Memo From Frank
Thanksgiving has been a tradition in the U.S. since 1621. Some people eat at home, while others eat out. So how do you decide where to eat? One item that has a significant contribution in that regard are America’s billboards. Restaurants are one of the largest advertiser segments of the outdoor advertising industry. The biggest ad-spending restaurant chain in the U.S. is McDonalds – but they don’t sell turkey. But their offshoot division called Boston Market does. Then there are also the billboards for cafeterias, casual dining, and upscale restaurants. The reason that billboards and restaurants have such a long tradition together is that billboards are very “point-of-purchase”, which means that they can literally steer a customer off the highway and into the advertiser’s booths as breakfast, lunch and dinner time approaches.
The Most Effective Salesman You Can Buy
I always tell advertisers that a billboard is like a giant salesman. But it’s a much better hire than any salesman in the advertiser’s business. What makes a billboard so effective?
Hits tens of thousands of customers per day
Based on the traffic count of the road or highway, the average billboard in the U.S. hits around 50,000 customers per day. You can get this stat from the state highway department. That’s a huge number of sales pitches. The average salesman only hits maybe 50 per day. That’s 1,000 times more.
Only costs minimum wage or so
The average billboard hits customers with the ad message from dawn until midnight – a total of roughly 16 hours per day. Assuming a billboard rents for $1,000 per month, that’s a wage of only $2 per hour. Even if the sign costs $3,000 per month, that only equates to minimum wage.
Never calls in sick
Billboards never get sick. And they’re never late. They also never stay at home if it’s snowing. Nor require personal time. The bottom line is that a billboard is the most dependable salesman of all time. Not even the business owner can claim never missing even one hour of work.
Great salesmen typically get hired away by competitors. They note how great that individual’s sales are and make them a deal they can’t refuse. But billboards are completely loyal. They will never leave the advertiser unless they don’t renew the sign.
Tells the customers exactly what you want them to
In today’s politically correct environment, businesses have to always be concerned that all employees are telling customers the right thing. But billboards never deviate from the script and tell the same correct sales message over and over with fail. This means less worry for the business owner.
Billboards truly are the best sales person that any business could hope for. They work hard, work smart, are intensely loyal and never disappoint. Every business needs at least one.
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Here’s What Billboards Looked Like In 1935
This is a very successful billboard campaign from 1935 for Burma-Shave. Placed in a sequence about 50’ apart, the driver would see the signs and read the message consecutively. These advertisements became so popular that the sales of Burma=Shave increased massively and this ad campaign beginning in 1925. It is considered one of the most successful billboard programs in U.S. history. These signs are in the Route 66 Museum.
There’s More Than Just Traffic Count In Billboard Rental Rates And Demand
This is a billboard in Los Angeles. And it rents for more than 90% of the billboards in the U.S., being located on Hollywood Blvd. It’s obviously not on a high-traffic highway. So why is it so valuable? The answer is that there is more to determining the value of a billboard than just traffic count alone.
Quality of the traffic
It’s not so much the sheer number of people who see the sign, but instead who those people are. The demographics of viewership has always been a big deal for advertisers, whether it’s TV, radio, magazine, or billboards. And in the case of this sign, Hollywood Blvd. is heavily driven by Hollywood directors and producers. As a result, one of these billboards can have an impact on winning an Academy Award, or having a certain show renewed. That’s worth a fortune. And that’s why these billboards are so valuable.
Scarcity in the market
There are very few billboards on Hollywood Blvd., as opposed to the major Los Angeles freeways like I-405. This scarcity equates to extra value, just as suggested in the old economic law of supply and demand. But, in some cases, billboards can become so rare as to almost become a monopoly. I once owned the only billboard at the exit to Universal Studios in LA. That’s a valuable position.
Of course, the value of a billboard also has something to do with the visibility of the sign. The longer you can see it, the longer you can grasp the ad message and ponder the content. And signs that can be seen from really far away create curiosity as to what the ad message is. These factors create greater value.
The bigger the sign, the bigger the value. That’s always been the case, since the first billboards were built. So the amount a sign rents for definitely has a correlation to the size of the sign.
Signs that are lighted have many hours per day greater visibility – roughly six hours more exposure. That translates into more deserved rent. In some markets, based on rush hour and direction of the sign, the lack of lights can make a sign virtually worthless (for example, it the afternoon rush hour goes by the sign at dusk every day).
There is more to the value of a billboard than just raw traffic count. Such items as demographics, scarcity, visibility, size and lighting can be equally important.
There’s A Unique Loophole Possible With Giant Wallscapes
When Ladybird Johnson helped to promote the Highway Beautification Act in the 1960s, they had to first come up with the “controlled area” which means the area that the Act could control billboards from being built in. The number they selected was 660’ from the highway right-of-way. When they used that number, they thought that signs that were 660’ or more away would have to be massive to be seen. Back in the 1960s, signs were built of telephone poles and plywood, and it was very difficult to build big signs. But the advent of vinyl has allowed giant signs to be made at a very reasonable cost. And that means that you can build giant signs that can easily be seen from 660’ away. And that means that there are opportunities to build billboards in areas that don’t allow traditional signs. All you need is something large to affix them to, like a building or a grain elevator. And those are out there everywhere. Great business opportunity? Absolutely.
Value Is The Best Shield You Have Against Tough Economic Times
A billboard is simply a mechanism to help an advertiser sell their goods or service. So there is a way to measure the success of any billboard – its inherent value – and this allows the advertiser to clearly see that the sign is worthwhile and should never be dropped in good times and bad. So how can you make the case for the value of a billboard?
How much does each sale make?
The first question is how much money the advertiser makes on each sale. The sale of a car might net $1,000, while the sale of a hamburger might net $1. This is not the total revenue, but the revenue less the expenses – an entirely different matter. It doesn’t matter if a homebuilder sells a home for $400,000 if they only net $500 from that sale. And the profit is the only thing that’s important.
How many sales does the billboard have to make to be profitable each month?
So once you have the net profit amount, the next part of the equation is how many of this product or service can be sold in an allotted period of time. If the automobile billboard can sell three cars per month – and the sign costs $1,000 per month – then the sign makes a $2,000 per month profit. For that burger shack to make money on the same sign, it would have to sell more than 1,000 hamburgers – which is quite an accomplishment (although not a big number for a McDonalds or similar high-volume franchise.
Putting it all together
The bottom line is: can your billboard show a profit for the advertiser. If the answer is “yes” then you’ll have a client for life. It also means that the best advertisers are those that have high-margin items or high-volume businesses. You should review your financial calculations with the advertiser – they will be impressed that you are thinking in their shoes.
Everyone ties back to making money. Billboards that make the advertiser money are treasured and the rest are dropped. Think through your sign’s economics and seek out the advertisers where you can make a real difference. That will get you perpetual renewal.
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