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IN THIS ISSUE – “Now I’ll Deal With Real Rattlesnakes”
A GOVERNOR LIKE NO OTHER
- Jerry Brown’s 5 Tips for Newbie Newsom
- The Youngest, Oldest & Longest-Serving Governor…
- Newsom Puts Businesses in Blind Trust
- State Air Board Continues Controversial Carbon Credits
- Ethanol Producers, Stung by Slump, Seek Market Supports
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
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FOR THE WEEK ENDING DEC. 21, 2018
CN&N WILL NOT PUBLISH NEXT WEEK
In the final days of his fourth and final term as California’s chief executive, Gov. Jerry Brown spoke at the Sacramento Press Club, offering parting, and remarkably candid, tips on how to best govern the Golden State.
The hour-long conversation in the ballroom of the Sacramento Masonic Temple was moderated by Los Angeles Times columnist George Skelton and Miriam Pawel, author of the family biography, The Browns of California.
Brown, now 80, drew upon experience gleaned over 16 years as governor, plus job experience as attorney general, secretary of state, mayor of Oakland, and a three-time presidential candidate.
On his imminent departure from elected office, he said that he will miss the constant activity that comes with the job.
“I like sparring with the press, I like raising money, I like attacking my opponents, I like being attacked by my opponents,” he said.
But come January 7, he will be giving that all up and heading up to his ranch in Colusa County, where he said he’ll have to deal with “real rattlesnakes.” (Note: Brown has never won a vote in Colusa County.)
- Tip Number 1: “Avoid overexposure”
Pawel asked Brown if he had learned anything from his father, Pat, who served as the state’s governor between 1959 and 1967.
“One thing I learned was not have an open-ended press conference every week,” the governor said. The reason: reporters have the nasty habit of calling you out when you contradict yourself.
“It’s hard to be consistent in the face of an ever-complex, ever-unfolding story,” he said.
Sure enough, this was Brown’s first-ever visit to the state Capitol’s reporters club since returning to Sacramento as governor in 2011. But when Skelton asked whether the governor planned on commuting the sentences of any of the 739 people on death row in California, Brown made it clear that he was not there to provide fresh fodder to the reporters in the room.
“If I said something that would give you a story,” he said. “I’m not here to make news, I’m here to enlighten.”
- Tip Number 2: Don’t try to make everyone happy.
Ever since running for governor in 1974 on the promise to introduce an “era of limits,” Brown has cultivated a reputation as willing to buck his party’s big spending tendencies.
Apparently, there is political logic to being a budgetary tightwad.
“The idea that you’re going to make people happy and build a lot of support by doing a lot of stuff, frankly, it turns out that there’s a downside,” he said. “The more that you do, the more that people are empowered to demand that you do even more.”
- Tip Number 3: Do try to make some people happy
As a politician known for sprinkling Latin into his speeches, Brown paid tribute to the wisdom of the phrase quid pro quo.
“In politics, you should take care of your friends,” said Brown, noting that both Michael Picker, president of the California Public Utilities Commission, and Rose Bird, former chief justice of the California court system, started out working for his various campaigns. “Loyalty is important. Keep the meritocracy within limits.”
But there are limits on repaying loyalty too.
“Politics is a difficult business,” he said. “You need to raise massive sums of money from people who all want something and if you give it to them directly you’ll go to jail. But if you don’t give it to them in some form, you won’t be elected to the next office.”
“So you square that circle.”
- Tip Number 4: Don’t get distracted by ideological labels
Brown was Oakland’s mayor between 1999 and 2007. That stint taught him that just because someone claims to represent a particular viewpoint that you happen to share, that doesn’t mean that they have the best idea.
“People show up to city hall and argue for the stupidest things in the name of all good things,” he said. “Environment, labor, historic preservation, ethics, police accountability. Everybody’s got a good story.”
- Tip Number 5: If you’re running for president, don’t do it out of California
“Nixon paved the way” for Californians running for the White House, he said. “He moved to New York.”
With so many early primary states located on the east coast and the daily news starting three hours earlier, “proximity is a key issue that works against Californians.” That could change in 2020. Last year, California legislators voted to bump up the 2020 state primary to March 3rd.
Brown tackled other topics, all the while honoring his pledge not to say anything too newsworthy.
On the state’s high-speed rail, he assured Skelton that it will be built. “I think at our age we shouldn’t be driving,” he said.
On the recent court ruling out of Texas, which declared the entirety of the Affordable Care Act known as Obamacare to be unconstitutional, Brown said that he was “not really worried about it,” confident that the ruling will be overturned. And if it isn’t, there will be electoral hell to pay for the Republicans, he said, allowing Democrats to replace Obamacare with “something even better.”
Deep into his fifteenth year leading the nation’s largest state, Gov. Jerry Brown practically shuddered when a reporter asked him about his legacy.
“I don’t have a legacy. I don’t know what a legacy is. This is a media construct,” he said at a June 2017 press conference.
Brown, 80, can’t avoid a public accounting of his two stints in the governor’s office much longer. After all, he’s the state’s youngest, oldest and longest-serving leader.
He leaves office on Jan. 7, 2019, closing a career in the public that spans five decades.
His father, the late Gov. Pat Brown, has a stretch of the State Water Project named after him. Jerry Brown does not yet have that kind of tangible monument, but his policies will continue to shape California budgets, taxes and environmental regulations long after he retires to the family ranch in Colusa County.
Here’s a look at five key issues where Jerry Brown sought to leave a mark on California government:
Climate change crusader
Barely five months into his first stint as governor, in May 1975, Brown took on the oil industry, signing a bill that eliminated a tax break known as the oil depletion allowance. “It’s symbolic of a new spirit that is sweeping across the state,” he said at a Capitol bill-signing ceremony.
It was the start of a decades-long journey in which Brown has built as a reputation as a pollution fighter and champion of environmental causes. In recent years some environmentalists say he’s gone soft on Big Oil, but as his final term ends he’s become better known as a globetrotting crusader on climate change.
In his first two terms Brown adhered to the philosophies espoused by British economist E.F. Schumacher, author of the bestselling book “Small is Beautiful.” He shelved giant highway construction projects and signed into law groundbreaking tax incentives for rooftop solar-energy installation. His appointees to the Air Resources Board led a successful showdown with the auto industry that resulted in a crackdown on tailpipe emissions of nitrogen oxide, a major factor in smog formation.
With Brown’s backing, “they stuck to their guns, adopted the standards over the opposition of the auto industry,” said V. John White, a Sacramento clean-technology consultant and former legislative aide. “Those early years set a tone.”
White said the smog fight enhanced Brown’s belief in technology as a force for good – something he would embrace when he returned to the Capitol in 2011.
California’s efforts against climate change began when Arnold Schwarzenegger was governor but took on greater urgency on Brown’s watch. He extended California’s first-in-the-nation cap-and-trade program, which puts a price on carbon emissions. He signed a bill requiring electric utilities to go completely carbon-free by 2045.
He became a familiar figure on the world stage, appearing at the Paris climate summit in 2015 and carrying the banner for California at climate change conferences in Germany, Russia and elsewhere. He delivered keynote remarks at the Vatican’s climate summit in November 2017, and hosted his own summit in San Francisco in September.
Global warming brought Brown into increasing conflict with President Donald Trump, who has been working to roll back greenhouse gas emissions standards implemented nearly a decade ago. Trump’s moves represent an assault on California’s unique authority under federal law to establish its own air-pollution regulations.
Brown has wasted little time blasting the president, calling his actions “an unconscionable gift to polluters.”
Some critics, however, said it was hypocritical to crusade against climate change while approving more than 23,000 new oil and gas drilling permits in the past eight years.
“He has not put a single limit on oil drilling in the state,” Consumer Watchdog’s Jamie Court said in September. “It’s literally drill, baby, drill.”
The skinflint governor who refused a chauffeur finally has a budget full of black ink to show for the penny-pinching image he cultivated over his 16 years leading the state.
Brown is handing a projected $14.8 billion surplus to Gov.-elect Gavin Newsom. It’s the first time in 43 years that an outgoing governor has passed a surplus on to his successor.
The last time that happened was 1975, when Brown inherited a surplus from Ronald Reagan.
Brown broke the cycle of governors passing down deficits by riding a booming economy, raising taxes and nixing some of the high-priced programs Democratic lawmakers wanted to expand as the state recovered from the last recession.
Brown began his second run as governor in 2011 while the Great Recession wreaked havoc on state finances. He faced a $27 billion deficit that year, a crisis that spurred the Legislature to ask voters for a sales tax increase and cut pension benefits for new public employees.
Brown also has persuaded the Legislature to create a “rainy day fund” where lawmakers could stash money they’d need in a recession. The account is full, with the state amassing $16 billion in reserves as Brown leaves office.
By any measure California still has serious financial challenges. Its primary pension systems are badly underfunded. Its high-speed rail program is behind schedule, and its costs are well above expectations. What’s more, its tax structure is inherently volatile because it’s closely tied to the earnings of wealthy residents.
But the surplus and reserves are a gift for Newsom that Brown did not leave for Republican George Deukmejian in 1985, when Brown departed office with a $1.5 billion deficit.
The 1985 deficit in some ways stemmed from Proposition 13, the popular 1978 initiative that capped property tax rates. It scrambled the state’s finances by stripping a revenue source.
Republicans in 2010 tried to hang the red ink on Brown when he campaigned against Meg Whitman, running ads that said Brown turned “a surplus into a huge deficit” that he bequeathed to Deukmejian.
Brown at press conferences seemed to happily cast himself again as thrifty. Throughout 2018 he stressed that a downturn is just around the corner, and the savings the state accumulated under his watch should be preserved to cushion inevitable cuts in a recession.
“What’s out there,” he said in January, “is darkness, uncertainty, decline and recession, so ‘Good luck, baby.’”
Brown’s legacy on changing the state’s criminal justice system is wide-ranging, and stems in part from his rejection of policies he championed during his first stint as governor from 1975 until 1983.
Brown approved the concept of determinate sentencing during his first two terms, a law that set rigid sentencing requirements for offenses that critics say contributed to prison overcrowding in California.
Since returning to office, however, Brown advanced a series of reforms that included theelimination of the bail system for suspects and that gave judges more authority over who can be released from custody while awaiting trial.
Brown signed into law a series of bills aimed at reducing the number of juvenile offenders who can be tried as adults, and establishing the age of 12 as the minimum age for prosecution in juvenile court unless the suspect is accused of murder or rape.
The governor also advanced a series of voter-approved initiatives, including Proposition 47 in 2014, which reduced penalties for crimes such as grand theft, shoplifting, writing bad checks and drug possession.
Those crimes formerly were treated as felonies, but were reduced to misdemeanors if they involved property worth $950 or less.
Brown also backed Proposition 57, which passed in 2016 and allowed prison officials to consider parole sooner for inmates convicted of nonviolent crimes.
Both measures were aimed at reducing the state’s prison overcrowding crisis, as was Proposition 36, the 2012 measure that allowed inmates convicted of a third strike to seek re-sentencing if their crime was not considered serious or violent.
But one of the most dramatic changes came with “realignment,” which was passed by lawmakers in 2011 and shifted responsibility for some parolees from state prison officials to county jails.
That helped Brown, who had been ordered by the U.S. Supreme Court to reduce California’s overcrowding problem, to bring state prison populations into compliance a full year before the court’s deadline.
The court had ordered the governor to reduce prison populations to 137.5 percent of capacity by Feb. 28, 2016. The state achieved that in January 2015, when it reported housing 113,463 inmates.
That compared to November 2006, when the prison system was at 200.2 percent of capacity and housed 162,804 inmates.
“I want to get s— done,” Gov. Brown said in 2012, when asked about his controversial plan to build two huge water tunnels underneath the fragile Sacramento-San Joaquin Delta.
When it comes to California water policy, Brown has tried to live up to that motto.
“In water, there really has been no more involved governor than Jerry Brown,” said Jeff Mount, a water expert at the Public Policy Institute of California. “Whether you like his policies or not, this is the most engaged governor in a generation. …The guy always focused on water, both in his first two terms and in his third and fourth.”
The controversial $17.1 billion tunnels project, known officially as California WaterFix, could break ground as early as next year. It’s arguably Brown’s signature piece of water policy, but it’s not his only one.
In his last two terms, Brown has enacted some of the most significant water policies decades. He signed a law in 2014 that put restrictions on groundwater use for the first time in California. His administration also has pushed for sweeping reforms to leave more water in the state’s major rivers to aid ailing fish populations.
Few issues, though, are as tied to Brown’s and his family’s California water legacy as a Delta “conveyance” system, which eventually morphed into the tunnels.
In the 1960s, Brown’s father, Gov. Pat Brown, got the State Water Project built. The statewide system of canals, pumps and the massive Oroville Dam funnel water south through the Delta from Northern California. While it’s played a key role in California’s meteoric rise to become theworld’s fifth largest economy, the State Water Project was never fully completed. The second phase included a canal around Delta that would have functioned in much the same way as the tunnels.
In the early 1980s, Jerry Brown advocated for a “peripheral canal” that would have finished the job his father started. Voters killed the plan in 1982, dealing Brown a major blow.
The Schwarzenegger administration resurrected the idea in the form of the Delta tunnels, and Brown has embraced the project with zeal. He played an important role in getting California’s largest water agency to vote in April to bankroll the project, a key hurdle.
Late in his last term, Brown found himself dealing with a crisis directly tied to his family’s water legacy.
In early 2017, a crater formed in the center of Oroville Dam, prompting the frantic evacuation of 188,000 people. In the nearly two years since, Brown’s administration has overseen more than $1.1 billion in emergency expenses and repairs. He signed legislation and enacted policies that seek to improve dam safety across the state.
But early this year, the team team of independent experts blasted the state for doing a poor job building the structure during Pat Brown’s era. The team also criticized the state for neglecting maintenance over decades. Meanwhile, the federal government just announced the dam may need a major upgrade — a costly prospect that Brown’s successors will likely have to address.
Brown delivered on a big promise to unions when he first took office, signing the law that empowered them to negotiate contracts for California’s public employees.
That 1977 collective bargaining law will forever win gratitude for Brown from public employee union leaders, but he’s leaving office the second time with a high-profile attack on pensions that worries government workers all over the state.
Brown’s lawyers earlier this month sought to dent the so-called California Rule, the legal precedent that prevents government agencies from withdrawing almost any kind of promised retirement benefit without offering compensation to offset a potential loss in income.
The argument unfolded at the California Supreme Court, where Brown’s team defended a 2012 pension law he signed that reduced potential retirement earnings for public employees hired after Jan. 1, 2013. The law also required workers to kick in more money from their paychecks to fund their pensions.
Brown throughout 2018 characterized the California Rule as a shackle on government finances, restricting wages for today’s workers and threatening public services. In January, he said public employee pensions would be “on the chopping block” in the next recession.
His comments unsettle unions, which have joined together to write legal briefs and file lawsuits challenging parts of Brown’s pension law. The state Supreme Court early next year is expected to issue a decision in the most recent case, which was filed by the union that represents state firefighters.
Outside of pensions, Brown was a reliable friend to labor throughout his 16 years leading the state. He was an ally to Cesar Chavez in the 1970s, when he signed the Agricultural Labor Relations Act and approved bills that expanded collective bargaining rights.
Unions supported his campaigns in 2010 and in 2014. They also backed his initiative that sought to plug a budget deficit with a new sales tax.
Brown nonetheless extracted pension cutbacks and other concessions from state employee unions during the recession. One of them has workers contributing a new deduction from their paychecks to fund retiree health care.
More recently, he approved a cluster of sweet, short-term contracts for prison guards, scientists and engineers that netted them 5 percent raises with no new givebacks. He also signed a number of laws in 2017 and 2018 designed to help public employee unions recruit and retain workers in the face of new, well-funded campaigns asking workers to opt out of their labor organizations.
Incoming California Gov. Gavin Newsom said Thursday he would give up control of his wine and hotel business and plans to issue an executive order barring state agencies from doing business with the company to avoid conflicts of interest.
The PlumpJack Group, founded by Newsom in 1992, includes four hotels; four Napa Valley wineries; several bars and restaurants; two wine and liquor stores in San Francisco; and an online liquor store. Newsom will transfer the title and control of his assets to a blind trust managed by Shyla Hendrickson, a family friend and attorney.
Newsom will be sworn in as governor on Jan. 7, replacing fellow Democrat Jerry Brown.
The arrangement will not affect Newsom’s sister Hilary Newsom’s role as the company’s president.
Newsom also said he’ll release his tax returns annually and plans to divest from any common stock in publicly traded companies. Reporters will be able to view the tax returns, but they will not be released to the general public, the same process Newsom’s followed during the campaign, spokesman Nathan Click said.
During the campaign, Newsom said he didn’t plan to sell off his business assets and would decide how to manage them after the election. Ethics experts said selling the assets and putting the proceeds into a blind trust would be one way to avoid conflicts.
“These are my babies, my life, my family. I can’t do that. I can’t sell them,” Newsom told reporters during a campaign bus tour.
Hendrickson will have full discretion on how to handle Newsom’s assets, including deciding whether to sell them, as manager of the trust. She is barred from discussing her decisions with Newsom.
Former Gov. Arnold Schwarzenegger put his assets in a blind trust managed by his friend and longtime financial adviser, prompting some scrutiny as to whether it was truly blind. Newsom’s office said Hendrickson is a family friend but has no prior involvement with Newsom’s investments or the business’s management.
State authorities delivered on a controversial deal struck last year that handed oil companies and other major polluters a multimillion-dollar windfall.
Critics pounced on what they characterized as a giveaway to industry.
The 2017 deal, for subsidies worth as much as $350 million, rescued a cliffhanger vote in the Legislature that extended the state’s cap-and-trade program to 2030.
Under cap and trade, industries may pay to pollute by buying allowances in a carbon-trading market. In addition, some receive free allowances from the state. The state Air Resources Board’s staff originally recommended a reduction in free allowances, as called for in the program’s design.
But the board last week set its plan for implementing the cap-and-trade extension as it voted to maintain a full supply of free carbon credits to some companies. That vote adopted recommendations from a later staff report.
The move assures industry the maximum state assistance through 2020. The cap-and-trade extension guarantees that level of help from 2021 to 2030.
At the same time, officials acknowledged that the cap-and-trade system for cutting greenhouse gases is in danger of not delivering the state’s required emissions reductions—a possibility many experts have warned about as companies have banked their pollution credits for later use.
“We know we are not on a line to meet the 2030 target,” Mary Nichols, the board’s long-serving chairwoman, said during the board’s meeting Thursday. She cautioned, as she has at other times, that achieving the state’s next set of climate goals will be challenging and encouraged the board to “think bigger and more broadly” to find emissions reductions.
(The board later issued a press release that quoted Nichols saying its latest actions “keep California’s highly successful cap-and-trade program on track to meet our post-2020 emission reduction targets.”)
“It sends the wrong message at the exact time climate leaders are in Poland trying to increase global ambition to curb emissions,” said state Sen. Bob Wieckowski, a Fremont Democrat. He had said last year, after the specifics of the deal were disclosed by CALmatters, that he would block the benefit.
“This decision moves us backwards and reduces future revenue to curb emissions,” Wieckowski said in an emailed statement after this week’s action. He was in Poland attending a climate conference.
The board affirmed its view that there is no excess supply of allowances and other credits in the cap-and-trade market. But the nonpartisan Legislative Analyst’s Office, academics and market experts have concluded that companies are holding too many credits and could use them to cover future emissions rather than reduce their pollution.
A months-long debate over the issue has exposed a vulnerability in the system’s design, its critics say. In its early incarnation, the cap-and-trade system was not considered a main factor in reducing state emissions; rather, it was intended to backstop other programs aimed at cutting climate-warming pollution.
But the air board now expects the program to provide as much as half of those reductions, amplifying cap and trade’s expected benefits and putting pressure on the program to work as designed in order to meet the state’s ambitious climate goals.
An oversupply could impede that. The Legislative Analyst foresees a reckoning, estimating that because of excess allowances, actual emissions could be as much as 30 percent over the statewide target by 2030.
The board previously dismissed concerns about the number of allowances on the market as mistaken and misguided. But the criticism has intensified. Most recently the Independent Emissions Market Advisory Committee, established by the state Environmental Protection Agency to advise on the cap-and-trade program, concluded that the system’s design “needs to be addressed” by the air board.
Danny Cullenward, an economist with the climate-change think tank Near Zero and a member of the advisory committee, said the air board’s position is based on a math error.
“The analytical integrity of what the staff has put forward does not meet the standard set by state law,” Cullenward said.
Nichols acknowledged Thursday that the issue “sticks in the craw” of those who continue to question whether the board has sufficiently addressed it.
“It hasn’t been put to rest; let’s put it that way,” she said.
Even the smallest acknowledgement of a shortcoming in the board’s carefully designed cap-and-trade program offered an I-told-you so moment for critics.
“Until we crack down on oversupply, (few) emissions will occur,” air board member Dean Florez said by text message, after voting with the rest of the board to adopt the new implementation rules.
He added that the justification for not reducing the free allowances is that emissions caps put California companies at a competitive disadvantage and they’re leaving the state. That’s “bogus,” he said. “Oil companies aren’t going anywhere, nor are most polluters.”
Florez said one benefit of the contentious supply debate is that the air board and staff appear willing to re-examine the issue
While California has generally exceeded its own goals for cutting greenhouse-gas emissions, lowering them further—and more steeply—will be a challenge. The deadline for reducing emissions to 1990 levels by 2020 has already been met. What lies ahead are reductions to 40 percent of 1990 levels by 2030 and 80 percent by 2050.
Given that difficulty, there is renewed focus on ensuring the system doesn’t let polluters off the hook. Assemblyman Eduardo Garcia, a Democratic from Coachella who authored the cap-and-trade extension law and is a non-voting member of the board, said at Thursday’s meeting that the number of available allowances should be monitored continually.
Some of the issues dogging the board today stem from the deal brokered by California’s powerful oil and gas interests, that crafted business-friendly language in the cap-and-trade extension law in return for its support. Among the concessions were to remove the ability of local air districts to regulate industrial emissions, and to guarantee to industry that allowances would remain at the highest possible level.
“It was part of the deal to make sure we could get a vote to extend the cap and trade program,” Garcia told CALmatters last year. “Without a doubt, it’s a compromise in order to reach the greater goal.”
U.S. ethanol producers stung by collapsing prices are seeking changes to the way benchmark values for the biofuel are established, arguing the current system used by exchanges is vulnerable to manipulation, according to sources.
The push comes as the key farm belt industry struggles with weak demand growth, a loss of export markets due to the U.S. trade war with China, and aggressive selling by global commodities giant Archer Daniels Midland Co (ADM.N) that have pushed ethanol prices to 13-year lows.
ADM is better placed to survive a long stretch of low prices than its ethanol-focused U.S. rivals, many of whom are concerned the company is deliberately pressuring the biofuel market lower to drive them out of business and are keen for a stable hedging tool to defend against further dips.
Top U.S. ethanol producer POET LLC has asked the CME Group (CME.O) to change its pricing method for a key swap contract used by the industry to hedge, and the rival ICE exchange is contemplating offering an alternative to CME’s product after discussions with biofuels companies, according to three sources familiar with the moves who asked not to be named because they are not authorized to speak publicly.
CME’s Chicago ethanol swap contract CUUc1 is the most widely used derivative instrument the industry uses to protect itself against market fluctuations. But traders have recently been reluctant to use the contract for fear it will expose them to further losses due to the strong selling by ADM.
CME currently calculates the swap contract’s value by averaging the monthly daily settlement price in the physical market as provided by commodities pricing company Platts. Several ethanol producers want that method changed.
Critics say the Platts price can be easily manipulated because it is based on deals that occur only during a 30 minute window each day, as opposed to during the whole day. In November, ADM represented more than 90 percent of sales in the Chicago Platts window, two traders said.
ADM declined to comment for the story and has never publicly defended itself against criticism about its activity in the trading window. ADM CEO Juan Ricardo Luciano blamed overproduction and the loss of sales to China for the industry’s recent woes in the latest earnings call.
Platts did not immediately respond to requests for comment for this story.
The issue has become more urgent as slumping prices force ADM rivals like Green Plains, POET and Valero to shut, idle, or sell off plants. U.S. ethanol prices have dropped below $1.20 a gallon 1ZEc1, the lowest in about 13 years, with inventories swelling to records.
The increasingly lengthy commute isn’t just a traffic jam. It’s a captive audience for advertisers.
The average one-way trip for commuters in the United States in 2017 was 26.9 minutes, according to the Census Bureau. That was up from 26.6 minutes in 2016 and added two and a half hours to the average time commuting over the course of the year. So even in this age of Facebook, Google, Netflix and Amazon, the companies selling seemingly old-fashioned ad space like billboards have noticed the slowing crawl.
“We love a good traffic jam,” said John Miller, vice president of sales and sales operations for Lamar Advertising in Baton Rouge, La. “We are all about eyeballs on billboards, and the increased amount of traffic is helping us.”
Lamar has 175,000 billboards throughout the United States, Mr. Miller said, adding that slower traffic had helped the company’s data collection program determine who was looking at the board and for how long. Using anonymous data from mobile devices and apps, Lamar has figured out how fast cars are passing by, how much “dwell time” drivers spend paying attention to billboards, what the demographics of the drivers are, and even where they live, travel and shop.
Roughly three years ago, Clear Channel Outdoor started its own data collection service, Radar. Using global positioning data from mobile apps that require mapping — navigation, dating, shopping and restaurant ads — the service blends third-party demographic data with information about people passing billboards to determine not only where commuters will spend, but how.
“Now we’re starting to understand what mobile devices we saw exposed to our billboards, and we look back in time and say, ‘Where else have we seen those devices?’” said Dan Levi, executive vice president and chief marketing officer for Clear Channel Outdoor. “In the case of businesses trying to get people into Target, we say, ‘What are the locations that are the most efficient in getting people whose devices we’ve seen in Target?’”
He noted that a recent analysis of fast-food customers in Southern California had found a strong (and perhaps counterintuitive) correlation with their going to the gym, largely because commuting whittled away time for sit-down meals and other forms of exercise. It also showed that billboards for gyms worked better when placed near a commuter’s workplace than near his or her home.
Mr. Miller said that data could also help digital billboards, which make up 2 percent of Lamar’s billboard inventory, change to meet an advertiser’s needs at specific times of the day. That could mean a movie studio’s billboard mocking traffic congestion at the height of rush hour, a Dunkin’ billboard changing from coffee in the morning to sandwiches at night, or sequential billboards telling a story.
“Smart brands strategically choose their placements based on a deep understanding of location and audience flow,” said Jeremy Male, chief executive officer of Outfront Media. “Then they match the messaging to the environment. This means creatively impactful messaging that highlights one key message, easily digestible with a strong call to action.”
If advertisers can’t catch commuters’ eyes with billboards, they are also trying to reach them through radio.
For instance, iHeartMedia — which owns Clear Channel Outdoor — has spent the last three years looking at listener behavior on both its radio stations and its app. Its research has produced data that iHeartMedia now sells to advertisers along with demographic information and specific ad time.
However, Robert Pittman, chairman and chief executive officer of iHeartMedia, said commuters were so bombarded with information that advertisers might get them to want a product or service in the moment but not get them to remember once they’re out of their cars.
Mr. Pittman said introducing a Taco Bell breakfast menu to commuters when they’re hungry, suggesting they drink Bacardi rum when they get home or pitching a car dealership while they’re stuck in their clunker put those advertisers foremost in a commuter’s mind when they’re most susceptible to persuasion.
When 20th Century Fox was preparing to release the Queen biopic “Bohemian Rhapsody” this year, iHeartRadio stations used peak commute times to air interviews about the rock band, Mr. Pittman said. On Nov. 1, a day before the film’s release, different versions of the six-minute title song played across all 650 iHeartRadio stations and sites.
“The longer the commute and the more time they’re in the car, the more they’re looking to enjoy the experience in the car or to make it at least more tolerable,” Mr. Pittman said. “We really try to make the programming that way, and we’re able to bring our advertising partners into it as well.”
Commuters using public transportation are also a coveted audience, especially in cities like New York (where 56 percent of commuters used public transportation in 2017), Boston (35 percent), San Francisco (35 percent), Washington (33 percent) and Chicago (28 percent).
The Manhattan advertising technology company Intersection works with transit agencies in cities like New York, Los Angeles, Chicago, San Francisco and Philadelphia to place interactive ads, Wi-Fi hubs and video displays in and around bus stops, train stations and airports. Dafna Sarnoff, Intersection’s chief marketing officer, said partnerships with Foursquare on navigation and with companies like the ice cream maker Blue Bunny on station takeovers (like its pop-up ice cream shop in a Chicago subway station this year) had become essential to holding commuters’ attention.https://www.nytimes.com/2018/12/16/business/media/billboards-highways-traffic-roads.html?emc=edit_ca_20181219&nl=california-today&nlid=8082316620181219&te=1