The stock of Clear Channel Outdoor went for around $30 a share in 2007 but today trades for only around $1 a share. What went wrong? In this Billboard Mastery podcast we’re going to explore how the billboard industry made some fatal moves years ago, and how you can learn from their mistakes and build your business the correct way going forward.
Episode 123: Where The Industry Went Wrong Transcript
In 2007, a single share of Clear Channel went for around $30 a share. If you went down to your stockbroker and said, I want to buy a share of Clear Channel, it would have cost you $30. And today, that same share of Clear Channel on the American Stock Exchange will cost you only $1. The stock fell from $30 to $1 in almost 20 years. That's an astonishingly terrible rate of return. It means your investment, including inflation, was completely wiped out. But why is that? It's because the billboard industry went completely wrong at one point in its history. And by identifying that and embracing that, we can learn the lessons learned from that and go a better path to the things that really do work. This is Frank Rolfe of the Billboard Mastery Podcast. We're going to explore how the billboard industry did wrong and how you can now correct your pathway going forward. So in the billboards' early origins back in the 1920s and 30s, it had one simple goal. That was to direct traffic to certain locations. That's why you see so many of the old ads on things like Merrimack Caverns and restaurants, hotels, because that's the strong point of billboards.
It's locational advertising, it's point of purchase, it says, oh yeah, don't worry, there's a Holiday Inn only 10 miles ahead, exit number 33. But then what happened over time? You saw more consumer products start going up on billboards. Things that weren't really locationally, things that billboards perhaps weren't even the strongest suitor of. MetLife, other consumer products. And now suddenly the industry was not doing what it was really good at, which was directing people to certain businesses, locations. But it was just part of the general crowd of advertising. I remember going to meetings and people would buy billboards for consumer products just to sum a little addition they might just toss on the pile. Their bread and butter was television and radio and newspapers, but what the heck, we'll throw some billboards on. But they didn't really care. It wasn't really a top concern or priority for them because the signs really weren't the best at delivering the message they were even trying to achieve. And then over time, as people started doing more consumer products, they even lost track of what in the world they were doing with the signs. I remember when TriVision came back out, back in the 90s, I believe, maybe the 80s. And TriVision, you've seen them, there's triangular panels. You have three messages on one side. And the pitch was, hey, these TriVision things will allow you to get three ads on one sign and triple your revenue.
Everyone tried one, but it didn't really work. One problem was the technology, they would often scramble, so the whole message would be ruined. But on top of that, people weren't going to pay the same amount for a third of a sign as they've been paying for the full sign. And when the novelty wore off, that reality was exposed. But billboard companies didn't listen. They then advanced into the realm of LED, thinking, well, heck, we'll make billboards more like a radio television station. We'll start selling our time by the second. We'll go ahead and pop up ads, but you only get to buy eight seconds or 10 seconds on the LED before it changes over again. Again, not the forte of billboards. Billboards were never designed to be radio stations. But nevertheless, the industry loved the optics of being able to push revenues ever higher with a new, different media, and they pushed on. And the problem is, with each of those junctures, they weakened the business. They took it away from its core, away from what it did best, and they made it instead kind of the weak cousin of all the other types of media outlets.
So what do you do, then, to get back on course? What's the meat and potatoes of the industry? How can you fare better than Clear Channel has for its investors? Well, you need to focus on the strength of billboards. Billboards are the absolute best, the king, the greatest ever, the GOAT of directing people who need a good or service to a business at the exact correct time. Nothing else does that. You can run an ad in the paper. You can run an ad on TV or the radio. You can be on satellite radio. You can have a zillion listings all over the internet. But nothing will time reaching to the customer at the very moment they drive by your exit. There's no way a McDonald's franchisee can reach all the traffic on Interstate 55 right before it gets to the Festus exit without a billboard. And they know that. That's why McDonald's is one of the largest advertisers in the industry is they know the power of point of purchase. That's a huge strength of billboards. Another huge strength of billboards is just the general cost per thousand exposures. Billboards are far less expensive than all of the other media.
Yet, many people lost track of that because billboard companies kept raising rates endlessly at the same time reducing their exposure through things such as LED. Even the signs themselves stick with the old static type of sign. That's what advertisers want. They don't want to be sharing signs, and they don't want to pay by the second. The billboard industry was very, very strong for decades. It just kept getting better and better because it was very aware of what the consumer wanted and did an excellent job of playing to its strong points. But unfortunately today, a lot of the larger billboard companies have lost their way, and they forgot what they were doing. So, as you go forward building billboards, stick with the good solid fundamentals. Build static signs, the old-fashioned variety. Build them in locations where you can advertise with plenty of advertisers to certain exits, and you will have very high renewal rates and no vacancy. A good billboard operator today will select locations that are where people want to advertise, which is not always in urban downtown areas. A lot of the businesses today that need directional help are in suburbs and exurbs.
Push farther out, places where there aren't currently billboards or nearly as many. And even though it gives you an advantage to find locations, you're also played into the future of America. That's where people are moving. The bottom line to it is, don't feel like you have to try and copy what the big companies do because copying what they do would be crazy. They haven't succeeded in their mission. When I got into the business all those many years ago, 40 years ago, the company that became Clear Channel, which was originally Metro Media, that company was a legend. They were amazing. I was in awe. I tried to copy everything they did because I thought that they were the best, and at that time, they were. But the problem is, as the years unfolded, people lost track of the mission. They lost track of what it took to be successful, and now smart new billboard operators, they're the ones who can get back in touch with the roots of what makes the industry work. This is Frank Rolfe with the Billboard Mastery Podcast. Hope you enjoyed this. Talk to you again soon.