Media Insider: MediaWorks wins massive AT outdoor advertising contracts, valued in hundreds of millions of dollars
MediaWorks is now 100% owned by Australian outdoor firm QMS, and the announcement will lead to inevitable speculation about whether its New Zealand subsidiary retains its radio arm, or spins it off to focus on its outdoor advertising business.
MediaWorks - which owns a suite of entertainment radio brands including the Breeze, More FM, The Rock, and The Edge - has been adamant that it is an integrated company.
MediaWorks currently looks after advertising on AT buses and some billboards and was long rumoured to be the frontrunner to win the lion's share of the AT contracts.
But there have been a number of other industry players who have also been in the running, such as OohMedia – which currently looks after advertising at bus shelters – JCDecaux and Go Media.
The announcement today will be a blow for OohMedia, especially, which has had the co
OohMedia currently has the contract to look after advertising at AT bus shelters.
'We are thrilled to announce our partnership with MediaWorks to manage what is New Zealand's largest out-of-home asset portfolio, following a very competitive process,' said AT chief financial officer Mark Laing.
'The out-of-home media industry is experiencing exciting growth and MediaWorks' proposal demonstrated strong delivery capability and alignment with AT's strategic objectives.'
Laing says the partnership with MediaWorks will deliver a substantial increase in advertising revenues and is an excellent outcome for ratepayers.
'Under the new agreement AT expects to receive a minimum of $220 million revenue over the next ten years. Revenue will be higher than this if the market continues to grow as forecast.'
AT currently receives around a quarter of the gross advertising revenue generated from its Out of Home media assets. Under this new partnership AT will receive more than half.
'Last year AT earned $7 million in advertising revenue. This coming year this will more than double,' says Mr Laing.
'Every additional dollar brought in through advertisements across the public transport network helps to offset the costs of operating our services and gets Auckland closer to meeting the Government's 'private share' targets for public transport.'
MediaWorks chairman Barclay Nettlefold and chief executive Wendy Palmer.
MediaWorks chief executive Wendy Palmer saidthe company was 'absolutely thrilled'.
'This win is a game changer and re-shapes the way New Zealand out-of-home will be planned and bought by advertisers.
'Our team approached the tender strategically to demonstrate the value and growth we can provide both Auckland Transport and our clients with a new exciting offering that sees street furniture integrated into our existing Auckland Transport portfolio.'
Drawn out process
The tender process has been a long, drawn-out affair, with today's announcement marking almost a 12-month delay.
The new deals were due to be operational from January 1 this year but AT has been taking the outdoor companies on a not-so-merry ride.
In December, when AT suddenly pulled the pin on the already 18-month RFP process, it refused, publicly, to say why. A media manager said at the time this was 'confidential'.
AT's decision left the industry outraged and bamboozled, although few of the companies have been prepared to go on the record for fear it would harm future opportunities.
'It's been a clusterf***,' one source told Media Insider.
'They've had no idea what they've been doing. They had no idea of the scope of the project. And that is very evident in the fact that we are now going back to an RFP [request for proposal] again with new parameters after 18 months.'
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MediaWorks currently has the contract to run bus advertising for AT.
AT had taken almost three months to release to the NZ Herald limited official information, including a notice that it sent to outdoor companies on December 10.
In that notice, AT told RFP participants that it had decided to 'extend' the procurement process based on a 'further review of market dynamics and transition risk as well as market feedback. This review also suggested the RFP process would benefit from some modifications'.
The use of the term 'extend' might be considered a stretch, given that the RFP will be reissued with 'modified evaluation criteria and bid structure'.
The process essentially had to start all over again, although AT said in the notice it would 'endeavour to minimise any additional effort required from participants'.
The notice said, 'This is not a decision that AT has taken lightly, considering the amount of effort to date from all parties involved. We understand that this is disappointing for participants and the out-of-home media sector.'
Editor-at-Large Shayne Currie is one of New Zealand's most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
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