Billboard Mastery Podcast: Episode 27

Working From The Outside In

The normal strategy in most endeavors is to work from the inside out – but not always for billboards. In this Billboard Mastery podcast we’re going to discuss the reasons and strategy behind going outside the city limits – where competition and costs are lower – and then start looking closer into the city core as your experience and cash flow increases. This is a proven plan that has been a winner in the past.

Episode 27: Working From The Outside In Transcript

We all think about approaching things from the inside to then move to the outside. Going from the inside out, but sometimes you're better off going from the outside in, this is Frank Rolfe, the Billboard Mastery podcast. We're gonna talk about the concept of not starting in the center and working outward, but starting at the farthest edges of the circle and working back in. So what am I even talking about? Well, let's say you live in any city in America and you wanna get in the billboard business. Right in the heart of the city will be the most competitive of anywhere you can possibly go. Why? It's got the biggest rents. Why else? Well, that's where most of the big companies have been historically for many, many years looking for locations. So where's the competition a little lower? When you go as far away as you can.

Let me give you a story. Back when I got in the billboard business, Dallas-Fort Worth. Dallas-Fort Worth was really, really maxed out. It was beat up, people would hit most of those locations. So what I did was I just said, you know what? If I wanna succeed, I'm just gonna go get in my car and I'm gonna drive about 45 minutes out of downtown Dallas. And where did it take me? It took me to Denton, Texas. And there were almost no billboards in Denton, Texas. So I just started putting them up everywhere, and people thought I was nuts, they were like, why you building that in Denton, Texas? You should be trying to build them in Dallas. You might be able to get one or two in Dallas. I was like, no, I'm gonna go ahead and get 10, 20, 30 in Denton, Texas. Then I turned my car to the east, I went out east. Went out to Terrell, Texas, Forney, Texas, same story. There were no signs there. I started building signs out there.

Over time, the cash flow and the banking that I had established from the signs in the periphery gave me the ability to go in and build and buy signs in the center, which were far more expensive and far more competitive, because now I had a much greater mastery of what I was doing, and I had the ability to borrow money easier, because the banks knew I also knew what I was doing. Now, there's another reason, however, beyond competition of why you'd wanna go on the outside and work in. Because the signs on the outside and the outer periphery, they are cheaper. The average billboard you will find, if you go outside of a city by an hour or so, is going to be wooden construction. The original classic. Wooden telephone poles, 2 by 4 wooden stringers, wooden faces. The sign that you can build strictly out of a Home Depot. The sign were, traditionally, they don't even have any engineering for it.

The type of signs you build out of spare parts, 'cause those telephone poles used to serve the power company well with telephones, prior to being decommissioned. And those are the cheapest kind of signs you can humanly build. If you wanna be able to sign in the heart of the city, you're looking at building traditionally a steel monopole. The most expensive sign ever built by man. But if you go an hour out, well you're looking at building the least expensive sign ever built by man. So just from a capital and risk standpoint, starting on the outside makes a lot of sense. As you get better, as your cash flow gets better, then you can go more towards the inside where it's more expensive to build signs or to buy them, but starting outside from a cost of capital is also a good idea. Another benefit of starting from the outside is the advertisers themselves.

When you get on the outside, you're gonna find the advertisers are easy to spot. Most of the smaller markets, they have some very definitive advertisers. Who would they be? Well, car dealers, home builders, hospital, restaurants, motels, all the regular suspects, but they're a whole lot easier to spot. And you can rent the ads a whole lot cheaper because the sign was a whole lot cheaper for you to build. And the ground rents a whole lot cheaper 'cause you're not inside the big city. Those kinds of advertisers can stick year over year over year, moving on up to into decades. I can name many of the ones that I used to have. Dairy Palace was one. Up at Dairy Palace, I have a sign, Dairy Palace was a place. Like a Dairy Queen, and I saw the original artwork from that sign. That sign was Dairy Palace from the very day I built it. Forever more. It probably shows Dairy Palace on it today, because those are advertisers who can make sense of it. Costs are not super high.

They reach a town that is very definitive to them, and as a result, they look at that sign as an extension of their own sign on their building. So the advertisers, it's a lot easier to find them. It's a lot easier to secure them when you get way out of town. Now, once you've established that foothold, it's a whole lot easier to then go in, because once you're good at what you're doing, once you have a stable of signs there, so you can go up to property owners and say, oh yeah, I've got... I've been in the business for x months or years, and here's how many signs I have, and it gives you a whole another level of confidence. So it just makes sense, you start off where the competition is lower and then work inwards more competitively because you're better. You are more competitive, but if you started on the outside, should you even bother to move in? Yeah, why not?

Once you've gone ahead and mastered the area on the outside of the city, there may still be opportunities on the inside of the city. So the ones I normally spot always, number one or 8 sheet, this old metal monopole, typically five by 12 foot in size, advertising faces signs, most of which have been abandoned. Those who are left over from the 1970s of tobacco and liquor advertisement put up by big companies by the thousands, then later abandoned when they no longer could put tobacco on signs anymore. Many of those you can pick up for nearly nothing. A thousand dollars, tons and tons of them abandoned. You don't want any in every location, but some of those locations are not bad. You can wrap a vinyl on them, they're a monopole or maybe they're a wall mount and you can make good money with them. Low ground rent and get a decent amount per month per face on them. So 8 sheets are always a good idea. Another one of those abandoned signs. Signs that were there that people built and they, for one reason or another, they just gave up on it.

They had a dispute with the property owner, they couldn't reach an agreement of paying the lot rent, whatever the case may be. There's always opportunity of those in the city, 'cause there's just so many signs. Things are so dense in the city, and then also don't forget that a lot of cities today... The billboard companies are very laissez-faire. They don't really have much fire power going on, and there may be parts of the city that have been newly re-zoned into commercial use, and no one's even bothered to even look at that. So you may be able to find entire corridors, entire sections of cities, right in the heart of the city, that is now an opportunity because zoning has changed, and yet, the big companies don't even know that 'cause they haven't been watching for it. Why? Because they got bigger and they got complacent, and as a result, they just don't care anymore. Remember that Warren Buffett writes many articles about the ABCs of a business going bad and the C is for complacency, the B is for bureaucracy.

I can't remember what the A is. The A stands for something like... They just... They have no sense of urgency anymore. So you can still find deals in the heart of the city as you work back in. It's always worth your while to do that, but it's... Typically for most people, the easiest and best course to start... Rather than in... From right in the center where things are the most competitive and work out, to instead start on the outside, where you have so much greater odds of success. Where the sign structures are lower, where the advertisers are easier to accomplish, where the competition is much lower. That's typically your best starting spot. Once you've mastered that on the outside, you can then move in. But it's very hard to start in the center and move out. This is Frank Rolfe, the Billboard Mastery podcast. Hope you enjoyed this. Talk to you again soon.