The Importance of Good Creative in OOH

Check out this funny meme involving DOOH. I hope this brings a smile to your face. Rest assured, this is photo is not real, don’t always trust what you find on the internet. It did remind me of how important good creative is for advertisers. I know operators spend a significant amount of time educating their advertisers on the importance of powerful creative design. With the ever increasing move towards digital, the demand for effective artistic advertising will only increase. When it comes to great resources for smaller operators, IBOUSA is the place to go. They have a treasure trove of resources for implementing impressive creative techniques and even brand recognition.

 

OOH Today shares their favorite OOH creative every week. You can find their top picks here.

A couple weeks ago I asked our readers if they thought now was a good time to consider raising rates. For one of our current projects I conducted a small study to better understand how Ad Rates have changed since 2019 in the Los Angeles Market. My findings were very interesting, you can view the graph below.

Interesting findings right? All display categories declined except for Digital Spectaculars. Our Analysis included both The Reef Sign and Circa’s full motion display. In a separate, geographically broader analysis I compared rates between 2020 and 2021 YTD. Though this analysis was not totally sound proof, it did show that Rates have increased so far this year. My analysis shows that static bulletin rates have increased 39% while digital rates have increased 16%. The catch is that we are collecting more and more digital rates than ever before, which leads me to believe that there is a big push for operators (especially the big 3) to convert existing static locations. Here at SignValue we regularly keep a pulse on OOH advertising climate across the country. For more information about market rates in your region feel free to reach out anytime.

This famous quote from Conrad Hilton recently piqued my interest, “If you are 100% occupied, you are not charging enough rent.”

I hear from many operators that its often easier to maintain their inventory at 100% occupancy because it requires less of a selling expense. Have you asked yourself if it’s time to raise your rates? What is your strategy to increasing those rates without losing valuable long-term customers? An article from Harvard Business Review on Pricing suggests that pricing decision makers only make decisions based on current costs and competitors’ rates. The Article suggests management needs to consider competitors pricing moves both in the short term and long term.

Check out this Graph from one of OAAA’s recent webinars. It clearly shows OOH’s position in comparison to its competitors. Print, Radio, and Local TV will be trying desperately to either hold or reduce their rates just to keep advertisers coming back. This is the perfect time for OOH operators to increase their rates. Consider this article on Inflation from the Associated Press, it suggests that as the economy reopens, demand will soar. Prices will sharply inflate but as demand readjusts, pricing increases will eventually slow resulting in higher overall prices from when the process began. I would love to get your opinion, is now a good time for you to consider increasing your rates?

When was the last time you updated your company website? According to a survey from BillboardInsider, company websites are the most effective marketing tools for Billboard Companies.

I was surprised to see that Facebook took precedent over LinkedIn. Does this mean that Billboards are a B2C transaction? I don’t think so, but I do think that ad buyers are primarily B2C companies who probably spend their time on Facebook. This may be why Billboard companies have seen more success from Facebook rather than LinkedIn, would you agree?

One of the metrics that we sometimes look at when analyzing the value of a billboard company is their advertiser mix to see if they depend too heavily on one advertiser type. This is an important thing to consider when assessing the risk of any acquisition. It can also be important when you assess your lead generation methodology. Do you depend too much on your website or on word of mouth to generate new business? What is the appropriate mix of lead generation tools to create that steady stream of qualified new clients? I would love to know what you think.

 

How much should you get for your billboard lease? This is one question that every landowner asks themselves.

The revenue that your tenant (the sign company) generates from advertising displays is the number one factor in determining a fair market lease rate. The major dilemma for most landowners is that they have no idea how much revenue the sign company generates from the advertising displays on their property. A sign’s revenue potential depends on the number of displays, the size of the displays, visibility, traffic count, and market saturation. Signs with digital displays generate the most revenue (4 times more than traditional static signs). A higher revenue for the sign equals a higher lease rate for you, the landowner.

Keep in mind that sign companies have additional expenses related to the operation of the sign. These expenses include utilities, maintenance, sales, and posting. These expenses cut into the margins the sign company must maintain to ensure the sign is profitable.

Sign companies are more likely to achieve profitable margins in top media markets. For example landowners in areas like New York City can collect as much as 75% of a sign’s revenue, whereas landowners in Louisville get around 15-20%.

Some additional considerations, when was the last time you received an increase in the base rate? If your lease is older than five years and your base rate has not escalated, it is probably time for an increase. SignValue provides lease negotiation expertise to landowners nationwide to ensure that you are receiving a fair lease rate from your sign company tenant.

It would be helpful to pull out a copy of your billboard lease to compare how much your tenant is paying you. Check out the graphic below to see what the average site lease expense was for the three public companies in 2021. Site lease expense refers to the percentage of the billboard owner’s advertising revenue paid to the landowner for the billboard on your property.

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