There is a maximum level of net income that every billboard can attain, but few hit those numbers. In this Billboard Mastery podcast we’re going to explore the normal categories of revenue and expense maximization that every sign should adhere to, along with tips on how to get there.
Episode 145: How To Operate With Maximum Efficiency Transcript
A few years ago, the federal government embarked on a new concept which was called DOGE, the Department of Government Efficiency. And this concept of DOGE was to just go through the spending habits of most government departments and figure out what could be cost-cut, what we didn't really need, where people could be laid off, buildings sold, eliminating fraud, all these things that were going on in government at the time. Hey, let's cut all that out and let's try and get down to the bare bones of spending what we really need to spend. And in many different ways, every good billboard operator can engage in their own DOGE campaign to maximize the value of each of their own sign assets.
This is Frank Rolfe, The Billboard Mastery Podcast. We're gonna talk about how to do an internal DOGE campaign, how to figure out how to cut waste with your billboard.
Well, let's first acknowledge that a billboard does not have a lot of moving pieces. The federal government sure does. It's got millions of employees, one of the largest employers in the United States. It's got literally millions of square feet of office. It's got huge utility bills and everything else. So they have a lot of things to explore. But on a billboard, you don't have that many. You only have basically as many as you have on your hand.
So what's the first one? What's the first thing with a billboard that you could try and cut? Lot rent, ground rent, paying people to have your billboard on their property.
Now, the national average for most billboard companies, they wanna have their ground rent percentage at roughly about 15 to 20% of revenue. That's long been the metric. I'm talking if you go back almost 100 years, that's what it was. It was all about building billboards and paying about 15 to 20% of the revenue towards ground rent. Now, can you DOGE that? Can you cut it? Well, it's possible. If you've got a billboard that has not been occupied very much or you've had to go with a lower rent with the advertiser, then you may need to go back to your property owner and try and retrade it, and say, "Hey, buddy, I didn't realize it at the time, but this sign has kind of got declining rent. I need to renegotiate my ground lease."
Can you do it? Yeah, I've done it. It's possible. It's also possible the property owner will tell you to go screw yourself, but you don't have a lot of risk other than your self-image and rejection. But that's one thing you definitely could do. A lot of the large companies went back and did huge DOGE operations after the Great Recession because they were not hitting their occupancy and their ad rent targets. And so they had to go back and try and get reductions in what they were paying the landowner. So, yes, that is definitely one area you can look at.
Well, okay, what's another one? Another one is production of the ad itself. Creation of the vinyl, hanging of the vinyl. Can you DOGE that? Yeah, you can. You can go back to whoever is printing those vinyls for you and you can get a bidding war between the different printers. They all need business, that's for sure. And see if you can get that price knocked down. Are you gonna get it knocked down a ton? No. Is it worth your effort? Yeah. Basically a few phone calls, little strategy, who knows what you might get out of that? Might be a significant number. But if you don't try, you'll never ever know.
Same on the installation side. You've probably been using the same group to hang your vinyls for quite a while. Why is that? It's because we all tend to hate change. We want to stick with the thing we got at hand. We don't want to have to go and look for the bird in the bush. It's easier just to use the one that we have. But the problem is, when vendors realize this, their prices inherently go up because they know you're not bidding it around. If you suddenly say, "Well, I'm gonna bid it around again," you'll probably get a reduction in price. So can you DOGE the installation cost and the print of the vinyl? Well, yeah, you can.
Now, what about electricity? Most every billboard today has lights on it. Not all of them, but most of them do. The question is, do they shine from dusk until midnight or dusk until dawn? What's the arrangement? But this one's much harder because you can't really go to the power company and say, "Hey, how about a little discount for me being a customer for a decade?" No, no shot of that at all. So I don't think you'll get any discount in your power rate.
What some people do to DOGE power, which has proven not to be always a good idea, is they'll try and reduce the amount of watts of the bulbs themselves. Most billboard lights run on 400 watts, but there's other light fixtures that cost all the way up to 1,000 watts. But they also make things that are only like 250 watts. And here's the problem. I've tried it. If you go in and try and put lower wattage bulbs, fixtures, on a billboard on a typical highway where everyone else has the higher, you'll look ridiculously dim. Don't even think about it.
So when it comes to lighting, typically there's not really a good DOGE to it. There really isn't a way you can cut much corners on that one. So that one probably, no, you're not probably gonna get anywhere.
Then we come down to the insurance line item. Can you DOGE insurance? Well, possibly. Now, you gotta maintain a high amount of insurance on a billboard about liability, because from a liability perspective, if a billboard gets blown down in the wind, terrible things could happen. It could kill someone, it can maim somebody, do terrible damage to property. I'll never forget when I had a billboard in downtown Dallas that got blown down in a tornado and the billboard face went through the lobby of an office building. Just crashed right through it, kind of like some kind of a wild action movie. And the good news was I had enough insurance to cover it. Didn't have to pay any amount of money out of pocket for that, but it sure got my attention.
So I don't think you can DOGE insurance as far as say, "Well, I'll drop my policy from $2 million of liability coverage down to 250 grand." That's a dumb idea. But you could theoretically reduce your insurance by your deductible. So the question is, how much is your deductible? 5 grand, 10 grand, 50 grand, 100 grand? Think through what the insurance is really for and what you think the real risk is of that occurring. And when you talk to your insurance carrier, and they can give you these prices, and you throw out the different deductibles, you're gonna see a point of inflection in which it makes total sense to reduce the deductible down to that level. There's a very good DOGE item.
Now, what about if you go and do all of those and you just get a little money out of each one? Well, that's fantastic, because you're not hurting service, you're not hurting visibility, you're not hurting your customers. You're simply trying to be as efficient as you can. And when you're running billboards, obviously every dollar that you save is a dollar in your pocket.
So should every billboard owner engage in some kind of DOGE practice? Yes, absolutely. There's no reason not to do it. And if it does work out even in the smallest way, it's still a very attractive addition to your income.
This is Frank Rolfe, The Billboard Mastery Podcast. Hope you enjoyed this. Talk to you again soon.