Billboard Monthly

October, 2nd 2014

Memo From Frank

I go to a lot of track meets to watch my daughter run. The goal of any school in Missouri is to make it to the State championship, but to get there you have to win in Districts and Sectionals. A Sectional track meet includes a huge number of high schools. And it’s there that you see what true determination is. Most people only see the track meets in their immediate area, which are mostly upscale kids who all look about the same. However, at Sectional you frequently see kids that are from remote areas of the state and completely lack financial resources. These kids frequently compete without cleats, because they can’t afford them. They run in cheap tennis shoes from Walmart. And yet they win, over and over again. How is this possible? Because they have no chance of going to college if they don’t earn a track scholarship, and they are going to run as hard as they can to make that possible. The same is true with billboards. Somebody who wants to succeed badly enough will always win, as they will put in the time and effort necessary to win. When I started in the billboard business, I was willing to work harder than anyone to make my company successful. I was able to out-compete the largest companies because of this resolve. So don’t let anyone convince you that you can’t make things happen if you really want them bad enough. It’s done every year in track meets, and it’s done every year in billboards.

Why A Billboard Must Be A Profit Center For The Advertiser, Instead Of A Cost

When it comes to renting advertising space, most billboard salespeople get it all wrong. They think the billboard is a cost to the advertiser, just like buying electricity or gas. However, the correct relationship between the advertiser and the billboard is as an investment : the advertiser is investing money in rent to get an even larger return in terms of sales and profits that the sign generates. Understanding this, and presenting this concept to the advertiser, is the foundation of high-volume sales and renewals for any billboard salesperson.

How a billboard makes the advertiser money

The whole goal of any billboard is to bring customers in the door. A billboard is nothing more than a giant salesman that tells every passing car “hey, come buy what I’ve got for sale!” When it does its job effectively, a percentage of everyone who drives by comes in the door and buys. So think of a billboard, not as an ad hanging up in the air, but as a giant salesman that’s on a salary of whatever the billboard costs per month – and has to bring in more sales and profits than he costs.

There’s more to it than just raw sales volume

Not every business has a mass-market product like McDonalds. Some advertisers are selling much higher-cost items that are not always impulse buys, such as cars and houses. So an important piece of the puzzle is not only how many customers come in the door, but how much they spend and – equally important – what the net profit is on every sale. For example, if a car dealer makes $2,000 net profit on every car that is sold, and the billboard generates one sale per month at a rent of $1,000 per month, then the billboard provides a profit of $1,000 per month to the advertiser. If a homebuilder makes a $20,000 profit on each home sold, and the billboard costs $1,000 per month, it will more than pay for itself and provide a great return on investment if it sells only one house per year. You need to think in terms of net profit to the advertiser, not just volume of sales created.

The unique feature of billboards

The most powerful feature of billboards is the ability to be “point of purchase” – which means that a billboard actually has the ability to physically direct customers to the advertiser by saying “exit now”. Newspapers, radio, television, magazines – they all fail to be able to time the advertisement at the very moment the customer is driving by the business. So a billboard is a much more aggressive and proactive salesman than the other options out there. As a result, their results are much more tangible. If a billboard says “Motel 6 Exit Now”, it will, without question, increase the sales of rooms at the Motel 6 and those sales will be a direct result of that billboard. So there really is a direct correlation of the billboard and the sales that are obtained.

Putting it all together

When you go to rent a billboard, your sales pitch should be to demonstrate to the business owner how much money the billboard can make for them. A bad salesman considers the billboard a cost to the advertiser, like buying toilet paper. A good salesman understands what motivates the advertiser to rent the sign is the allure of riches. Show people how to make money, and they are always interested. Show them how to spend money, and they are not that impressed.

And Another Wooden Billboard Goes Up

building a billboard

building a billboard

For those who think that every billboard in America has already been built, here’s another wooden sign going up in a town of around 5,000. This sign will rent for around $4,000 per year, and net around $3,000 after expenses. That’s a pretty amazing rate of return given that the sign will only cost about $4,000 to build. The sequence of events to build a sign like this is very simple. First, a company comes by that installs wooden telephone poles (frequently a utility vendor) and they dig and install the poles in a matter of only a couple hours. They fill the holes with dry concrete straight of the bag, and let groundwater provide the moisture to harden the concrete. Then they nail on the stringers and faces, and the sign is then ready for vinyl installation. You can build a wooden sign like this in a weekend – and the cash flow continues for decades.

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