Billboard Mastery Podcast: Episode 12

Natural Advertisers

There are many potential advertisers for any billboard – but there is one that is the most natural fit. When you find the perfect advertiser you can attain a continual renewal rate, and you may not have to rent that sign again for years. In addition, the natural advertiser will be successful with it and always pay promptly, not wanting to lose the sign. In this Billboard Mastery podcase we’re going to review what makes for a natural advertiser and how to find them and rent them your sign.

Episode 12: Natural Advertisers Transcript

The dictionary defines natural as a person regarded as having an innate gift or talent for a particular task or activity.

This is Frank Rolfe with the Outdoor Billboard Mastery Podcast. We're going to be talking about a natural advertiser. This would be an advertiser for a sign that has the innate gift of being the perfect person to sell their good or service on your billboard.

So why is it important to find the natural advertiser, the one that is so obvious, the one that can do so well with the sign? Well, from a financial perspective, the natural advertiser will renew. And renewal is a very important thing when you own a billboard. Back when I had my large billboard holdings down in Dallas, I had an 80% renewal rate. So what did that mean? That meant that every year, I only had to re-read 20% of my total signs. That was a huge help. When you have renewal, you have 100% occupancy continually, you don't have the time or the stress in finding a replacement advertiser. You don't have to work on what the new advertising copy should be. You don't have the risk of them going up on the sign and not liking it. You don't have the risk of them not paying you. There's every reason in the world you would want the natural advertiser. Because don't forget that happy customer, someone who is doing well with the sign, they always pay. They never complain. It's a very happy win-win relationship.

So what makes an advertiser a natural for a sign? The first thing is that they have the ability to make enough money with the sign to pay for the sign, and to make a profit. So the best advertisers for signs are ones that sell products that are fairly profitable, and sell products at enough quantity to make sense of the sign.

Let's just look at this for a minute. Let's say you have a billboard and there's a hobby shop. And that hobby shop sells Hot Wheels cars and items like that, and they're all very low margin, and they're very small transactions. Let's say on a Hot Wheels, they make 50 cents. And on a model train, they make $10. The problem would be there's no way that sign is going to create enough transactions to ever pay for itself. Even if it was a $500 a month billboard, could that billboard truly bring in enough customers and enough profit to pay $500? And even then, what about a profit off of it? And the answer is no, it probably can't.

So then, who can actually make enough money on a billboard to pay for itself? Well, there's a lot of obvious ones. Any good hotel definitely can make money off of a billboard. If a room rate in that hotel is $150 a night, and it can just score three or four nights a month from your billboard, it would pay for itself. Okay, so that would work. Who else could it work for? Well, if a car dealer could sell just one car off your billboard every couple months, it would pay for itself. If it's a home builder client, if they could sell just one home per year, it would pay for itself. And if it's a McDonald's or a Taco Bell or an Arby's or someone who has very, very high volume, who's doing a million or $2 million a year in sales, once again, with that much volume, if they can direct just a certain amount of customers from that sign over to their business; in the case of a McDonald's, if that sign was $500 a month, all they would have to gain is $30 a day of customers, which is nothing. That would be like six total customers a day, and they'd make twice their investment on your sign.

So the first part of the natural advertiser is someone who just can make sense of billboards, because they sell an item that's got pretty good profit margins and a sufficient volume to make sense of it. The other thing a natural advertiser has is easy directions. Remember that billboard's strongest point is getting people to go to the business. It's the only point of purchase form of advertising, really in existence. Magazines ad, TV ads, even the internet ads, anything you see on your computer, the one thing it can't do is tell you to exit now; to tell you, "Yeah, that business is right over there." They can give you a little map, but they still got to get to out of your apartment or your house and get you to that little map to get you to their business. Billboards already have that built in. That's why, for example, in the Harvard textbook on marketing, it says the most effective billboards all have two words on them: exit now. That's because of the power of point of purchase and being directional.

So the first thing a natural advertiser's going to have is it's going to be easy to find from that side. And typically what that means is the words exit now, or next exit, or maybe exit number whatever, if it's several exits up.

So how do you find advertisers that are easy directionally, that can make money, sufficient money off your sign to show a profit? Because those are the people who will renew year after year after year. Well, first off, the first item which will greatly limit the pool is easy directions. Who is at the next exit? If you go out and look at your sign and you go up the highway from your sign and you go to that first exit and you write down all the businesses at that first exit, and then maybe the second and maybe the third, and you stop there. That short list is going to contain the best natural advertiser for that sign. Maybe your listing is only going to have ...

Between those three exits, you might have 40 businesses. And one of those 40 is going to be the best fit. Then you look at those 40 and you say, "Which of these could make enough money from my sign to make sense of it? Let's see. It's not Nancy's Bridal Shop. Nope. That's not going to make enough money. But it might be this Taco Bell. And then what do we have here? Whoa, a new subdivision from Pulte Homes, Homes from the 150s. Okay, that's a good one. And look, oh, here's this car dealer. Let's put the car dealer down there." So take that list geographically. And then with a highlighter, highlight the ones that are the kind of raw material you need to make money off that sign.

Now you've got your short list of people. Then you basically go to that short list and say, "I've got a billboard that I know is a natural fit for your business. And all I want you to do is try it out. Let's do an experiment of you on this sign," and put together a lease and put together some kind of creative artwork on the thing to give it a whirl. If you've got the right natural fit, it'll be very apparent that this is a winner, almost from the beginning. And they'll just stay on that thing forever. But the key is to identify that natural advertiser and then to make them give it a try. Structure whatever you have to structure to get them up on the sign.

Now, sometimes when you look through the natural advertisers, you'll see additional opportunities. And namely, that is what would be a shared billboard; one with two businesses that share a common exit. So let's say when you look down your list of natural advertisers, you see there's a McDonald's and there's also a Marriott Courtyard Hotel, and they're right next to each other. This gives you another dimension. Now you're able to take those two natural advertisers and combine them. And that means the price for each is half of what it would have been. There's nothing that leads to greater renewal than when you have one of these combo signs, where you'll have two natural advertisers who share the price tag, and now they're only 50 cents on the dollar per month. Now they have everything. They've got not only a sign that works for them, they get it at a bargain price. Those combo signs are some of the most powerful ones you'll see on the highway, because those things never expire. Those advertisers love that relationship.

So really, when you're out there running billboards, the key item is to be like a matchmaker. I would much rather find that natural advertiser and get them on that sign, even if it's for less money than Sally's Bridal Shop, that I know it's not going to work for. I know they're not going to renew. I know in the end, when you take a few months of vacancy in between advertisers, I won't make as much money as I would with the natural, and I'll have to fight them to pay every month, because they'll say, "Well, this sign isn't making me any money at all."

So the key, if you want to succeed in billboards, is to be like that matchmaker. Try and find the perfect natural advertiser for your sign, and you'll succeed every time.

This is Frank Rolfe, the Billboard Mastery Podcast. Hope you enjoyed this. Talk to you again soon.