Startups Colonize New York Subway, Pricing Out Plastic Surgery Ads
You’ve seen them if you’ve been to New York recently or are one of the city’s harried commuters. Bright, colorful, funny, cheeky ads for startups selling everything from insurance to mattresses, plastered in every subway car and station.
The New York subway had long been known for ads hawking questionable services from plastic surgeons and personal-injury lawyers. Then young, well-funded companies like Casper and Seamless realized that even in the age of Facebook and Google, subway ads are a cost-effective way to grab attention. In a testament to the growing power of the city’s startup scene, these upstarts have helped push up the price of certain subway campaigns sevenfold in the past five years and chased away many of the surgeons and lawyers.
“It’s become a rite of passage for startups and tech companies in New York,” says Jennifer Fitzgerald, Chief Executive Officer of Policygenius, an insurance-comparison startup. “You’ve made it when you’ve got your subway ads.”
In a recent four-week campaign, Policygenius spent about $250,000 to buy a “brand train,” which involves covering half of the inside of around 550 randomly selected subway cars, or about 9 percent of the total fleet, with ads. Five years ago, the home services platform Handy paid less than $50,000 for the same thing, says CEO Oisin Hanrahan.
John Laramie, who runs the tech-focused marketing agency Project X, says brand trains are almost sold out for the rest of the year and now going for $345,000. Outfront Media, which sells ads on behalf of the subway system, declined to comment on pricing but says it launched campaigns with 100 venture-backed companies in 2017, 30 percent more than it did in 2016. Not all of the space has been gobbled up by local startups, of course; big established brands including YouTube and Twitter have taken over trains and stations, too. In late May, Spotify ads blanketed Union Square station in Manhattan.
The rising cost of subway marketing is crowding out longtime advertisers. One is Manhattan Mini Storage, famous locally for sassy ads featuring such quips as “Why leave a city that has six professional sports teams, and also the Mets?”
“We've had a great run with the subway part of our campaign and I think we would continue to consider it but price is always a factor, you want to get the best reach for the best value,” says Jason Morros, who runs marketing for Manhattan Mini’s parent Edison Properties. “To have an impact you really have to have those big buys that these startups have been doing.”
After years of false starts, New York’s tech scene is growing up. Venture capital investment is ballooning, tech giants like Google are adding thousands of jobs in the city, and former bankers, advertisers and retail execs are lining up to disrupt their former industries. These consumer-focused companies use New York’s population of 8.5 million as a testing ground for new products and ideas, from electronic tooth brush subscriptions to food delivery services. The subway is ground zero for many of them.
Not so long ago, new brands were deeply skeptical of advertising on the trains; they thought long and hard before putting an ad next to controversial campaigns, such as one for breast augmentation that ran a couple of years ago. Among the first to take the leap was Handy, the home services company. It had recruited hundreds of cleaners and was trying to find customers. Handy bought 10 percent of the subway for less than $50,000, and it worked. “It drove thousands and thousands of new customers,” CEO Hanrahan says. “We were very happy.”
But it was Oscar, the health insurance startup founded by Josh Kushner, that took it to the next level soon after. In 2013, the company made a massive ad buy across New York as it pitched people to switch over during open enrollment season. “They had every single subway, they had every single taxi top,” says Project X’s Laramie. “Oscar is the one who made subway known for what it is in the tech community.”
New York’s subway caters to a broader demographic than most American mass transit systems, with wealthier people who might drive a car in Los Angeles, Atlanta or Dallas more likely to take the train in New York. The audience is captive too, with people spending long stretches of time in the same subway car (often thanks to frequent delays on the aging system).
“New Yorkers have a ‘special’ relationship with their commutes—they average nearly two hours with us, among the highest in the nation, each day,’’ Outfront Media CEO Jeremy Male said in an e-mail. “It is the best way to reach a young, upscale audience, as well as consumers more broadly.”
Another key factor behind the subway advertising boom: the ever-rising price of using Facebook and Google to target people online. Web ads still consume most of tech marketing budgets, but “out of home” advertising like billboards and subways isn’t going away.
“Digital channels are just becoming more and more saturated, more and more expensive,” Policygenius’s Fitzgerald says. “The word ‘insurance’ is the most expensive adword on Google,” she said, referring to the Google product that lets companies place ads on top of search results for certain keywords.
Then there’s that ineffable New York factor. “Because New York is home to journalists and the Twitterati, they see you on the subway and it’s actually more powerful than TV,” Fitzgerald says.
Her company’s ads spoofed the “poetry in motion” posters beloved by commuters. The campaign was designed to get people to think they were enjoying real verse until they suddenly realize they’re reading an insurance ad. Some found this hilarious; others deemed the ads an insult to one of the last vestiges of civic art. In the end, the outpouring of articles and tweets won the brand more attention. “We got a write-up in New York magazine: ‘Why I found those Policygenius ads so annoying,”’ Fitzgerald recalls. “I was like ‘guys, we’ve made it!”’