April 9, 2014
Citi Bike – Did Branding Hurt or Help the Program?
New York City’s Citi Bike program has attracted more than 100,000 customers, in annual memberships alone, since its launch last year. With that much annual revenue, one would expect this program to be a huge financial success. According to Ronn Torossian, CEO of 5wPR, the truth is, the NYC’s bike sharing program is in serious trouble. This is where Citibank would benefit from having a Corporate Communications PR Firm, to help communicate their message – as well as mitigate the difficulties the brand is having.
Citi Bike Seeks Sponsorships
The Citi Bike program is currently looking to borrow $20 million dollars to expand and maintain the program. With so many registered annual users the company should be successful, but one only need look at the structure of the sponsorships to really see what caused the decline rather than steady growth. The program’s main sponsorship is with Citi Bank, and unlike other bike share programs across the country, the Citi Bike program does not receive any public funding at all. This means that its revenue is greatly dependent on the money from sponsors.
The Bloomberg administration put together a deal whereas Citi Group would only have to pay $41 million dollars to be the main sponsor. The problem is that that money is to be spread over a five year commitment. Meaning that the program gets about $8 million per year, which will hardly be enough to help grow the company in NYC. Currently, the only other sponsor is Mastercard, who only pays a little over $6 million to be a secondary sponsor of the bike share program. And here’s the million dollar branding problem: Many new sponsors have difficulty seeing where the Citi Bike brand ends and the CitiBank sponsorship begins.
While branding the bike sharing program was beneficial for CitiBank to get its name all over the city, other companies were hesitant to become sponsors because there is no perceived value when the bike share is so closely associated with the main sponsor. The branding – that was so so powerfully done – benefits just one company and perhaps leaves no room for others. The organization did not take into account the possibility that no other company could (or would want to) become associated with the share program. This is how excellent branding may have crippled the bike share program in one of the biggest cities in the country.
Citi Bike Program Borrows Millions
Citi Bike needed to either secure more money from Citi to allow them top billing on such a widely used commodity, or they needed to share the potential benefits with a large variety of other companies. Branding the bikes with one company has left the program in a very bad financial position, needing to borrow millions just to stay afloat. With the name of the lead sponsor in the name of the bike, it really does not have any appeal for another sponsor to even consider becoming a partner.
Annual memberships are given to customers at a significant discount to daily memberships. The only way this program has any chance of surviving for it to increase revenue from riders and find a way to give new sponsors a perceived benefit to attaching their name to the brand.