One of the methods that the out-of-home advertising industry is using to outperform traditional advertising mediums is their deployment of digital displays. These digital displays have an internet connection and can be controlled remotely to easily switch out ads in real time.
The nation’s largest billboard companies are seeking as many digital conversion opportunities for their static displays as possible. So far this year, Outfront has converted 64 static locations, Lamar has converted 82, and Clear Channel has converted 40. By the end of 2021, Lamar projects to convert about 215 locations (Lamar 2021 Q2 10-Q).
The revenue mix for the OOH industry is leaning strongly towards digital billboards. Let’s take Outfront, for example. In Q2 2021, Outfront was operating 47,000 total billboard advertising displays, 1500 of which were digital. This means that 3% of their inventory was accountable for 20% of total revenues. Outfront estimates digital displays to soon drive 40% of their total revenues (Source: Jeremy Male USB Global TMT Conference, 2019).
At the USB Global TMT conference, Outfront CEO Jeremy Male noted that digital billboards generate four times the revenue of static displays, while costs may only increase two fold. If your billboard tenant approaches you about converting their sign to digital, you should expect a major increase to your lease rate.
There are a number of factors that go into determining whether the billboard on your property qualifies for a digital conversion. These include, but are not limited to, local sign ordinances, competition, advertising demand, and lease terms.
For any landowners who have been approached by their billboard tenant about converting their sign to digital, there are important legal considerations that need to be addressed in the lease. It’s essential for every landowner to understand these legal considerations to ensure they are signing a fair and equitable lease agreement. SignValue offers a free consultation for any property owners seeking more information.