There's no denying that LED billboards catch the eye. They flash, rotate ads, and stand out along the highway like giant TVs. On the surface, they seem like the natural next step for the billboard industry. But behind the flash is a level of risk that many don't talk about—and for investors, it's worth pausing before jumping in.
The "New" Doesn't Always Mean Better
If you've been in the industry long enough, you might remember tri-vision signs—mechanical panels that rotated between three ads. In the beginning, they were exciting and advertisers were eager to try them out, often paying premium rates. But that novelty wore off fast. Within a couple of years, ad rates dropped to the point where the extra cost and upkeep made them unprofitable. Many ended up scrapped.
LED signs are more sophisticated, but the business model echoes the same concerns. Advertisers may enjoy the initial appeal, but will they continue paying high rates for just a few seconds of exposure? For many operators, the answer seems to be no. The economics simply don't add up when the long-term returns fall short of expectations.
A Tough Fit for Today's Market Conditions
Digital signs entered the scene at a difficult time. Since the 2008 downturn, marketing budgets have tightened, and every ad dollar is scrutinized. While traditional billboards offer one of the lowest costs per thousand impressions in all of media, LED signs belong to a more expensive, niche tier—more like a luxury item than a necessity.
That might be sustainable for major players in big urban markets, but for smaller or mid-sized operators, it's a stretch. Competing in a high-cost arena while clients are looking for budget-friendly solutions puts LED boards at a disadvantage.
The Price Tag Is No Joke
Putting up a digital face isn't a small step—it's a major financial commitment. A single LED face can easily cost over $200,000, and even with proper care, it's only expected to last around a decade. That level of expense brings significant pressure to fill every ad slot consistently, which isn't always realistic.
Compare that to more traditional options, where your capital risk might only be in the five-figure range, and the picture becomes clearer. The higher the upfront cost, the harder the fall if things don't go as planned.
So, Is It Worth It?
For large national firms with deep pockets and premium locations, LED signs might make sense. They can afford to test the waters. But for most smaller operators, the risk is too great. The business model hasn't proven itself well enough outside of top-tier metro markets, and the financial downside is steep.
There's nothing wrong with staying in the lane that's been consistently profitable—well-positioned static billboards. They're cost-effective, lower-risk, and still deliver results.