Today we have part 2 of an excellent analytical guest post from Oscar Slotboom. See part 1 here.
If you watch the local news you have likely seen advertisements promoting the use of Metro services, especially the heavily-run ad with the Houston Ballet ballerina. So I started wondering, how much does Metro spend on advertising?
Metro’s annual reports include the amount for “marketing” which includes press campaigns. However, no detail on the spending is provided. The plot below shows that 2022 marketing expense was $9.3 million, which is well below the amounts in the period 2013 to 2020, with the 2019 peak value of $21.2 million (in 2022 dollars) during the MetroNext 2030 election campaign.
Metro’s 2023 budget has more detail on marketing efforts starting on page 191, but no detailed budget amounts for specific activities. The overall communications department has 54 employees, with “marketing and corporate communications” reporting 24 employees. Advertising appears to be covered by the marketing department, which is described as “a full-service, in-house agency providing advertising and marketing services for internal and external audiences.” On page 191, the 2023 budget for “Marketing and Corporate Comm” is $15,089,860. The 2022 budget was $14,709,543, which is $5.4 million higher than the reported 2022 marketing expense of $9.3 million. It appears that the communications portion of the budget is included in the line item “Business, community, and government development” in the audited annual report, which was $12.2 million in 2022.
So, it’s impossible to determine the amount spent on advertising, but it is likely to be in the range of $5 to $7 million per year. It’s plausible that Metro spends around $1 million at each of the four major local TV stations.
So imagine that you are the advertising manager at Channel 2 in charge of the Metro account with $1 million annual billing. If the news staff reports unfavorably about Metro, or even just reports the decline in ridership due to Covid, then Metro could be inclined to shift advertising dollars to another local station. Would Channel 2 avoid negative or unfavorable (but accurate) reporting about Metro to ensure that Metro advertising dollars continue to flow?
I spent around an hour searching the websites for Channels 2, 11, and 26 for reports of the 50% ridership decline due to Covid, or the recent boarding subsidies of $16.98 per rider in 2021 and $15.10 in 2022. I found nothing relating to ridership or the high cost of providing service. (There are plenty of reports about crime and accidents.) Channel 13 search results are overly broad so it was inconclusive, but I found nothing for “Metro ridership” and “Metro covid”.
The Chronicle has reported on the poor ridership of the Silver line and other routes, but most reports downplay the overall drop in ridership while emphasizing the recovery, for example, this May 3, 2022 report “Metro ridership surged in March, and it was not just the Rodeo”. The taxpayer subsidy per rider, $16.98 in 2021 and $15.10 in 2022, is an easy-to-compute and easy-to-understand statistic, but the Chronicle does not report it. The Chronicle also does not report that fares covered 4.3% of operating costs in 2022.
Most Recent Ridership Data
This plot shows Metro ridership as of the most recently reported data, February 2023. Overall ridership was down 28.4% compared to the 12-month pre-Covid average. This is an improvement over fiscal 2022, which was down 36.3%.
This piece first appeared at Houston Strategies.
Tory Gattis is a Founding Senior Fellow with the Urban Reform Institute and co-authored the original study with noted urbanist Joel Kotkin and others, creating a city philosophy around upward social mobility for all citizens as an alternative to the popular smart growth, new urbanism, and creative class movements. He is also an editor of the Houston Strategies blog.