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Friday, Sep 29, 2023

Cubic Interactive Tests the Waters Of Advertising and Loyalty Programs

Talk about a captive audience: consider people on subways, buses and light rail systems.

Cubic Corp., the San Diego company that offers a variety of fare-collection services to some of the world’s biggest public transit systems, is now selling advertising on its transit-related apps. Miami-Dade County was first agency to roll out the Cubic system on Jan. 2.

Company officials say their new initiative can do several things. Transit systems can use it as a tool to influence commuter behavior. First and foremost, however, it’s a loyalty platform, said Robert Sprogis, senior product director with Cubic.

Videos and Stars

The new initiative is the work of a 12-employee office within the company called Cubic Interactive.

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Advertising on transit is actually an old concept: think of the iconic San Francisco cable car. In some ways, Cubic Interactive’s system is an update for the 2020s.

The Miami transit system is running advertising from Bausch and Lomb, Johnson & Johnson, Paragon Vitamins and Ricola, Sprogis said. In this case, Cubic shares its advertising revenue with Miami.

Commuters on the Miami system are invited to watch videos from the advertisers. By doing so, they are able to earn loyalty points (called Stars on the Cubic system).

Loyalty points can be cashed in for something of value, such as future public transit rides.

In Miami, 1130 Stars are worth a day pass. In point of fact, the transit system is not giving away a free ride; Cubic is essentially writing a check to pay for the ride, Sprogis said.

“We are excited to be the first transit agency to adopt this loyalty-based interactive service that rewards riders,” said Alice Bravo, director of transportation and public works for Miami-Dade County, in a statement distributed by Cubic. “The program is a great way to incentivize our current riders, [and] invite new ones to give transit a try. It provides the building blocks that will help us increase the use of transit to reduce congestion.”

The Art of the Nudge

Transit agencies have two options for rolling out the app: They can fund it themselves, or they can leverage advertising.

What incentive would a transit agency have to fund such a program out of its own pocket?

Consider a sprawling, aging mass-transit system in a very big city. One subway station might be seeing entirely too much traffic. So the transit provider might award a certain number of Stars to a commuter for choosing to use a station a short distance away.

In a similar situation, a transit agency might want commuters to avoid a popular 8 o’clock bus by awarding 100 Stars to a person who chooses the 8:10, Sprogis said.

The concept is called “nudging.”

Transit providers also have a newer problem. Ride hailing services such as Lyft and Uber seem to be eroding public transit agencies’ ridership. Ridership numbers are going down, Sprogis said. “We think we can reverse that trend a little bit” with loyalty programs, he said.

Capturing Digital Advertising Dollars

Cubic is also promoting ancillary advertising services, such as putting logos on mass-transit system turnstiles.

What’s in it for advertisers? Actually, a lot, said George Belch, chair of the marketing department at the Fowler College of Business at San Diego State University.

Young people no longer consume traditional media like television or print, Belch said, so advertisers are casting about for new ways to reach potential customers.

Indeed, he said, in another generation, commuters on the subway would be engrossed in magazines. Now they are glued to their cell phones, Belch said. There is a need for something to watch to pass the time.

Today, Belch said, almost 50% of advertising dollars go toward digital, with 75% of that sum going to big players such as Facebook and Google.

An application such as Cubic’s would be excellent for an advertiser (such as a coffeehouse in a particular place) wanting to target customers by location, Belch added.

Transit agencies win too, he said, noting they probably appreciate the extra revenue.

The professor also noted that loyalty programs are on the rise.

A Startup Mentality

Cubic’s new transit initiative goes back to January 2018. Sprogis recalled that Cubic CEO Brad Feldmann challenged him to create the new solution involving loyalty and Cubic’s mobile app for transit. Cubic Interactive was created in October of 2018, when Sprogis pulled together his team. Application development was concentrated in June and July of 2019.

Today the team has 12 people in Orlando and Hyderabad, India. Their specialties include engineering, sales, project management and service management. Sprogis works from Raleigh, North Carolina.

The initiative is similar to a startup, Sprogis said.

In addition to technology for transportation system operators, Cubic offers technology to the U.S. military and its allies.


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