Memo From Frank
The collapse of world markets has highlighted the fact that everyone needs a plan. You cannot coast in today’s economy – things are so de-stabilized that without a strong plan you are taking a huge risk. Just recently, Walmart announced they are closing nearly 200 stores and laying off 10,000 workers. Macy’s announced that they’re laying off 4,000 and over 100,000 oil and gas workers have been cut due to oil nearing historic lows. If you want to develop an income stream independent of your day job, then consider the opportunities in building, buying and operating billboards. You are your own boss, and you control how big you grow the business. A day job is great, but every American needs at least a second stream of income for that moment when your day job becomes eliminated. And if you’re at retirement age and already have amassed some capital, you face the same issue regarding a stock market that’s down nearly 10% in the first few weeks of the year, and CDs and bonds that pay nearly nothing. Billboards can offer you spectacular returns and preservation of capital. In times like these, the worst thing you can do is to do nothing. Take action to save you and your family from hard times.
The Romance Of The Roof Mount
This is a photo of the roof mount in front of Grauman’s Chinese Theater in Hollywood, one of the most photographed sites in Los Angeles. Look at the complicated construction of this billboard. These are the most custom signs ever built, literally hand cut and welded as they went. And they are some of the most valuable billboards on earth.
The best locations
Roof mounts always have the absolutely best locations. Any city you go to, the roof mounts are the best of the best. Why? Simple. They were there in the earliest days of the city’s growth, right at the epicenter on the top of the tallest building at that time. These signs were early pioneers in an industrial age in which signs had not caught up with their potential. Since the monopole was not yet invented, these were the only way to place a large billboard in an urban location. And when you are capable of using the entire roof of a building, you have huge flexibility of positioning.
The rarest type of signs
Most cities have not allowed new roof mounts to be built in decades. In many cities, it was determined that they were fire hazards and, in others, they violate their sign ordinance. As a result, they are exceedingly rare. In most urban markets, there are not more than ten room mounts still standing. And, because of supply and demand, these are often the most valuable signs in the city they serve.
Typically gigantic and often animatronic or neon enabled
Because these signs sit on roofs, they don’t have any limitations to size – they can often be the entire width of the roof. As a result, they can be huge – often two or three times bigger than a standard billboard. Because they can tolerate huge amount of weight, they also often include neon and even animatronics (motion, such as an arm waving or a coffee pitcher pouring). This gives these signs legendary memorability and, in some cases, they have been deemed historical landmarks.
I’m proud to have owned one
Being a history buff, I always wanted to own a roof mount. I tried to buy them for years, but could never pull it off. But I was ultimately able to buy a roof mount in Los Angeles when I bought a portfolio of signs. It was on the corner of Wilshire and La Brea, and had been featured in a number of movies including “Falling Down” in the 1990s. It is very hard to buy these signs as most owners have pride of ownership, and the prices are normally high enough that they often don’t make any economic sense.
You probably can’t build a roof mount in any city in America today, but you might be able to buy one if the price was right. Room mounts are landmarks, and are typically easy to rent at large amounts. Remember that the roof mounts in Times Square in New York often rent for more than the buildings that hold them up. They are extreme income generators and a part of American history.
Why The Value Of A Billboard Is Not Just About The Traffic Count
Most people rate billboard values by the number of impressions they make daily; they tie the value to the traffic count. However, this is not always the case. Some of the highest billboard rents in Los Angeles are found on a mere surface street: Hollywood Blvd. And the reason is a great example of when quality of traffic is more important than quantity.
Quantity is important
We all know that the higher the traffic count, the better. A general rule of thumb is that a road should have at least 5,000 viewers per day to be rentable. The typical highway in the U.S. has over 100,000 viewers per day, with some ballooning to over 250,000. More viewers means that your advertisement is more widely seen which, as a result, creates more sales for the advertiser’s product or service. It’s a volume business.
But quality is just as important
But some billboard owners forget the fact that, often as important as the quantity of the traffic, is the quality of that traffic. And in some markets, this quantity of traffic exceeds the number of viewers in importance. Hollywood Blvd. in Los Angeles is a perfect example of this phenomenon. Every major motion picture and television producer drives down this road every day to get to the studios. So these billboards are used to target this tiny – but incredibly important – audience. Here’s why. If a movie or TV show gets nominated for an award, or wins an award, it increases the viewership enormously as well as the ticket sales and revenue. So these signs are used to suggest to these producers who they should vote for regarding the Academy Awards, Critic’s Choice Awards, etc. Since the amount of money at stake is enormous, these signs often rent for $50,000 per month or more. Not bad for a sign with a small traffic count.
And don’t forget about scarcity
Just as quantity and quality are important, there is also the dynamic of scarcity. The signs on Hollywood Blvd. are scarce, but there are even more extreme disasters. In La Jolla, California, there is only one billboard that reaches traffic going into La Jolla on a small highway. So if you want to reach this traffic, you only have one sign to do it with. As a result, this sign is never vacant, as customers have to sit on a waiting list to be get their chance to rent it, and the price is substantial.
While traffic is important, there is more to the value of a billboard than sheer number of exposures. Quality of the traffic and scarcity are equally important in determining a sign’s rental value.
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How The Monopole Revolutionized The Industry
For a half a century, billboards along roadways were exclusively made of multiple poles, typically wooden. This was as far as science had taken things and, as a result, you could only place billboards in certain types of property situations, such as raw land. Then came the monopole, and the sign industry was never the same. How did the monopole have such a large impact on the billboard business?
The limitations of multi-poled structures
Before the monopole, signs could not blend well with property usage. Raw land was fine, but on a property with any type of development on it, it was hard or impossible to fit the sign without hurting the use on the ground. For example, you could not build a multi-poled sign structure in front of a gas station, as you could not fit the cars around the poles. In addition, there are severe aesthetic limitations to installing a bunch of poles on a developed property. Let’s assume, for example, you have a multi-million dollar shopping center. There’s no way you’re going to ruin its appearance for a $10,000 per year land rent income.
The monopole’s structural opportunities
When the monopole came on the scene in the late 1960s, it ushered in huge new opportunities to build signs where they had never been allowed before. For the first time, you could build a sign on only nine square feet of ground space, and on virtually any corner of the tract. A single pole allowed for no disruption of the workings of cars and pedestrians going in and out under the sign. A new era for sign construction had begun.
The monopole’s aesthetic possibilities
Just as the monopole allowed for placement of the column in areas that did not disturb the property, it also allowed for greater aesthetics. You could now hide the sign by painting it to match the color scheme of the building, or to resemble a tree trunk, or disappear into the sky. In urban locations, this opened up a huge number of locations on super-valuable properties that would never have considered a multi-poled billboard on looks alone.
The modern billboard industry would not have been possible without the invention of the monopole structure. By allowing a billboard to be balanced on one single pole, the options became limitless, and both land owners and billboard companies benefitted from this new invention.
The Power Of Bunching
Have you ever seen billboards with the exact same advertising message, located next to each other? This is a marketing technique called “bunching”. It’s been around for as long as billboards have existed. It was first seen by most Americans with the billboard programs of Burma Shave. The Burma Shave ad program had a series of sequential ads, which garnered much greater attention than a single sign. Advertisers learned over time that consumers are drawn to situations in which they see at least two similar signs in rapid order. Why is that? Basically, curiosity of your brain as it tries to process if it has just seen the same thing twice, and why. How often do you see two identical things in real life? Never. So by simply placing two ads side-by-side, the memorability of the sign is greatly increased.
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