HCM CITY — Three out of four packages for advertising on HCM City buses have gone unsold, with prospective advertisers blaming it on the high rates.
The Department of Transport 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.
This pegged the total value at around VNĐ700 billion ($30.9 million).
Japanese ad agency Koa Sha Media Việt Nam was the only company to bid and it won the first package.
Nguyễn Quý Cáp, head of the HCM City Advertising Association (HAA), said the reserve prices were too high.
At these rates, a company that successfully bids for a package has to pay more than VNĐ60 billion a year, according to Cáp.
Hà Nội is also an attractive market for ads on buses, and its prices are only 20-25 per cent of those in HCM City.
Many companies had registered to bid but then quietly withdrew.
Some HAA members have suggested lowering reserve prices to 80 per cent of the current rates.
Cáp said advertising on buses would only be effective if the vehicles are large, carry a large number of passengers and run on busy streets.
Based on these factors, Package 1 had advantages over the others, he said.
“The city should consider having more packages to enable more advertisers’ participation.”
But Trần Chí Trung, head of the city’s Management and Operation Centre for Public Transport, disagreed, saying that before the auction the transport department had obtained feedback from advertisers and discussed the auction plan with the HAA.
The reserve prices were approved by the Department of Finance, he said.
“If advertisers say one of the packages was better than the others, why didn’t they compete harder for it?”
The bidding is public and transparent, and winning a bid depends on a company’s competence and the reserve prices were based on the market, according to Trung.
Allowing ads on buses could fetch the city around VNĐ200 billion a year.
The money will be used to reduce bus subsidies.
Trung said the city would divide the three remaining packages into smaller packages and auction them. — Quang
