conclusion
After discussions with the City, a blended implementation strategy of the two approaches was favored with a twophased approach. 1 Executive Summary
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 3 1.3 Project Overview
The City issued a Digital Wayfinding & Out of Home Advertising Kiosk Program RFP in December 2021 following Superlative’s analysis and recommendations mentioned in Section 1.2. Through the public bidding process, the City received six proposals, with varying revenue projections, technologies, strategies and timelines for implementation.
After internal discussions, the City identified the top three proposers based on the factors above. Those proposers, who will be described in more detail in the following sections, are listed below in alphabetical order. • BIG Outdoor
• IKE Smart City
• Smart City Media
This valuation reviewed those top bidders’ proposals to the City to identify the best fit and most lucrative opportunity.
1.4 Conclusions
Intial Bid Submissions
Table 1.4.1 below summarizes the financial benefit from the three proposers outlined in this report. The average annual floor contemplates the total guaranteed value the City could receive over the 20-year term. The average annual ceiling contemplates the forecasted sales figures provided by each proposer, adjusted for the City’s proposed revenue share, then averaged over the 20-year term.
Table 1.4.1
Proposer Signing Bonus
Total
Guarantee (20-
Year Term)
Revenue Share Projected Revenue for
the City (20-Year Term)
Average
Annual Floor
Average
Annual Ceiling
BIG Outdoor $3,000,000 $111,966,671 50% $297,526,826 $5,598,334 $14,876,341 IKE Smart City $0 $35,353,446 50-55% $83,636,169 $1,767,672 $4,181,808 Smart City
Media $0 $0 25% $36,500,000 $0 $1,825,000
BAFO Submissions
In August 2022, the City of Santa Monica received BAFO submissions from IKE Smart City and BIG Outdoor. Table 1.4.2 summarizes the financial results from each submission.
Table 1.4.2
Proposer Signing Bonus
Total
Guarantee (30-
Year Term)
Revenue Share Projected Revenue for
the City (30-Year Term)
Average
Annual Floor
Average
Annual Ceiling
BIG Outdoor $4,000,000 $112,966,671 50% $297,526,826 $5,598,334 $14,876,341 IKE Smart City $1,000,000 $107,747,959 50-55% $159,038,843 $3,591,599 $5,301,295 Each BAFO submission was reviewed and scored in line with the Evaluation Criteria set out in Appendix A of this document. The evaluation criteria covered a wide range of factors including: Experience & Technical Competence; Ability to Meet Project Work Plan & Timelines; Quality Control; Revenue Projections & Profit Sharing; Stability & References; and Value-Add & Bredth of Service.
BIG Outdoor were selected as the preferred supplier due to their more attractive financial proposal and range of additional community benefits, such as donating two percent of profits from the program back to the City to fund community programs and services and hiring a full-time Santa Monica resident as a success ambassador. Review of the non-financial aspects of the submissions from BIG Outdoor and IKE Smart City (e.g. Experience & Technical Competence, Ability to Meet Project Work Plan & Timelines & Quality Control) concluded that both proposals were of similar technical competence and capable of delivering a high quality product and user experience.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 4 2.1 The Superlative Valuation Methodology
Due to the lack of a universally accepted valuation methodology for naming rights and partnership valuation, Superlative developed the following valuation methodology based on its experience in negotiating Naming Rights and sponsorship agreements. The diagram on the following page shows the key steps, specific activities, and outputs during implementation of a partnership marketing strategy.
Figure 2.1.1
Project Initiation & Desktop Research
Upon appointment as sales agents on any new engagement, Superlative carries out initial desktop research to review relevant documentation such as financial statement and strategic plans to gather contextual information such as major capital projects in the locality, specifics of the existing facilities and key statistics such as visitor numbers, drive-by traffic, media publications, hits on websites / communication channels. Our research team maintains a database which is used to compile key pricing and contractual data for all relevant Naming Rights and sponsorship initiatives.
• Initial Desktop
Research
• Project Initiation
Meeting
• Site Visits
• Collation of Digital
Inventory
• Review of
sponsorship
policies & political
considerations
• Analysis of existing
sponsorship
Contracts
• Agree structure of
Phase 1 Report
• Assess number of
visitors
• Assess number of
impressions
(visitors, traffic,
ridership, etc.)
• Current Media
• Potential
Media
• $ Value of
Media
• Consider
demographics
• Assess “quality of
exposure”
• Assess cost of
engagement
• Establish utilization
of existing assets
• Assess direct &
tangible benefits
• Onsite signage
• Events & ticket
packages
• Display
opportunities
• Use of media rate
cards to assign
price to each
benefit identified
• Financial Modeling
of impressions and
Contract term
options
• Identify
comparable
benchmarks
• Research
commercial terms
& contract values
of benchmarks
• Quantifiable
evaluation of
impressions
• Rank assets in
order of potential
to generate
revenue
• Discuss and review
with client
• Agree shortlist of
assets for Phase II
sales process
• Collate desktop
research, key
findings and
valuation of assets
• Identify target
companies for
Phase II activity
• Develop
implementation
strategies for
Phase II
• Develop draft
report for review
by client
• Present findings to
client and any key
stakeholders
• Report finalization
• Develop
understanding of
existing assets &
sponsorships
• Agree base inputs
for quantitative
evaluation of
impressions
• Assess Return on
Investment for
sponsors
• Establish values
for approach to
target sponsors
• Final Phase I
Report
Outputs
Specific Activities
Valuation Report– Key Activities
Project Initiation
& Site Visits
Assessment of
Media Exposure
Quantitative
Assessment of
Impressions
Benchmarking to
Validate Market
Value
Reporting &
Phase II Planning
2 Background & Methodology
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 5 Site visits are undertaken where relevant to view the assets being valued. A digital inventory is compiled for each location that is used during the valuation process and subsequently, during development of promotional materials during the sales process. Superlative gathers site maps to document key details such as number of existing signage and venue specifications. This information is used to identify commercial opportunities as part of the Phase I valuation process.
Assessment of Media Exposure
Assessment of media exposure requires an understanding of the number of impressions which a corporate sponsorship would deliver. This involves gathering traffic statistics for specific venues and consideration of impressions from roadside signage, aerial views and naming on radio traffic updates or other media channels. Local rates are gathered from radio stations and billboard advertisers in order to establish accurate local benchmarks.
With the gathered data, Superlative generates an initial model of impressions. Superlative takes the following factors into account when determining the appropriate amount of impressions a piece of signage or collateral would receive:
Valuation Factors
• Sign Size – has a direct impact on visibility. Within a given market, advertising space carries a different value depending upon the number of impressions, which are used to calculate advertising rates. An impression indicates the number of times an advertisement is seen by pedestrians, motorists and transit riders.
• Location – Rates are higher in high demand areas. Billboards in New York City will carry some of the highest rates in the nation. Location also dictates the demographics of the audience. Airport advertising rates are high due to the premium demographics of air travelers.
• Rotation – In the case of digital advertising inventory, rates are based on the length of each advertisement.
Rotations can range from 8 seconds to 30 seconds (depending on average wait time in a given location) with OOH advertising agencies aiming to maximize the number of advertisers on each digital ad board. • Demand – Premium units and high-traffic transit stations in the heart of cities may have a long list of advertisers waiting to display their message. The proximity of certain ads to airports, shopping centers and other attractions also increases demand and price. Further, other events and timing make outdoor inventory more “precious” and can impact rates, such as large sporting events or beach adjacent inventory in the summer months.
• Population – Audience size will influence your billboard cost.
Sponsorship Rates
A sponsorship or naming rights buyer will typically invest in a naming opportunity based on a cost per thousand impressions (CPM) or cost per 30 seconds (CP:30) calculation for broadcast exposure. CPMs or CP:30s for naming rights or advertising programs vary due to location and the type, duration and quality of exposure. While an average CPM for a national television advertisement may be $28, a 30-second advertisement during the 2021 Super Bowl typically cost around $6.5 million, with CPMs in the range of $60 - $80. CPM values can vary considerably across the nation. As a result, Superlative applies local media rates to each project. Superlative made conservative assumptions in comparing these values to current and suggested sponsor exposure on facilities and assets (e.g., main identity signage).
The CPM value includes assessment of the demographics of the target audience and the quality of exposure to that audience. For example, sporting venues tend to be patronized by 18 to 34-year-old males, which is a “premium audience” in terms of the potential revenue for sponsors generated by this audience. Accordingly, sponsors wishing to gain exposure to this audience would target sports venues. The target demographic for other venues may be considerably different and hence, this must be taken into consideration as part of the valuation.
The following table sets out the average historic media rates from the Superlative database.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 6 Table 2.1.2 Traditional Media Rates
Traditional Media Rate Card Average CPM Cost per Impression TV $28.00 $0.0280
Magazines $17.00 $0.0170
Newspaper $17.00 $0.0170
Cable $12.00 $0.0120
Social Media $10.76 $0.0108
Radio $7.00 $070
Internet $3.60 $020
Mobile $2.23 $020
Average $12.20 $0.0120
Average across USA (exchange wire)
Table 2.1.3 shows current out-of-home media rates for the Los Angeles designated market area (DMA) considered as part of this study.
Table 2.1.3 Local OOH Media Rates
DMA DMA 18+
Population Media Type 4-Week Rate Per Face
4-Week Total
Rate CPP CPM
Los Angeles, CA 14,463,449 Digital Bulletin $8,750 $315,000 $785 $5.42 Los Angeles, CA 14,463,449 Bulletin (Static
Billboard) $6,430 $270,060 $681 $4.71
Los Angeles, CA 14,463,449 Posters $645 $92,235 $230 $1.59 The quality of exposure is determined by how prevalent the sponsor’s branding is during the exposure period and the impact that this placement will have on the target demographic.
Quantitative Evaluation of Impressions
Superlative uses financial modeling to assess the dollar value of impressions from the sponsorship (e.g. wayfinding signs, recognition on websites). Superlative assigns a CPM-based value to each component available for naming rights, based on the strength and reach of exposure for a possible partner associated with each branding opportunity.
In developing these values, Superlative uses a template financial model it has developed over time and adjusted the model to fit the saleable components of the City.
Benchmarking/Case Studies to Validate Market Value
In order to negate the short-fallings identified above, The Superlative Group identifies sector benchmarks (or comparables) for each opportunity, researching commercial and contract values.
In order to confirm that an impression-based valuation is appropriate and accurate, Superlative investigated the prices paid for similar properties and assets in similar markets. When evaluating benchmark comparisons, Superlative considers the prestige of each asset, likely partner interest, and geographic reach of each sponsorable asset. Superlative takes into account the geographic reach of a partnership opportunity as a whole, on a local, regional and/or national basis, but also the geographic reach of each individual asset. For example, an individual piece of signage within the interior of a property would have a local reach, while recognition on publications and/or signage within a transit car would reach a far broader audience. Assets are then ranked in order of potential to generate revenue to establish priorities for the sales process. A full list of the case studies considered by Superlative as part of its analysis can be found below in Section 4.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 7 3.1 Introduction
This Section of the Digital Wayfinding Out of Home (OOH) Advertising Kiosk Program Report provides a summary of the City’s top three proposals, Superlative’s analysis of the three factors the City requested (financial benefit, equipment and technology and timeline for implementation) and Superlative’s conclusions. Proposers are listed in alphabetical order in this section.
A full description of the City’s evaluation criteria is listed in Appendix A of this report.
3.2 BIG Outdoor
Introduction
BIG Outdoor is a privately held OOH media company focused on the development, marketing and sales of media assets in media markets across the country. Founded in 2010, BIG Outdoor is headquartered in Dallas and has satellite offices in New York and Los Angeles.
BIG Outdoor is currently partnered with Macerich at Santa Monica Place.
Overview
BIG Outdoor partnered with smartLINK (now known as Rove IQ), who creates the digital kiosk technology BIG Outdoor included in their proposal.
BIG Outdoor has dedicated a discounted sales program to local businesses in the community and is a member of the Santa Monica Chamber of Commerce.
Financial Benefit
BIG Outdoor projects gross annual revenue in year 1 at $18.2 million. After adjusting for expenses, if BIG Outdoor’s forecast is accurate, the City could recognize nearly $8.9 million in the first year. Total revenues for the City across the 50-kiosk program are forecasted at nearly $300 million for the City over a 20-year term. Table 3.2.1 on the following page highlights the projections over the term.
BIG Outdoor projects direct costs for the 50-kiosk program to total $6 million over the 20-year term, or $120,000 per kiosk over the term. This was assumed by BIG Outdoor as $3 million per phase. Additionally, BIG Outdoor projects annual operating and maintenance expenses to be $489,000 for Phase I. Assuming an operating and maintenance cost of $19,560 per kiosk per year, these costs will total $18.582 million over a 20-year term.
In total, BIG Outdoor projects nearly $25 million ($24.582 million) of expenses over the 20-year term. Total revenues for the City are $294.5 million after accounting for expenses and a 50 percent revenue share, which is highlighted in table 3.2.1 on the following page.
Signing Bonus
In addition to the partnership revenues, BIG Outdoor proposes a one-time signing bonus of $3 million, which would be paid to the City upon execution of an agreement. This is the only proposal of the three reviewed in this report that offered a signing bonus.
Minimum Annual Guarantee (MAG)
BIG Outdoor proposes a MAG of 50 percent of Adjusted Gross Revenues (AGR) or $5 million annually, whichever is greater. The $5 million MAG would be paid monthly once Phase I is fully developed and completed. Every three years the MAG would raise three percent. Table 3.2.2 on the following page highlights the change in the MAG over a 20-year term.
3 Proposals
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 8 In order for the City to receive over the minimum $5 million MAG with 3 percent escalator every three years, the total AGR would need to be $217.9 million or less over the 20-year term.
Total
Assuming the above assumptions are true, with a $3 million signing bonus and MAG of nearly $109 million, the City could recognize a minimum of $112 million over a 20-year term through a partnership with BIG Outdoor. If BIG Outdoor’s revenue projection for the City of $294.5 million over the term is accurate, the City could recognize nearly $300 million over the term. The average annual revenue for the City is a guaranteed $5.6 million and projected $14.9 million, respectively.
Additional Value
BIG Outdoor proposes a 10 percent Share of Voice (SOV) of digital kiosk network to be allocated for the City’s use in addition to any unsold media.
Table 3.2.1 BIG Outdoor Projected City Revenue
Phase 1 Phase 2 Total
Year 1 $ 8,855,000.50 $ - $ 8,855,000.50
Year 2 $ 8,984,000.70 $ - $ 8,984,000.70
Year 3 $ 9,065,000.70 $ 4,468,000.09 $ 13,533,000.79
Year 4 $ 9,198,000.50 $ 4,533,000.32 $ 13,731,000.82
Year 5 $ 9,333,000.20 $ 4,599,000.45 $ 13,932,000.65
Year 6 $ 9,469,000.80 $ 4,666,000.50 $ 14,135,001.30
Year 7 $ 9,608,000.40 $ 4,734,000.47 $ 14,342,000.87
Year 8 $ 9,748,000.90 $ 4,803,000.37 $ 14,551,001.27
Year 9 $ 9,891,000.40 $ 4,873,000.23 $ 14,764,000.63
Year 10 $ 10,035,000.80 $ 4,944,000.04 $ 14,979,000.84
Year 11 $ 10,185,525.81 $ 5,018,160.04 $ 15,203,685.85
Year 12 $ 10,338,308.70 $ 5,093,432.44 $ 15,431,741.14
Year 13 $ 10,493,383.33 $ 5,169,833.93 $ 15,663,217.26
Year 14 $ 10,650,784.08 $ 5,247,381.44 $ 15,898,165.52
Year 15 $ 10,810,545.84 $ 5,326,092.16 $ 16,136,638.00
Year 16 $ 10,972,704.03 $ 5,405,983.54 $ 16,378,687.57
Year 17 $ 11,137,294.59 $ 5,487,073.29 $ 16,624,367.88
Year 18 $ 11,304,354.01 $ 5,569,379.39 $ 16,873,733.40
Year 19 $ 11,473,919.32 $ 5,652,920.08 $ 17,126,839.40
Year 20 $ 11,646,028.11 $ 5,737,713.89 $ 17,383,742.00
Total $ 203,198,853.71 $ 91,327,972.67 $ 294,526,826.38
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 9 Table 3.2.2 BIG Outdoor Minimum Annual Guarantee
Minimum Annual
Guarantee (MAG)
Year 1 $ 5,000,000.00
Year 2 $ 5,000,000.00
Year 3 $ 5,000,000.00
Year 4 $ 5,150,000.00
Year 5 $ 5,150,000.00
Year 6 $ 5,150,000.00
Year 7 $ 5,304,500.00
Year 8 $ 5,304,500.00
Year 9 $ 5,304,500.00
Year 10 $ 5,463,635.00
Year 11 $ 5,463,635.00
Year 12 $ 5,463,635.00
Year 13 $ 5,627,544.05
Year 14 $ 5,627,544.05
Year 15 $ 5,627,544.05
Year 16 $ 5,796,370.37
Year 17 $ 5,796,370.37
Year 18 $ 5,796,370.37
Year 19 $ 5,970,261.48
Year 20 $ 5,970,261.48
Total $ 108,966,671.23
Equipment and Technology
As mentioned above, BIG Outdoor has partnered with smartLink for this proposal to use smartLink’s digital kiosk technology. The kiosks have a 10-year expected life with a 99 percent uptime.
Superlative reviewed the hardware and software specifications proposed by BIG Outdoor and it all meets the City’s criteria. With hardware such as an Intel Core I7 quad core processor, the CPU is high quality and will be able to perform all desired tasks such and media and analytical tasks.
The software proposed includes the ability to embed City transit and weather data to give real time updates on bus routes and weather forecasts. The kiosks can also connect with Google Maps to highlight local businesses, institutions, restaurants, retail and local landmarks. Additionally, the kiosks can provide users with a QR code to view information presented through the kiosks on one’s smartphone.
The proposed kiosks can also help with a number of key datapoints for the City. For example, the kiosks can install cameras to track daily traffic counts next to each kiosk as well as pedestrian traffic counts. As the program develops, this data could help the City attract new partners and businesses.
As a part of their quality control prior to deployment, BIG Outdoor performs an IP66 Water Test. This test rates a product as “dust tight” and protects against heavy seas. This test uses three 55-gallon drums of water, which sprays the kiosks from all angles to ensure protection from the elements.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 10 Timeline for Implementation
BIG Outdoor’s timeline is broken down into five phases below. Once a contract is in place, BIG Outdoor proposes a timeline of 26 – 33 weeks total.
• Phase I – Hardware Design & Procurement (16 weeks)
• Phase II – Software/UX Design (8-12 weeks)
• Phase III – Kiosk Preparation (1-2 weeks)
• Phase IV – Kiosk Installation & Staff Training (1-3 weeks) • Phase V – Ongoing Network Management
Conclusions
BIG Outdoor has the largest financial MAG and forecast of the three proposers by far. As the proposals currently stand, if BIG Outdoor is able to implement the proposed program for seven years ($38.7 million guaranteed), the City would recognize more revenue in that timeframe then it would with the fully matured 20-year program for either of the other two proposals.
It is important to financially vet any City partner, especially when proposals of this magnitude are presented.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 11 3.3 IKE (Interactive Kiosk Experience) Smart City
Introduction
IKE Smart City, a venture of Orange Barrel Media, was founded in 2015 with a focus on designing, constructing and implementing media. IKE launched in Denver, CO to support city revenues with a focus on creating interactive pedestrian wayfinding signage.
At the time IKE’s proposal was received by the City, IKE had successfully implemented digital kiosk networks in 11 cities and was weeks away from implementing four additional networks. Section 4.3 provides a list of these networks.
Some key features on IKE’s interactive digital kiosks include navigational assistance, ability to contact local law enforcement, free Wi-Fi and information to civic resources, safe shelters, events and local attractions. IKE’s technology also has the capability to broadcast emergency messaging to quickly provide messaging to the community.
IKE provided letters of support from Santa Monica Travel & Tourism, Santa Monica College, Downtown Santa Monica and local coffee shop Café Demitasse.
Financial Benefit
IKE Smart City proposed two options for the City. Each option is proposed at a 20-year term with a 10-year renewal option.
1. 50 percent net revenue share
2. An additional five percent revenue share to the City (55%) should the City be able to provide an efficient power source for the kiosks.
a. IKE defines efficient power as 75% of the kiosks meeting the following criteria i. The distance from the kiosk’s location to the power connection provided by the City is under 15 feet;
ii. IKE Smart City will only be required to meter one kiosk location of the City’s choice and be billed across the network based on the consumption of that kiosk; iii. The power type and capacity provided by the City meets IKE’s electrical requirements below; and
1. Up to two 20-amp dedicated circuits and five wires
2. Uninterrupted power of 110VAC or 120VAC
3. Able to accommodate a peak load of 30 amps
iv. IKE Smart City will be billed at the City’s rate for power consumption.
IKE estimates a $105,000 capital investment cost per kiosk. Additionally, IKE projects over $1 million in annual expenses in the first year (25 kiosks) and up to $3.1 million in annual expenses in year 20 of the program.
Signing Bonus
IKE Smart City did not propose a signing bonus for the City, which may be considered as a point of negotiation by the City.
Minimum Annual Guarantee
IKE Smart City proposed a MAG of $30,000 per kiosk deployed, with a two percent escalator each year following the deployment. Once fully deployed, the MAG would be more than $1.5 million. Table 3.3.1 below highlights the MAG for this opportunity.
Total
Assuming the above assumptions are true, the City could recognize a minimum of $35.4 million over a 20-year term through partnering with IKE Smart City. If IKE’ sales forecast over the term is accurate, the City could recognize $83.6 million over the term. This averages out to new revenues for the City of $1.7 million and $4.2 million annually, respectively. If the City chooses not to or is not able to meet IKE’s efficient power source request, the City is forecasted to receive $3.8 million on average per year.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 12 Table 3.3.2 on the following page provides an overview of the projected net revenue by year and the 50 and 55 percent revenue share the City would receive.
Additional Value
IKE proposed a 12.5 percent share in advertising time to be used by the City for the promotion of civic content, public service announcements or other communications by the City.
Table 3.3.1 IKE Smart City MAG
Year Phase I Phase II Total
Year 1 $ 750,000.00 $ 750,000.00
Year 2 $ 765,000.00 $ 750,000.00 $ 1,515,000.00
Year 3 $ 780,300.00 $ 765,000.00 $ 1,545,300.00
Year 4 $ 795,906.00 $ 780,300.00 $ 1,576,206.00
Year 5 $ 811,824.12 $ 795,906.00 $ 1,607,730.12
Year 6 $ 828,060.60 $ 811,824.12 $ 1,639,884.72
Year 7 $ 844,621.81 $ 828,060.60 $ 1,672,682.42
Year 8 $ 861,514.25 $ 844,621.81 $ 1,706,136.07
Year 9 $ 878,744.54 $ 861,514.25 $ 1,740,258.79
Year 10 $ 896,319.43 $ 878,744.54 $ 1,775,063.96
Year 11 $ 914,245.81 $ 896,319.43 $ 1,810,565.24
Year 12 $ 932,530.73 $ 914,245.81 $ 1,846,776.55
Year 13 $ 951,181.35 $ 932,530.73 $ 1,883,712.08
Year 14 $ 970,204.97 $ 951,181.35 $ 1,921,386.32
Year 15 $ 989,609.07 $ 970,204.97 $ 1,959,814.05
Year 16 $ 1,009,401.25 $ 989,609.07 $ 1,999,010.33
Year 17 $ 1,029,589.28 $ 1,009,401.25 $ 2,038,990.53
Year 18 $ 1,050,181.06 $ 1,029,589.28 $ 2,079,770.34
Year 19 $ 1,071,184.69 $ 1,050,181.06 $ 2,121,365.75
Year 20 $ 1,092,608.38 $ 1,071,184.69 $ 2,163,793.07
Total $ 18,223,027.35 $ 17,130,418.97 $ 35,353,446.32
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 13 Table 3.3.2 IKE Smart City Sales Forecast and Proposed Revenue Share Year Net Revenue 50% Share 55% Share
Year 1 $1,977,208 $988,604 $1,087,464
Year 2 $4,313,779 $2,156,890 $2,372,578
Year 3 $5,379,369 $2,689,685 $2,958,653
Year 4 $6,179,729 $3,089,865 $3,398,851
Year 5 $6,388,460 $3,194,230 $3,513,653
Year 6 $6,603,267 $3,301,634 $3,631,797
Year 7 $6,824,332 $3,412,166 $3,753,383
Year 8 $7,051,844 $3,525,922 $3,878,514
Year 9 $7,285,994 $3,642,997 $4,007,297
Year 10 $7,526,984 $3,763,492 $4,139,841
Year 11 $7,906,048 $3,953,024 $4,348,326
Year 12 $8,290,658 $4,145,329 $4,559,862
Year 13 $8,550,000 $4,275,000 $4,702,500
Year 14 $8,817,038 $4,408,519 $4,849,371
Year 15 $9,092,004 $4,546,002 $5,000,602
Year 16 $9,375,137 $4,687,569 $5,156,325
Year 17 $9,666,679 $4,833,340 $5,316,673
Year 18 $9,966,885 $4,983,443 $5,481,787
Year 19 $10,276,014 $5,138,007 $5,651,808
Year 20 $10,594,333 $5,297,167 $5,826,883
Total $152,065,762 $76,032,881 $83,636,169
Equipment and Technology
As with the other proposals, Superlative reviewed the hardware and software specifications proposed by IKE Smart City and it all meets the City’s criteria. IKE listed its kiosk longevity as a minimum of 10 years, which is a common lifespan. IKE also proposed its screen monitors and computers replaced every five years. These replacements were calculated in its revenue share and cost proposal calculations.
IKE technology has experience in extreme heat and humidity through Tempe, AZ and Miami, FL. Kiosks are listed as corrosion-resistant for a minimum of 15 years. Other key design factors to handle the weather include flood sensors to power down if the water line reaches 18”, rated to withstand hurricane-force winds up to 165 mph, operating temperature of -20° to 120° Fahrenheit and 5% to 95% humidity and dust and water resistant to a rating of IP-56.
Although a slightly lower rating than BIG Outdoors IP rating, both are incredibly strong.
As with other proposals, IKE technology can implement a number of City and community benefits. Some of the benefits are listed below.
• Wayfinding
• City & Community Content
• Essential & Emergency Communications
• Accessibility
• Systems Integration
• Public Polling
• Data & Analytics
• Air Quality
• Mobile & Web Extensions
• Economic Development
One unique feature is the option for the City to poll kiosk users. This could provide the City with insights such as use of transportation, reason for using the kiosks, etc. Other valuable features include applications for social services,
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 14 safe shelters, job boards and civic resources. This reaches residents who may need help but not have the resources such as internet at home to find the resources they need.
Image 3.3.3 below provides a screenshot of analytics the City could use through this partnership. The City could get a better understanding of the application usage and where each kiosk interaction occurs. This could potentially help the City implement a more strategic Phase II.
While all proposals meet the City’s ADA compliance requests, IKE is partnered with the National Federation of the Blind to allow for contactless solutions to allow for all users to have quality experiences with the kiosks. When developing this partnership, IKE conducted 21 usability sessions with blind and low-vision users to improve its accessibility. Through this partnership, IKE includes a braille plaque encouraging these users to scan a QR code to access the information through their phone and includes TalkBack and VoiceOver tools to assist with this process.
Image 3.3.3 IKE Smart City Analytics
Timeline for Implementation
IKE projects a three-to-six-month (12-24 week) timeline from the contract being awarded to the program going live. • Kiosk Design Begins (1-2 months)
o Kiosk Fabrication Begins (3 months)
• Pre-construction Siting Begins (1-3 months)
• Site Specific Due Diligence and Plans (2-4 months)
o Bidding, Installation and Deployment (1-2 months)
• Content Development Begins (3 months)
Conclusions
IKE provided a detailed proposal. Overall, Superlative believes its proposal ranks 2nd in financial benefit to the City, technology and equipment and timeline and implementation.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 15 3.4 Smart City Media
Overview
Smart City Media, LLC (SCM) was founded in 2015 and headquartered in New York City. As part of their proposal, Smart City Media has partnered with a number of companies. The companies and their respective focus are outlined in Table 3.4.1 below.
Table 3.4.1 Smart City Media Partners
Focus Company
ESG Funding Voya Financial
Media Channel CityPost (SCM)
National Ad Sales Capitol Outdoor
Local Ad Sales InSite Street Media
Smart Kiosks (MWBE) NANOV Display Inc.
Smart Integration (MWBE) Sology Solutions
Small Cell Connectivity Ubicquia
Smart City Intelligence Quantela
Shared Mobility Charge Hub EnerSys
Smart Wifi & Monetization Global Reach
Financial Benefit
Smart City Media projects $146 million in net revenues over a 20-year term. With a proposed revenue share of 25 percent, this could generate the City approximately $37 million over the term.
Signing Bonus
Smart City Media did not propose a signing bonus for the City, which could be a point of negotiation.
Minimum Annual Guarantee (MAG)
Smart City Media’s MAG was proposed as 25 percent. In this instance, Superlative believes a MAG should have a specific dollar value. Having a minimum annual guarantee as a percentage is synonymous with a revenue share offer. Often, a MAG is relevant to a portion of projected revenue but fixed in dollar amount, and then adjusted for inflation, as with the other proposals.
Total
Because Smart City Media did not propose a signing bonus or true MAG, the 25 percent revenue share is projected to net the City $36.5 million over a 20-year term.
Additional Value
Smart City Media proposed a 50 percent share between City content and advertising. While this would provide great value to the City, typical shares are between 10-25 percent.
Equipment and Technology
Smart City Media did not provide the same level of detail for hardware specs as did the other two proposers.
Additionally, the software capabilities mentioned are similar to the other proposals. The difference added value Smart City Media included in their proposal is through their partnerships, which would provide a number of unique technological opportunities to the program.
Ubicquia
Smart City Media partnered with Ubicquia for its proposal to create a small cell network and Wifi hotspots across the City. This partnership focuses on the connectivity of the network through the internet of things (IoT) and will support mobile integration.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 16 Quantela
One partnership Superlative would need to understand better is Smart City Media’s partnership with Quantela.
Quantela is listed as added value through “monetization of smart city digital endpoints”. The proposal highlights the ability to capture audience detail and analyze it to the upmost detail. Digital privacy is a large topic among the general population, and how the partner plans to use this data would need to be better understood before pursuing a partnership such as this.
Mobility Hub
In Superlative’s opinion, the most substantial partnership in this proposal is with EnerSys. Smart City Media proposed a shared mobility hub at the Pico Boulevard Entrance to Santa Monica College, which according to projections, would offset the entire kiosk program and make the program power-positive for the City. Its solar energy could also be stored to act as a generator to provide the City with reliable energy should backup power be needed.
CityPost App
CityPost is a user-friendly app that allows users to access the kiosk data through their phone. The app also allows for users to check wait times for transit stops. The app seems accessible and easy to use, but the few reviews on the Apple App Store have had issues with its accuracy. This would likely be connected to the transit system and not the fault of Smart City Media.
Through Superlative’s detailed review, most kiosk programs through the app provide updated events and promotions. However, not all locations have been maintained to the same level. For example, the application does not highlight any posts in its “Latest CityPost” articles for Louisville, KY. Additionally, the Little Rock, AR, network highlights the city’s “Lil’ Rockin Events”, which are city events. The app only highlights the “Ballet Arkansas Four Decades of Dance 19/20 Season”.
Image 3.4.2 Smart City Media CityPost App
• Arts & Culture
• City Visitor Information
• City Government Information
• Parks and Recreation
• City Attractions
• Restaurants and Bars
• Events
• Social Services
• Kids
• Programming
• Shops
• Living (hotels, apartments, etc.)
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 17 Timeline for Implementation
From contract approval to the program going live, Smart City Media projects a 16-week timeline for implementation.
Table 3.4.3 below provides an overview of the projected timeline for implementation.
Table 3.4.3 Smart City Media Timeline
Action Week #
Contract Approval Week 1
Pre-Planning Meetings (hardware, software) Week 2
Review Final Site Selection Week 2-3
Initiate Permit Process Week 2-7
Hardware Manufacturing Starts Week 3
SCM Presents Kiosk Exterior Design for Approval Week 7
SCM Presents UI Colors for Approval Week 7
Prep Sites for Electric, Connectivity and Base Footings Week 7-10 Content Development Begins Week 8
Final System Test (in plant) Week 10
Ship to Warehouse, Uncrate and Test Prior to Install Week 11-13 Install Phase I Kiosks (25 double-sided) Week 13-15
Go Live (in sequence of installation) Week 16
Conclusions
Overall, Smart City Media proposed the shortest timeline for implementation but also had the lowest forecasted revenue for the City. It also more generally had the least detailed proposal including its revenue projections. Smart City Media did however provide unique sustainability initiatives including the shared mobility hub to power the entire kiosk network.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 18 3.5 Conclusions
It is important to consider all criteria identified by the City when reviewing a city-wide digital kiosk network.
Financial Benefits
Superlative conservatively projected the revenue for a two-phased approach for the City to implement a digital wayfinding OOH advertising kiosk program in December 2020. Total revenues for the City were projected at approximately $39.8 million, which is in line with the MAG offered by IKE Smart City ($35.4 million) and the forecast by Smart City Media ($36.5 million).
• The largest MAG was proposed by BIG Outdoor, which would guarantee the City $112 million over 20 years including the proposed $3 million signing bonus. The average annual revenue for the City is a guaranteed $5.6 million and projected $14.9 million, respectively. However, Superlative questions the feasibility of this offer, as it is clearly an outlier when compared to the other bidders’ proposals as well as Superlative’s revenue forecast for the asset.
• IKE Smart City had a strong financial offer with a MAG of $35.4 million over a 20-year term. Assuming IKE’s forecasts are accurate, the City could recognize $83.6 million over the term. Between the MAG and sales forecasts, the City could recognize new revenues between $1.7 million and $4.2 million annually. • The lowest financial commitment proposed was Smart City Media, which only committed a percentage of sales revenues as their MAG. Assuming Smart City Media’s forecasts are accurate, the City could expect to receive on average $1.8 million per year. The total value to the City over a 20-year term is $36.5 million.
With large guarantees and upfront costs, it is critical that the City fully vet each respondent including their financial positioning to ensure the proposed guaranteed payments are likely to occur.
Equipment and Technology
Each proposer meets the equipment and technology qualifications identified in the City’s RFP. While the City identified a number of factors in their scorecard (table A-1) for Experience & Technical Competence, most related to past work of each proposer. While these are incredibly important factors, Superlative believes equipment and technology should include the non-exhaustive list below. It is critical for the City to review other networks in person to fully test the products and communicate with key stakeholders at other cities. • Aesthetic/artistic customizes of kiosks;
• Accessibility;
• Connectivity;
• Energy usage;
• Speed for emergency messaging;
• User statistics at other programs;
• Useful life of kiosks; and
• Uptime.
Timeline for Implementation
All three proposals outlined a similar timeline for delivery. In this case, It is important to consider experience, references and time to implement vs. projected time to implement in other markets when reviewing this category. • BIG Outdoor
o 26-33 weeks
• IKE Smart City
o 3-6 months (12-24 weeks)
• Smart City Media
o 16 weeks
Recommendations and Suggested Next Steps
As the proposals stand, BIG Outdoor has made the largest guaranteed offer to the City. It is important for the City to consider the below factors in addition to financial commitment.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 19 Superlative has included the City’s scorecard in Appendix A of this report. The below includes general questions City personnel should consider in addition to the scorecard. • Financial Stability
o How has the value of assets, revenues, expenses, etc. changed over time for each proposer? What happened for these changes to occur?
o How likely is the proposer to meet its financial commitment? § What happens if a proposer cannot meet its financial commitment? o How does total annual revenues compare to proposer’s respective forecast? § What percent or proposer’s projected 2022+ revenue will be made up of revenue from the City of Santa Monica Digital Wayfinding OOH Advertising Kiosk Network? § Will each proposer need additional employees to support the network? o What are the projected costs for proposer to implement the two-phased network? § How will proposer fund the network if chosen (cash reserves, financial backing, etc.)? • References
o Respondents experience ranges in both the general OOH advertising space as well as the digital wayfinding OOH advertising kiosk program space.
o What does each reference the proposer listed say?
§ Are there any news articles/other highlighting other digital networks managed by the proposer that were not included in the references?
• What are the overall pros and cons being discussed?
o Does each proposer have experience in the state? The region? The city? o How accurate is each proposer’s forecasts for similar projects? § What was the forecasted revenue (per year and total) compared to the actual revenue for similar projects?
• Equipment and Technology
o Who will the City need to call should there be an issue? § Will the contact need to be onsite to fix the issue?
• How quickly will this contact be able to get onsite?
o How up-to-date are the other networks each proposer manages? o How long is the technology expected to last?
o Is the equipment and technology accessible?
o How sustainable and environmentally friendly are the kiosks proposed? • Timeline for Implementation
o How has each respondents’ timelines for implementation compared to their actual implementation for other municipalities/projects?
o Have the proposers dealt with roadblocks during the implementation phase? § If yes, what were the roadblocks and how did the proposer overcome the blocks? o Does the proposer have experience working in the municipal marketing sector? • Additional Benefits Offered to the City
o How many dedicated advertising slots will the City receive? § Will local business get free or discounted rates?
• What is the projected share between national and local brand recognition? o How will the proposer work with different City stakeholders? As a part of an additional scope of services, Superlative can analyze the respondents’ financial positionings and other necessary vetting.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 20 4.1 Introduction
This section of the report provides an overview of digital wayfinding OOH advertising kiosk programs across the country. It is important to consider case studies while reviewing a digital OOH opportunity such as the proposals that the City received, in order to gain an understanding of what is currently in place in other cities across the country. There are a number of factors and variables that impact value, which are not always quantifiable, such as size of the market, value of the audience/demographics, etc. These are qualitative benefits that impact the quantitative elements. Quantitative and qualitative benefits should be considered when reviewing the benchmarks in this section.
4.2 BIG Outdoor
Coverage
Of the three references BIG Outdoor provided, only one was a digital kiosk network. That reference, located on page 25 of the proposal, said it developed 16 double sided outdoor kiosks across two locations in the City of Cleveland.
The locations are Crocker Park (Westlake, OH) and Eton (Woodmere, OH), located in Cuyahoga County. IKE Smart City, as identified below, is contracted with the City of Cleveland for a digital kiosk network.
The below outlines the markets that BIG Outdoor lists on their website. Their website highlights only static kiosk advertising.
• New York
• Los Angeles
• Chicago
• Dallas
• San Francisco
• Philadelphia
• San Diego
• Boston
• Atlanta
• Portland
• Austin
According to the proposal, smartLINK is implementing its products across a number of smart cities and mixed-use developments across the country. Those developments include:
• Atlantic Station (Atlanta, GA)
• Avalon (Atlanta, GA)
• City Center Bishop Ranch (Bay Area, CA)
• City of Cape Coral, FL
• City of Lawrenceburg, IN
• CityPlace Doral (Miami, FL)
• Crocker Park (Westlake, OH)
• Disney Springs (Orlando, FL)
• Fashion Island (Newport Beach, CA)
• Irvine Spectrum (Irvine, CA)
• Mary Brickell Village (Miami, FL)
4 Case Studies
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 21 4.3 IKE Smart City
Coverage
IKE, a venture of Orange Barrel Media, was founded in 2015 with a focus on designing, constructing and implementing media. IKE launched in Denver, CO to support city revenues with a focus on creating interactive pedestrian wayfinding signage. IKE covers a number of digital kiosk networks across the US. According to IKE, four new programs were scheduled to launch a few weeks after submitting their proposal.
Live Networks
• Tampa, FL
• Denver, CO
• Miami, FL
• Cleveland, OH
• St. Louis, MO
• Baltimore, MD
• San Antonio, TX
• Columbus, OH
• Berkeley, CA
• Coral Gables, FL
• Tempe, AZ
Under construction at time of proposal (Feb. 2022 launch) • Atlanta, GA
• Houston, TX
• Detroit, MI
• Cincinnati, OH
City of Houston
In May 2021, the City of Houston and IKE Smart City agreed on an initial 12-year term to implement 75 digital kiosks across the city during its Phase I. The agreement included a two-year planning process, installing the kiosks by 2024.
The agreement provides the City of Houston with a 42 percent revenue share, and guaranteed revenues of between $11 million to $16 million over the initial term. The MAG range is dependent on the implementation of a potential Phase II, which would grow the network to 125 kiosks. Figure 4.3.1 below highlights the forecasted net revenue through the program over the initial term and the MAG to the city. The Mag in this figure assumes that Phase II would be implemented in the 7th year of operation, bringing the average MAG up from approximately $1 million annually to nearly $2 million.
In total, the forecast projects the city could make between $35 million to $50 million over the initial 12-year term.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 22 Figure 4.3.1
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 23 City of San Antonio
In December 2017, the City of San Antonio and IKE Smart City agreed on a five-year term contract with the option for the City to renew for up to four additional one-year periods. The City of San Antonio is contracted to receive
21.5 percent of the net revenue through the proposed 25 kiosk network. The city agreed to a minimum annual guarantee of $937,080 for the initial five-year term.
The City of San Antonio directed content is agreed to occupy a minimum of 66 percent of the screen area on each kiosk during interactive mode and one of passive mode at least one spot out of every eight spots shown on the IKE kiosk screen will contain city directed content. Per the contract between the city and IKE Smart City, all rotations will be of equal duration. Passive mode is the loop of advertisements and interactive mode transitions the screen once pedestrians begin to interact with the kiosk.
The minimal annual guarantee is honored by IKE Smart City if no fewer than 25 Kiosks are installed. If less than 25 kiosks are installed, then the term shall decrease by 4 percent for each IKE kiosk that is not installed and operational.
Table 4.3.2 MAG to the City of San Antonio
Year Minimum Annual
Guarantee
Year 1 $ 150,000
Year 2 $ 175,000
Year 3 $ 200,000
Year 4 $ 204,000
Year 5 $ 208,080
Renewal 1 $ 212,241.60
Renewal 2 $ 216,486.43
Renewal 3 $ 220,816.16
Renewal 4 $ 225,232.48
City of Miami Beach
The City of Miami Beach awarded IKE Smart City in spring of 2020 to install 30 kiosks over a 20-year term. The city agreed to receive 40 percent of net revenues from IKE. IKE projected the city would receive between $1,500,000 and $2,000,000 annually and between $30,000,000 and $40,000,000 over the term.
Direct content provided by the city is guaranteed in one out of every eight advertising spots through the contract.
A minimum of 66 percent of the screen area must be occupied by directed content. It is important to note that if more than 50 kiosks are installed up to 20 percent of the locations will be in underserved areas and if fewer than 50 kiosks are installed at least 10 percent must be in underserved areas.
City of Detroit
The City of Detroit and IKE Smart City recently entered into a 15-year agreement to install at least 30 kiosks. The residents of Detroit asked city to opt out of the optional security cameras due to privacy concerns. This is the first known network to Superlative where the city opted out of the optional security cameras. The residents were sited with concerns about unwanted surveillance and other facial recognition features that may provide a user’s personal information to third parties.
City of Berkeley, California
In September 2018, Visit Berkeley, on behalf of the City of Berkeley, and IKE Smart City agreed upon a 25-year contract to install 31 kiosks. Visit Berkeley is a contracting agent to the city for marketing, wayfinding and other information.
IKE agreed to a 10 percent gross revenue share to Visit Berkeley in the first two years of the program and 25 percent in the following years of the term. Through its agreement with the city, Visit Berkeley has the option to retain the
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 24 lesser amount of 25 percent of the revenue share or $100,000 for its costs for administration of the program and will distribute the remainder of the revenue share to the City of Berkeley. The City of Berkeley is expected to receive approximately $829,361 per year in revenue once the program is fully deployed or approximately $26,754 per year per kiosk.
According to the agreement, requests to move a kiosk won’t be considered within two years of the initial installation of the kiosks. The City is then able to request one relocation and/or removal of a kiosk per year. The City may also require the temporary removal or the permanent relocation of kiosks when necessary to facilitate streetscape improvement or to address public health or safety concerns. Members of the public are able to initiate a kiosk removal or relocation, by generating a petition signed by 50 percent of the property owners and business owners within a 300-foot radius of the location of the kiosk.
When the kiosk is in interactive mode, Visit Berkeley content will occupy a minimum of 66 percent of the screen area on each of the IKE kiosks. When the kiosk is in passive mode, at least one spot (or unit of time when content is displayed) out of every eight spots shown on and IKE kiosks screen will contain Visit Berkeley directed content.
IKE installed two different models, the IKE Mini and the IKE Standard. The Mini is a compact six-foot-tall model for placement in lower density areas with smaller architectural structures, narrow sidewalks, and slower moving traffic.
The Standard is approximately eight foot tall and is intended for high density areas with larger buildings, large sidewalks, and fast-moving traffic.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 25 4.4 Smart City Media
Coverage
Smart City Media has worked with a number of municipalities to implement digital kiosk networks. It is unclear through their proposal and website how many systems are in their network. The below include Smart City Media case studies.
City of Milwaukee
The City of Milwaukee awarded Smart City Media a contract in late 2019 to install 35 digital kiosks throughout the downtown area, with a focus along the city’s streetcar (The Hop MKE) route. The initial agreement includes a 10- year term. The City of Milwaukee receives 20 percent of the advertising revenue over the first three years, 25 percent for the following three years and 33 percent the remaining four years. Based on Smart City Media forecasts, the City of Milwaukee is expected to receive between $300,000 and $500,000 annually.
The kiosk screens display arrival times, local content or public messaging during the slots that are not sold by Smart City Media.
Montgomery County, Maryland
In March of 2020, Montgomery County and Smart City Media agreed upon a five-year contract to install interactive digital information kiosks. The County has two options for additional five-year terms. The total agreement could last up to 15 years.
Smart City Media agreed to pay the County a franchise fee of 25 percent of the net revenues. The commission rate for third party advertising sales needed approval from the county because the county has a 15 percent commission threshold.
City of Scranton, Pennsylvania
The City of Scranton awarded Smart City Media in 2017 a contract to install interactive digital kiosks for a minimum of a five-year term with the option to renew for an additional five years. Smart City Media projected the city could receive a net revenue of $800,000 over the life of the contract with a 25 percent of the net advertising revenue.
City of Aurora, Illinois
In 2018, the City of Aurora awarded Smart City Media a five-year contract to install interactive digital kiosks. Smart City Media and the city have a mutual option to renew for an additional five years. It is expected that 60 percent of the content on the kiosk will be local advertising or information provided by the city and the remaining 40 percent will be sold to national brands. The national brand advertising is expected to provide the majority of the revenues for the program.
The City of Aurora will receive 25 percent of all advertising revenue and it is estimated that the city will receive $700,000 in revenue over ten years, assuming the two parties mutually opt into the five-year extension.
City of Little Rock, Arkansas
In 2018, the City of Little Rock awarded Smart City Media and Duke Energy One Partnership the contract to install interactive digital kiosks. The majority of the content came from the city’s website and the Little Rock Convention and Visitors Bureau website. The Downtown Little Rock Partnership also created some content for the message boards. Smart City Media pays the city 25 percent of its net advertising revenue. The city was expected to receive $100,000 from the first year of the partnership.
Through the agreement, small local businesses have the opportunity to be on the network for free. The business will only need to pay if it wants guaranteed placement in the kiosk interactive screen or a desired number of rotations.
The partnership between Smart City Media and Duke Energy One is in an effort to deploy outdoor digital technology to help people in various North American cities better connect with their communities. Duke Energy One is a subsidiary of Duke Energy. The partnership leverages smart infrastructure, including connected devices, sensors, and data analytics, to improve quality of life for residents, enhance economic growth and address urban challenges.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 26 4.5 Intersection/Titan Outdoor LLC
City of Philadelphia
Intersection’s Link Network
In 2014, the City of Philadelphia, PA, signed a 20-year concessionaire agreement with Titan Outdoor LLC (now Intersection) that would provide $12 million in new transportation infrastructure for the city, including 600 SEPTA bus shelters installed and maintained by the company, and generate projected $100 million in advertising revenue over the term of the agreement. As part of this initiative, Intersection installed 100 “LinkPHL” kiosks in Center City, University City and other Philadelphia neighborhoods between 2017 and 2019, deploying a proprietary technology that had been pioneered by the company in New York City in 2016 (LinkNYC). During the same period, Link kiosks were also installed through concessionaire agreements in Newark, New Jersey (LinkNWK) and the United Kingdom (InLinkUK, Intersection’s international sister project), with plans for future rollout in other major municipalities in the United States and internationally.
Specifications
Intersection’s Link kiosks measure 9.5 feet in height and feature 27” x 55” 1080p LED display panels on each face, in addition to two (2) USB ports and a 911 button (999 in the UK). The kiosks offer free WiFi connectivity and allow users to charge their devices, make calls from the kiosk and download music or movies for free. The panels support static and dynamic advertising content in rotating 10-second avails. Through partnership with local transit agencies, the digital panels can also be programmed to provide real-time transit information (e.g., bus arrival times), in addition to weather updates, voter registration, healthcare enrollment and other public services and messaging.
According to a City of Philadelphia official cited by The Philadelphia Inquirer, each kiosk costs “tens of thousands” of dollars each.
Advertising and Sponsorship Revenue
According to a 2017 Philadelphia Magazine article, the City of Philadelphia shares 50 percent of the advertising revenue with Intersection after capital expenses (production, installation and maintenance), with a $450,000 minimum annual guarantee. As a part of the agreement, the city also received 10 percent of rotations to promote city events and public information.
Per The Philadelphia Inquirer and other local news sources, the LinkPHL network is sponsored by PECO, Pennsylvania’s largest electric and natural gas utility and subsidiary of ComEd, although Superlative was unable to locate any formal agreement that would verify this arrangement. In exchange, PECO receives prime advertising inventory across the kiosk network, with Philadelphia Museum of Art and other advertisers receiving substantial, but secondary, inventory. These arrangements are projected to generate $18 million over a 15-year contract period, or an estimated $1.2 million per annum.
In New York, which to date has installed more than 1,300 LinkNYC kiosks, the kiosks generated $37.3 million in advertising revenue within one year of installation through partners like Verizon.
Rates, CPMs and Other Metrics
According to the Inquirer, Intersection’s rate card for LinkPHL advertising is $25 per 1,000 views, or $25 CPM, determined by a third-party service, Geopath, through variables like foot traffic and census data to estimate the number of views per kiosk. According to Global, the third-party out-of-home advertising for InLinkUK in London, LinkNYC kiosks received over one million users in the first 12 months and 82 million WiFi sessions.
In greater context, Intersection’s website calculates a total of 2,200-plus Link kiosks in New York, Philadelphia and across the UK, which are used by 11 million consumers every week and generate 645 million weekly impressions with consumers aged 18 or older.
Revenue Share
Table 4.5.1 below provides an overview of the revenue share from the original Titan Outdoor contract with the City of Philadelphia. This table breaks down the monthly MAG (Minimum Annual Guarantee) and the proposed revenue share for the different proposed assets as part of the agreement. The revenue share is critical to Superlative’s analysis, as it demonstrates that another major municipality, the City of Philadelphia, was guaranteed a 50 percent share for each year during the life of the agreement, a monthly minimum payment guarantee (MAG) and a variable CPI escalator over the 20-year term, each of which Superlative considers to be best practice.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 27 Table 4.5.1 Titan Outdoor (now Intersection) Revenue Share Agreement with the City of Philadelphia Year MAG Shelters and
Head Houses
MAG Monthly
Payment
Revenue Share
(Shelters & Head
Houses)
Revenue Share
(Kiosks, Condos and
Benches)
1 (2015) $1,425,000 $ 118,750 17.5% 50.0%
2 $1,525,000 $ 127,083 17.5% 50.0%
3 $1,625,000 $ 135,417 17.5% 50.0%
4 $1,725,000 $ 143,750 17.5% 50.0%
5 (2019) $1,825,000 $ 152,083 17.5% 50.0%
6 $1,900,000 $ 158,333 17.5% 50.0%
7 $2,000,000 $ 166,667 17.5% 50.0%
8 $2,295,000 $ 191,250 22.0% 50.0%
9 $2,375,000 $ 197,917 22.0% 50.0%
10 (2024) $2,575,000 $ 214,583 23.0% 50.0%
11 $2,655,000 $ 221,250 23.0% 50.0%
12 $2,745,000 $ 228,750 23.0% 50.0%
13 $2,900,000 $ 241,667 25.0% 50.0%
14 $2,985,000 $ 248,750 25.0% 50.0%
15 (2029) $3,075,000 $ 256,250 25.0% 50.0%
16 $3,515,000 $ 292,917 27.0% 50.0%
17 $3,620,000 $ 301,667 27.0% 50.0%
18 $3,730,000 $ 310,833 27.0% 50.0%
19 $3,830,000 $ 319,167 27.0% 50.0%
20 (2034) $3,945,000 $ 328,750 27.0% 50.0%
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 28 Digital Kiosk Revenues and CPMs
As noted above, Intersection’s website calculates a total of 2,200-plus Link kiosks in New York, Philadelphia and across the UK, which are used by 11 million consumers every week and generate 645 million weekly impressions with consumers aged 18 or older. Extrapolating this data further based on the published rack rate of $25 per 1,000 views, Links around the world have the potential to generate $16.125 million in revenue per week, or more than $403 million annually. Per machine—absent any reference points for specific metrics for impressions generated by each unit—this amounts to an average of 260,000 consumers and 15.2 million impressions annually. Based on reported revenue generated by these campaigns, the actual cost per thousand (CPM) paid by advertisers on Link kiosks ranges between $0.58 and $1.88, depending on the market. SEPTA advertising partners received rotations on subway ticket vending machines as a value-added benefit to existing OOH contracts.
Table 4.5.2
Agency/Entity DMA Asset Partner(s) Year
Consumers
Reached (Avg.
per Machine)
Impressions
(Avg. per
Machine)
Wi-Fi
Sessions
(Avg. per
Machine)
Total Annual
Revenue (or
MAG)
Machines Avg. per
machine CPM
SEPTA PA LinkPHL PECO
Energy 2019 260,000 15,245,455 468,000 $ 1,800,000 100 $ 18,000 $ 1.80 New York MTA NY LinkNYC Verizon 2019 260,000 15,245,455 468,000 $ 37,300,000 1,300 $ 28,692 $ 1.88 United Kingdom (Various) UK InLink BT 2017 260,000 15,245,455 468,000 $ 6,613,500 750 $ 8,818 $ 0.58
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 29 4.6 Outfront/Decaux Street Furniture
City of West Hollywood
In 2017, the City of West Hollywood and Outfront/Decaux Street Furniture agreed on a 10-year term for street furniture advertising. It is important to note that street advertising is OOH advertising that is affixed to street furniture using various displays at eye-level for pedestrians. In this instance, the street furniture is affixed to bus shelters and bike station kiosks.
Outfront/Decaux Street Furniture agreed to invest $7 million over the initial term which includes the cost to replace assets after the end of their useful life or a technical refresh. The assets, similar yet different to the digital kiosks proposed for the City of Santa Monica, are outlined below.
Table 4.6.1
Street Media Panels
Bus Shelters
Digital static 25
Digital full motion 25
Classic posters 50
Bike Station Kiosks
Classic Posters 15
Total Media Panels 115
Revenue
Within 20 days after the end of each license year, the city will receive the below percent of net revenues, less the MAG paid for such license year.
• 32% of Net Revenues up to $5,500,000;
• 40% of Net Revenues between $5,500,000 and $6,500,000; and • 50% of Net Revenues above $6,500,000.
Table 4.6.2
License Year Minimum Annual
Guarantee (MAG) Quarterly Payment
Year 1 $ 1,250,000 $312,500
Year 2 $ 1,750,000 $437,500
Year 3 $ 1,800,000 $450,000
Year 4 $ 1,850,000 $462,500
Year 5 $ 1,900,000 $475,000
Year 6 $ 1,950,000 $487,500
Year 7 $ 2,000,000 $500,000
Year 8 $ 2,050,000 $512,500
Year 9 $ 2,100,000 $525,000
Year 10 $ 2,150,000 $537,500
City of West Hollywood License Agreement for Street Furniture Exhibit A
5.a Relocation of Inventory
At the City’s request, Licensee shall remove or relocate elements of street furniture, up to an aggregated annual expenditure limitation of fifty thousand ($50,000) dollars.
Conclusion
When reviewing benchmarks, it is important to consider factors outside of revenue such as the market and additional benefits. Superlative elected to include this example because of the proximity to the City of Santa Monica as well as the revenue share agreement for the OOH advertising.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 30 4.7 Conclusions
Every agreement is unique. When reviewing the case studies identified above, it is important to consider a number of variables that could impact the minimum annual guarantee, revenue share and ultimately the total revenue recognized by a city. Variables that could impact revenue include but are not limited to the below. • Audience
o Market size
§ Tourism and total market reach
o Value of audience
§ Desirability for local, regional and national brands to engage with audience • Kiosks
o Number of kiosks implemented
o Location of kiosks
§ Pedestrian traffic vs. vehicular traffic
§ Proximity to major attractions
o Timeline for implementation
§ This can be impacted by a number of factors. Cities may be in different stages of planning when they go to RFP for these opportunities.
• The City and Superlative dedicated months determining the number of kiosks, location of each kiosk and the phasing of each kiosk. Some agreements have built in time to go through this process.
• Term of agreement
o Due to the cost to implement a digital kiosk program, a longer term typically has a better revenue share.
• Advertising
o Other OOH advertising opportunities in market
§ Billboards, transit, etc.
o City’s desire for its own messaging
• Competition
o Number of digital kiosk OOH advertisers in the market, or desire for other to get into market.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 31 5.1 Introduction
In April 2022, the City approved a second modification to the agreement for Superlative to conduct a valuation of viable advertising, naming rights and other sponsorship opportunities related to the City’s assets.
The key objectives of this exercise are to:
• Complete a comprehensive review of the Proposals received by the City; • Provide an analysis of each Proposal’s overall financial benefit to the City; • Provide an analysis of the proposed equipment and technology to be used by each proposer; • Compare the proposed timelines for Project implementation included in each Proposal to the realistic timelines needed for Project implementation;
• Provide benchmark valuations of similar Project arrangements from around the United States; and • Provide recommendations to the City, as requested, on the approach to negotiations with the proposers.
This report presents the findings from Superlative’s valuation process.
5.2 Project Overview
The City issued an RFP in December 2021. Through the public bidding process, the City received six proposals, with varying revenue projections, technologies, strategies and timelines for implementation. After internal discussions, the City identified the top three proposers based on the factors above. Those proposers, who will be described in more detail in the following sections, are listed below in alphabetical order. • BIG Outdoor
• IKE Smart City
• Smart City Media
This valuation reviewed those top bidders’ proposals to the City to identify the best fit and most lucrative opportunity.
5.3 Conclusions and Recommendations
Table 5.3.1 below summarizes the financial benefit from the three proposers outlined in this report. The average annual floor contemplates the total guaranteed value the City could receive over the 20-year term. The average annual ceiling contemplates the forecasted sales figures provided by each proposer, adjusted for the City’s proposed revenue share, then averaged over the 20-year term.
Table 5.3.1
Proposer Signing Bonus
Total
Guarantee (20- Year Term)Revenue Share Projected Revenue for the City (20-Year Term)
Average
Annual Floor
Average
Annual Ceiling
BIG Outdoor $3,000,000 $111,966,671 50% $297,526,826 $5,598,334 $14,876,341 IKE Smart City $0 $35,353,446 50-55% $83,636,169 $1,767,672 $4,181,808 Smart City
Media $0 $0 25% $36,500,000 $0 $1,825,000
5 Conclusions and Recommendations
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 32 The proposals reviewed in this report present Superlative’s detailed review of the information presented in the proposals received by the City. As a next step, Superlative suggests the three key objectives:
1. Financially vet each proposer.
2. Meet with as many of the groups below to get a deeper understanding of the proposers. a. Proposers
b. References provided
c. Other cities
d. Etc.
3. Review as many digital kiosks as possible.
a. Preferably networks that are a few years old to review how the technology ages.
Either in tandem or following this process, a negotiation process should occur with the proposers to ensure the City maximizes its revenue.
CITY OF SANTA MONICA DIGITAL WAYFINDING OOH ADVERTISING KIOSK PROGRAM 33 Table A-1
No. Evaluation Criteria Scoring
Method Weight (Points)
1. Experience & Technical Competence
Up to 20 points may be awarded based on the evaluation of the proposer’s knowledge and prior experience. Evaluation will be based on relevant experience of key personnel based on resumes showing technical knowledge and experience. Evaluation will also be based on level of the firm’s previous projects of comparable complexity, scale of nature; training and proven expertise in the area of work required; experience in projects completed for public entities; and the firm’s proposed work plan.
Points Based 20
(20% of Total)
2. Ability to Meet Project Work Plan & Timelines
Up to 15 points may be awarded based on the consultant’s ability to perform the work within the desired time frame. The ability and experience in assembling a highly qualified staff. The ability to provide the City with approval of management and representatives assigned to the engagement and provide assurance of resources to accommodate changes or turnover in staff. Efficiency and timeliness in completion of projects; specifically note where required reporting deadlines were not met.
Points Based 15
(15% of Total)
3. Quality Control
Up to 15 points may be awarded based on whether the distinctive goals established for each component is met. Brief descriptions of previous project experiences should be used as examples of how quality control was achieved with former clients.
Points Based 15
(15% of Total)
4. Revenue Projections & Profit Sharing
Up to 25 points may be awarded to proposals with the greatest and most realistic revenue projections, proposed sharing of profits, and minimum annual revenue guaranteed to the City. The consultant’s overall revenue sharing proposal for the project should reflect cost effective work and services. Cost control, performance, prudent auditing practices, overall management, and clear and constant communication with City staff are essential to the success of this project. Brief descriptions of previous project experiences should be used as examples of how this was achieved with former clients, along with key examples of the firm’s accuracy in cost estimating.
Points Based 25
(25% of Total)
5. Stability & References
Up to 10 points may be awarded upon an evaluation of proposer’s work for similar engagements and proposer's financial and structural stability. Please submit at least three references from other public entities. Additionally, provide evidence of insurance; description of firm size and structure, including number of partners and owners; and confirmation of firm’s independence and license to practice in California.
The Proposer must provide copies of audited financial statements for the most recent three (3) fiscal years for the entity that is proposed to sign the Contract. Audited financial statements should include balance sheet, income statement, footnotes, and subsidiary schedules.
A. If the entity that will sign the Contract has a parent company or is proposing as a joint venture, the parent company or joint venture companies must also provide audited financial statements for the most recent three fiscal years.
The parent company must provide a statement indicating its intent and means to provide financial assurance of performance.
B. If the entity that will sign the Contract has been in existence less than three years, the Proposer must provide sufficient financial data to substantiate, to the satisfaction of the City, the Proposer’s financial capability.
C. In addition to the audited financial statements, the Proposer must provide a statement from the Chief Financial Officer indicating that there has been no material change in the financial circumstances of the proposing entity (or its parent company or City’s if they are providing financial assurance of performance) since the date of the last audited financial statements.
Points Based 10
(10% of Total)
6. Value-Add & Breadth of Service
Up to 15 points may be awarded based on the proposer's ability to provide insight and information, industry best practices, and the ability to effectively communicate information to management and provide technical training or resources. Any additional products or services that can add value to the program, products or services.
Points Based 15
(15% of Total)
A City of Santa Monica’s Evaluation Criteria