BILLBOARDS ARE LIKE RIDING A BICYCLE – ONLY MORE PROFITABLE

We’ve all heard the old adage that once you learn to ride a bicycle you never forget it. Well, the this is also true with the entire “out-of-home” advertising industry. The skills from one segment of the industry are the same in the other sectors – it’s very efficient in that regard. So what are the skills that you need to know in order to start a billboard business?

The basic mechanics behind making money

You can’t be in the billboard business without knowing the basic template of making money. It’s always the same:

CASH IN: Revenue from ad sales.

CASH OUT: Ground rent

NET INCOME: The sum of revenue less expenses

This is a very simple business model and this is the same metric whether it’s a billboard or a transit shelter or a mobile billboard.

How to negotiate a property lease

Regardless of the type of billboard or sign you are building, it’s essential that you have the legal right to place that ad on the property. Whether it’s placed on the ground or on the side of a building, you still need a legal document to spell out for how long you get to use it and how much you pay. The basic terms always include the start date of the lease, the amount to be paid, the term of the lease, and the ability by either lessor or lessee to cancel the agreement.

How to select what size and height for the ads – and building material

To be successful, all ads must be seen, and that means they have to be big and visible. But there are limitations by law and budget to how large and tall you can construct them. As a result you need to understand the methodology to determining these facts. Many times it’s based on “keeping up with the Joneses” and at other times there is no other sign products to compare to and you simply have to use your best judgement.

How to figure out what to charge for the advertising space

Every sign has the right price to make it attractive to advertisers yet to maximize your net income. Often this comes initially from making comps of all the other ads in the market. And, at other times, it’s based on an educated decision tied to how many exposures the advertiser gets. One of the most important skills is simply knowing the range of prices you can charge.

How to rent the advertising space

Without an advertiser you have zero revenue, and without revenue you have nothing. So it’s critical you know how to attract an advertiser to your sign. There are at least ten methods to finding an advertiser, ranging from your phone number on the sign to doing a direct mail piece and putting together combo arrangements. There really is an advertiser for every sign – you just have to figure it out.

How to keep the customers happy

A happy customer is a profitable one. The key is to understand how they make money with the ad – because to them it’s an investment. Another item is to watch over the sign periodically to make sure it has not been damaged by a weather event. Signs are very hardy and only a tornado can typically actually impact one.

How to scale the business

Once you’ve learned the above, the final step is to do it over and over again. Once you’ve mastered how to make money, you’re going to want to increase your income stream and grow your portfolio. Whether it’s in billboards or mobile signs or transit signs or event signs – all you have to do is to figure out how to make one unit work and you can replicate it endlessly. Remember that he biggest sign fortunes in America began with just one sign.

Conclusion

If you can ride a bicycle you can certainly get into the sign business. It’s all about understanding the simply steps to doing it and then repeating it until you hit your income target. And, unlike a bicycle, you can’t get injured in the attempt at mastering the process.

By Frank Rolfe

Frank Rolfe started his billboard company off of his coffee table, immediately after graduating from college. Although he had no formal training on the industry, he learned as he went, and developed his own unique systems to accomplish things, such as renting advertising space. Frank was formerly the largest private owner of billboards in Dallas/Ft. Worth, as well as a major player in the Los Angeles market.