The Western Railways in Mumbai has called OOH advertising players to bid for the seven-year sole/bulk advertising rights for the entire suburban section of Mumbai Division from Churchgate to Dahanu.
The section has thirty-six stations, including two terminal stations of Mumbai Central and Bandra terminus, and handles about 32.53 lakh passengers daily. The bid price/ licence fees for the tender have been fixed at a minimum Rs 40.5 crore per year, amounting to a total of Rs 283.5 crore.
The tender consists of a two-packet system: Packet A contains the technical bid, while Packet B contains a financial bid. The technical bid will be opened on December 12, 2008, at 3 pm. Eligible bidders will be informed of the date of opening of the financial bid later on. The licensee will be allowed to pay the licence fee on a quarterly basis.
From the second year onwards, the winner of the bid will have to increase the licence fee by 10 per cent, 15 per cent, and 20 per cent, respectively, on an annual basis from the previous year’s licence fees.
Industry experts’ views of the advertisement opportunities are mixed.
Sriram Iyer, CEO, Street Culture, felt that this tender was a huge opportunity. He said, “In the long run, this tender will be a great opportunity for anyone who wins. The tender would give rights to thirty-six stations, which is a great property for channels, media and financial clients who would be looking out for mass coverage. Moreover, the economic slowdown shall not last for long.”
Ajaz Memon, Director, Network Media Solutions, on the other hand, felt that “In the time of economic slowdown, when everyone is trying to cut down on expenses, the Railways officials have once again come up with a tender, which was earlier forfeited by the entire industry. And this time, too, I feel that despite them increasing the tender period from five to seven years, the tender will be a failure as it involves the interests of many existing players who already have the rights for some stations, and also because the minimum bid price of Rs 40.5 crore is on the higher side.”
Mangesh Borse, Director, Symbiosis Advertising, suggested that the Railways officials hire an OOH consultant as, “they have time and again failed to tender this particular stretch. And this time, too, they will meet with the same fate as this particular stretch from Churchgate to Dahanu Road has not been priced competitively. Hence, very few players will think of participating in the bid. Secondly, despite the Railways officials increasing the tender period from five to seven years, the deal still is not economically viable.”
Railways officials, however, believe that the tender offers a golden opportunity. According to a Railways official, who wished to remain anonymous, “The tender provides for an unlimited scope to the licensee to develop many advertisement sites for various media at various locations of the station with prior approvals. No additional charges shall be levied on the advertiser for new sites during the currency of the contract as the entire suburban section of Mumbai division will be covered under the contract.”
He added that, “The existing commercial publicity contracts (except for the media of trains and other exempted sites/media) shall be handed over to the licensee after their contractual period. All new sites displayed and existing sites taken over during the contract period would be co-terminated with the original expiry date, and I feel that it is a golden opportunity for the OOH players”.