HCM CITY – The three unsold packages for leasing advertising space on HCM City public buses will be put up for auction for a fourth time this month following three earlier unsuccessful attempts, according to the Department of Transport.

On September 12 last year the department had called for three-year bids for advertising on 2,082 buses.

Package 1 for 492 buses on 25 routes had a reserve price of VNĐ161 billion (US$7.1 million), package 2 for 538 buses on 23 routes cost VNĐ193 billion, package 3 for 527 buses on 26 routes cost VNĐ171 billion, and package 4 for 525 buses on 30 routes cost VNĐ167 billion.

Japanese ad agency Koa Sha Media Việt Nam was the only company to bid, and it won the first package.

The remaining ones failed to attract interest, with advertisers calling them too expensive after a second unfruitful attempt.

The department then divided them into eight smaller packages and called for a third bid on July 18 this year.

The prices this time ranged from VNĐ10.5 billion to VNĐ36 billion per year before tax, but it was a familiar tale of lack of interest.

Trần Quang Lâm, deputy director of the department, to explain the lack of interest, said online advertising is now the trend rather than advertising on buses or at bus stations.

Besides, the auctions were for three years, which made them even less attractive, he said.

After the third auction the department assigned the Public Passenger Transport Management and Operation Centre to divide the packages into smaller ones and reduce the contract period to one or two years.

Lâm said: “The fourth auction will be held this December. If it does not work either, the department will propose to the city People’s Committee to hire a consultancy to re-evaluate the bid prices.”

While concurring with Lâm on the decreasing demand for outdoor advertising, Nguyễn Quý Cáp, head of the HCM City Advertising Association, said the high reserve prices and improper division of the packages were the main reasons for firms not showing interest.

He said advertisers just want to advertise outdoor for several weeks or a few months at a time as their products keep changing.

“Although demand for outdoor advertising is declining, there is still demand. Advertising firms now tend to put ads on taxi due to the large number of vehicles, reasonable prices, and the ease of securing contracts.”

Besides, Hà Nội is an attractive market for ads on buses, with prices only a fifth of HCM City’s, according to Cáp.

The first package won by the Japanese firm comprises all the best routes while the remaining are like leftovers.

“These [remaining] packages are not good and at the same time expensive. So the lack of interest leading to the unsuccessful auction was obvious.

“If the bids are not changed, the packages cannot be sold regardless of how much smaller they are divided into.”

The reserve prices should be slashed by 50 per cent and ad companies should be allowed to sign a contract for bus advertising according to their capacity instead of buying the whole package, he said.

Lê Trung Tính, chairman of the HCM City Interprovincial and Tourist Passenger Transport Association, said the department should conduct a survey to assess the real demand from advertising firms and offer prices based on supply and demand.

If demand is low, prices should be reduced as much as possible to attract bids, which would be better than having no bidders at all, he added.

Leasing advertising space on buses could fetch the city around VNĐ200 billion a year, which would help reduce bus subsidies.—VNS