Memo From Frank
The last day of this month marks the end of the 1st quarter of 2019. Are you on track with your goals so far this year? It can be a very sobering exercise to look at your New Year’s Resolutions and realize that you only have 75% of the year left to achieve them. But that’s the reality of time. I have a sign in my office that reads “Time Kills Deals” and it means that you should always have a sense of urgency because time is simply not your friend. So if you’re not on-track for where you want to be in 2019, the good news is that there’s still 9 months to go. But the important point is that you need to get into action now.
Big Money In Master-Leasing Under-Utilized Signs
Let’s assume you’re driving down the highway and you see an empty billboard. That’s a shame for the sign owner, right? But there’s also a business opportunity there. And most people do not even know this trick.
How it works
There’s an entire business model in renting vacant signs and then sub-leasing them for a higher rent. Here’s an example. You see a sign with good visibility but no advertiser. You call the sign company and they are only wanting $500 per month, since it’s been sitting around vacant for a while. You know that you can rent the sign if you put some elbow grease into it. So you rent it yourself and then re-rent it to McDonalds at the next exit for $1,000 per month, pocketing $500 per month for the next year or longer.
Often zero investment required
Since you’re renting an existing sign, there’s no out-of-pocket cost on your part – the sign’s already there and open for business. Since a “rate of return” is based on how much you invest into the project. When you invest zero, your return-on-investment is infinite.
How to succeed
Look for vacant signs that have solid basics of visibility and length of read, and that you believe to be empty solely because the sign owner is not putting out any effort. There are some billboard owners who simply put their phone number on the vacant sign and wait for the phone to ring. That’s not a good way to rent ad space and you can definitely do better if you take a more proactive approach.
What to watch out for
Be careful not to get involved in signs that are vacant for a good reason, such as poor visibility or a road that has too little traffic. Also, do not work on a sign that the owner refuses to give you less than a one-year lease with options for another year or two. What some sign owners will do is to give you a 6-month lease and then plans to non-renew your lease and remove you as the middle-man. Finally, avoid any sign that has language in the lease that you cannot sub-lease the sign.
Renting and then sub-leasing vacant signs can be very lucrative. It has no capital cost and only upside – as long as you can find an advertiser. Watch for these opportunities and – if the pieces are in the right position – take advantage of them.
In The Internet Age, Is The Billboard A Dinosaur?
Everyone is all excited about that new invention: the internet. As a result, some people think that billboards are literally dinosaurs – giant towering reminders of the old days. But the truth is that modern methods of advertising can never destroy the billboard sign, as it has some attributes that the internet cannot mirror.
Something that no internet ad can accomplish – point of purchase
One of the extreme strengths of a billboard is the “point-of-purchase” capability. When you’re driving down the highway and you’re exactly 2,000 from the exit to the restaurant, the billboard tells you “exit now for a Big Mac”. Nothing else can do that. There’s no way that the internet can tell you on your cell phone while you’re driving “better exit now you’re neat a McDonalds”. That’s always been the factor that billboards offer above all types of competing media.
Little competition for your attention
Billboards only have to compete with other billboards. And their number is finite thanks to the Highway Beautification Act. Otherwise, the viewer has nothing to look at other than scenery. However, the internet is packed with a continual stream of ad messages and must also compete with ad messages on the radio and TV in the background. Obviously, the more ad messages your brain has to process, the less impact your ad message has.
Proven track record
Billboards have been around for over 100 years. No offense to the internet, but it’s still in its infancy, and nobody knows how the movie will turn out. There’s talk about a new type of internet on the horizon in the near future. Meanwhile, Google often changes the algorithm which can cause havoc for advertisers.
One of billboards’ benefits is the lowest cost per thousand exposures of any type of advertising. With the U.S. economy perpetually weak, advertisers gravitate to cheaper forms of advertising, which includes billboards. From Amazon to Dollar General, all Americans are seeking lower cost ways to shop, and that includes advertising dollars.
Dinosaurs died out because they could not adapt to modern times. Billboards have no such difficulty. It’s important to note that billboards have done better than any other media in happily coexisting with the internet. They’re not going away, and their strengths have never diminished.
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Mobile Billboards: Another Alternative
This is a truck that has a billboard on it and is parked inside a mobile home park on a vacant lot that just happens to have strong visibility from a major highway. It does not fit any box as far as the sign ordinance. It’s not technically a billboard, it’s a truck. It’s not in a position approved by the government, but it’s also not entirely illegal to park there. In many markets, these type of billboards hold a lot of potential if you know what you’re doing. And we call this sector “mobile billboards”.
How the business model works
Mobile billboards come in many different shapes and sizes. You have ads on trucks that are driven around popular tourist areas like the Las Vegas Strip. You have ads on trucks that are seen by drivers on the highway that drive behind them. You have ads on trucks that are parked on prominent corners and high-traffic zones. There’s no limitation to the uses, but it all revolves around the same simple business model.
Why this may be a solution in some markets
Some cities in the U.S. do not allow new billboards to be built. Zero. So if you want to get in the sign business in these markets, the only possibility are mobile signs. In many markets, that’s the only source of opportunity and, if you live in those areas, you can either choose to do nothing or to experiment with mobile signs.
Low cost of entry
One nice attribute of mobile billboards is that they are relatively inexpensive when compared to their more traditional contemporaries. While a steel monopole sign might cost $70,000, you can sometimes buy a used mobile billboard vehicle or trailer for $5,000. And the cost of production is equally low. With vinyl printing running about 85 cents per square foot, that means that a 40’ long box truck vinyl ad would cost less than $400.
What works well
Although there are all types of mobile billboards, there are only a couple that work effectively in my opinion. The first is the type that is stationary, using areas that are illegal for traditional billboards to their full advantage. For example, if there is an area of town that is extremely upscale and does not allow any signs to be built, you can find a parking space that is highly visible on private property – maybe that one space that’s got a “curve-in-the-road-head-on” affiliation to the main road – and put a billboard on a truck and park it there. Another type is a billboard on a trailer (normally about 5’ x 12’) that you can park on the same location. The other variety of mobile billboard that works well (although much more specialized) is a truck in which you put a billboard vinyl wrap on all three sides and then drives slowly through special events, such as the Las Vegas strip, or maybe the Daytona 500. But those are much more difficult as you have to have just the right special event and they only happen a few times per year.
Things to watch out for
Mobile billboards are on the cutting edge of the law in most cities. Billboards are regulated but trucks are not. So when is a truck a vehicles and not a billboard? Hard question to answer. Those billboards on trailers are even more hard to grasp, as billboards are defined as being permanently affixed to the ground. But it’s often the case that people will complain and that city officials may be called. So make sure you know the basic laws and what you can and can’t do. I have observed that the key is moderation. Move your truck occasionally so you can truly claim it’s not parked there permanently. Don’t put up an ad that’s obnoxious. Use common sense.
Mobile billboards are a unique way to reach traffic that you legally can’t under conventional sign ordinances. While stationary signs – whether metal or steel – are the norm when you think about billboards, don’t overlook this concept, particularly if you live in an area where new billboards are not allowed.
What Do Most Billboard Advertisers Have In Common Today?
Coke is one of the largest billboard advertisers in the U.S. and has been for almost a century. After a while, you can find of see similarities between the largest players in the billboard market, which today is McDonald’s. So what are these similarities?
Simple ad message
What do Coke and McDonald’s have in common? Food. A simple ad concept: come buy our food. Everyone knows what food is and they all have to eat three times per day. Billboards are giant but they don’t have that many words on them, so an effective billboard advertiser must have a simple message that can be conveyed visually and in just a few words. That’s why most internet businesses don’t work on a billboard – they’re too complicated to explain.
Presents itself well on a billboard
Some businesses just look good on a billboard, since the message is upbeat and has bright colors. McDonald’s and Coke definitely have this in common. But it’s also true of cars, homes and a number of other products, like cellular telephones. But drab, serious businesses – like a funeral home – don’t traditionally work well because they are somber and not really “billboard material”.
Basic commodity that most viewers would want
Most major highways in the U.S. have roughly 100,000 cars per day going down them. In those cars are a myriad of customers from every walk of life. As a result, the most effective signs are those that appeal to the entire spectrum of viewers regardless of income levels. These categories include food, lodging, cars, homes, cell phones, television shows, movies, etc.
Healthy economic profitability rate
Good billboard advertisers share a healthy “economic profitability” rate – essentially the profit margins on their products. Grocery stores, for example, only have a 1% profit margin. They would have to sell $100,000 of groceries from a billboard ad to make back the $1,000 per month that it costs – and that’s ridiculous. A car dealer makes $3,000 on a normal automobile, so they’d only have to sell one car every three months to make back that same billboard cost.
Exit now component
The Harvard book on marketing says that the best billboards always say “Exit Now” because that’s the sign’s greatest strength: that point-of-purchase element. I’ve found that the advertisers who renew year after year, decade after decade, are on signs that say “Exit Now”. It makes perfect sense, right?
Why this list is important
A good billboard owner is like a matchmaker between their sign and the right advertiser. The best advertisers share the characteristics shown above. The reason I was able to build my giant portfolio of billboards was that I recognized that the best advertisers all had commonalities, and I searched out those that fit the model. That’s what creates high rates of renewal and that’s what gives you the time to build more and more billboards.
It’s not sheer luck that certain businesses are bigger billboard advertisers than others. There is a definite element of economics to the program, and you have to acknowledge that and make that a part of your search for the right advertiser.
How To Put Some Excitement In Getting Your First Billboard
There’s two ways you can approach life: 1) with excitement, enthusiasm and passion and 2) with dread, worry and fear. Personally, I like the first. So how can you bring some excitement to the effort of finding a billboard to build or buy? Here’s what I’ve found over the years.
Think how you’ll use the money
We live in a capitalist society and our motivator is always partly money. That being the case, what would you buy with the money generated by the sign. It’s hard to work on something at night or on a weekend if there’s not the carrot dangling of some fun money to play with. Let’s say the billboard will generate $3,000 per year when it’s done. So how will you spend that $3,000? That’s one way to create excitement.
Create a game for yourself
I like games (board, video – it doesn’t matter). So I took an erasable marker board and had a game for myself that I had to fill it with ten potential billboard deals at all times. Every time I lost one, I had to find a replacement. I told myself that the reward would be that I would eventually own a decent-sized billboard business as long as I kept that board full. And that’s exactly how I ended up with 300 signs.
Reward yourself at each step
Set a goal for yourself, and a reward that goes with it. For example, if you get a ground-lease signed for a billboard you get $100 for new shoes. That will help you get motivated for success. The reward doesn’t have to even be monetary, it could also be to sleep late.
Memorialize your journey
I like to record life with photos and videos. So why not make a scrapbook of photos of your early career trying to build or buy a billboard. I have the photos of my first billboard location, me standing in front of the steel being unloaded to build the sign, photos of them digging the whole, everything. It’s fun to look back on these remembrances.
Life should not be drudgery. It’s an exciting buffet that only you control. So approach getting that first billboard with a positive energy and you’ll do much better – and enjoy yourself more.