After three unsuccessful bids to sell advertising space on buses, the HCM City Department of Transport aims to invite a fourth tender this month. (Photo: VNA)

HCM City (VNS/VNA) - The three unsold packages for leasing advertising space on Ho Chi Minh City’s public buses will be put up for auction for a fourth time this month following three earlier unsuccessful attempts, according to the municipal Department of Transport.

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

Package 1 for 492 buses on 25 routes had a reserve price of 161 billion VND (7.1 million USD), package 2 for 538 buses on 23 routes cost 193 billion VND, package 3 for 527 buses on 26 routes cost 171 billion VND, and package 4 for 525 buses on 30 routes cost 167 billion VND.

Japanese ad agency Koa Sha Media Vietnam 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 10.5 billion VND to 36 billion VND per year before tax, but it was a familiar tale of lack of interest.

Tran Quang Lam, 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.

Lam 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 Lam on the decreasing demand for outdoor advertising, Nguyen Quy Cap, 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, Hanoi is an attractive market for ads on buses, with prices only a fifth of HCM City’s, according to Cap.

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 percent 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.

Le Trung Tinh, 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 200 billion VND a year, which would help reduce bus subsidies.-VNS/VNA