Memo From Frank
I drive by a large number of billboards every day, and probably the dumbest thing I see is the general movement within the industry to confuse potential advertisers on vacant billboards. What happened to the old fashioned “Rent this sign (XXX) XXX – XXXX”? Why do companies that should know better continue to install ads that say “Gotcha!” and “Caught You Looking!” Does anyone really believe that an advertiser driving by could decipher that these cryptic messages really mean “please rent my big, vacant sign”? It seems to me that, if you let the advertiser know the sign was vacant and where to call, you’d be miles ahead. It’s funny that the very people who are trying to rent ad space seem to be lousy at writing their own ads – actually embarrassing really. Look around while you’re driving, and you’ll see what I mean.
So You Found An Abandoned Billboard – Now What?
Millions of Americans drive by abandoned billboards every day and don’t think a thing about it. They have no idea that there is any way to make money with them. And if they did, they would not have a clue as to how to even get started. The truth is that abandoned billboards offer great opportunity if you approach them properly, and they have the raw material necessary to make the cut. So how do you get started?
Get the facts on how the sign began and how it came to be abandoned
Every sign has a story, and the first stop is to find out what that story is. Some signs are abandoned because they were illegally built. Others became abandoned because there was a blockage to their visibility that rendered them impossible to rent. Still others became abandoned because the landowner would not agree to a renewal of the ground lease. What you need to figure out is what went wrong with the sign and if you can fix it. If the problem is blockage, maybe you can figure out a way to get it removed – chop down the brush, remove the premise sign, trim the tree. If the problem was that the original builder could not rent it, maybe you have a better plan to do so. Or maybe, with time, the location is of more value to advertisers.
Stay away from the abandoned signs that you can’t fix
If a sign is illegal, you can’t fix that. If the sign is blocked by a bridge overpass, then you can’t tear that down. Recognize that some abandoned signs should be left that way. Not every abandoned sign can be brought back to life, and you are wasting your time and money in trying to make that happen. As soon as it is apparent that a sign cannot be saved, then drop it and move on to one that is worthwhile.
Come up with a plan on how to fix the ones that can be fixed
To bring a billboard back to life, you need to have a road map from beginning to end. You should make a complete chronology of how the deal would evolve. Next to each step, write down the cost to complete that step. When you add them up, that will give you the total cost of the project. Then you simply figure out what the sign would rent for, and you can quickly figure out how profitable the project would be.
But never share your plans with the Landowner
If you tell the landowner what you are going to do with the sign, they may decide to do it themselves. Although you may be very excited about your concept, the last person you would want to discuss it with would be the one person that could kill your deal. It is important to make the landowner, in fact, think that the plan is extremely difficult and costly, to actually discourage them from trying to do it on their own.
Every plan begins with getting a new Ground Lease
Before you can take over and bring a sign back to life, you have to get a current, executed agreement that allows you to operate the sign in exchange for paying the land owner rent. The key factors you have to know before calling the landowner is how much you can pay them. The general rule of thumb in billboards is 20% of the revenue. So if similar signs on that road rent for $500 per month – and the abandoned sign only has one side – then the amount you could be pay would be around $100 per month. I like to offer the largest “sounding” amount possible, so I would offer, in that case,” $1,000 per year, payable monthly”. As far as term, the longer the better, assuming that you have the right to cancel the lease and stop paying rent if you have to take the sign down, or if you can’t rent it. In the industry, 5 years is pretty much as short as most people would go, with 30 years normally the longest length. You might also try to see if you can strike a deal paying only a percentage with no set minimum, but this is very hard in abandoned signs, as the landowner has already been burned once and wants some type of “sure thing”. Make sure that the landowner assigns any rights he has to the sign to you under the agreement, as the general argument on who owns the sign is normally answered by the landowner, as they are the one who would seize it as abandoned property, as well as for non-payment of their lease.
You may have to be fairly loose on the permit
The legality of abandoned signs is often a real problem. Many signs began life with a valid permit, but it’s anyone’s guess as to whether that permit is still valid or not after the sign’s checkered life and period of abandonment. The beauty of abandoned signs is that normally the net income pays you your investment back in a few months, so if it turns out that the sign could not be legally operated, then you at least can walk away from the deal with your money back. In my entire career, I have only ever had one abandoned sign classified as “illegal” and been forced to remove the advertisement – so that’s a pretty low odds shot.
Then you enact your plan as calculated
Once you have the ground lease, the next steps are normally to lease the ad space and install the ad, or to remove the obstruction, then lease the ad space and install the ad. If you have a well thought out plan, it should follow the methodology accurately and within budget.
Abandoned signs have great potential as money-makers. All you have to do is to be able to spot what is an opportunity from what is not an opportunity, and then make it happen. There’s no mystery to it, and it’s not a difficult business model. It’s a shame that more people don’t know the potential here … or maybe that’s a good thing, as long as you do!
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A Billboard Story
We had an enterprising sign painter who once would put down 4’ x4’ sheets of plywood on the floor in the shop and, over time, these panels would become covered in thousands of drops of different color paint. He would then pull them up and sell them for about $100 at art shows. They really did look like a $1 million Jasper Johns or Kandinsky original. I thought it was pretty clever, and secretly regretted that I didn’t come up with the idea myself.
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