Betting On Billboards

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Betting On Billboards
Lisa LaMotta, 08.17.07, 11:50 AM ET

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Should I spend money on outdoor advertising?

Outdoor advertising--the second-fastest-growing ad medium, after the Internet--can be worth your while, but you have to be strategic. Otherwise you'll end up torching a lot of dough for little, if any, return.

The nice thing about outdoor ads--including billboards, buses, hot dog stands and even skywriting--is that you have the customer's full attention. There are no pesky television shows and magazine articles to get in the way.

When developing your strategy, first focus on the audience you're trying to reach.

"If it’s just overall branding, then we are going to use things general in scope like billboards, digital billboards or transit advertising--things that will be seen by more eyes," says Heather Armstrong, director of out-of-home media for GSD&M;, a unit of Omnicom Group (nyse: OMC - news - people ). "Skywriting can be best if you are trying to reach the people on the beach in the Hamptons."

At the high end, billboard rates in New York's Times Square and on L.A.'s Sunset Strip might range from $30,000 to $300,000 per month. While only large companies can afford those nosebleed prices, smaller businesses--though not too small--have options too.

Say you own a $100 million (sales) regional bank in Phoenix. Glenn Carroll, president of Carroll Media Services, an outdoor advertising consultancy that has worked with the likes of Coca-Cola (nyse: KO - news - people ), McDonald's (nyse: MCD - news - people ) and General Motors (nyse: GM - news - people ), says you can pull off an effective outdoor advertising campaign for about $420,000 a year. "This is a pretty healthy buy" for a regional business with a decent-sized [ad] budget of about $3 million, or 14% of the total ad budget, says Carroll.

In this theoretical case, Carroll recommends 10 rotary billboards at $5,000 a piece for six months (about $300,000). For that, about 250,000 viewers--or 7.5% of Phoenix’s population--would see each of your signs every day.

Next, to complement your billboards and hit a more targeted market, Carroll recommends taking out ads on 24 bus shelters, at $350 a piece for six months at a time, for a total of $50,000. Estimated daily viewers: 850,000.

Finally, for an additional $48,000, take out another eight displays in four malls throughout the area during the other six months. Production costs for the entire package (billboards, bus shelters and malls): $20,000.

How to measure the payback on that investment? Currently, the industry uses the number of people who have the opportunity to see an outdoor ad (called the Daily Effective Circulation). This is done by estimating how many people walk past an intersection or drive down a particular highway.

Now a new measurement methodology is coming--a three-pronged approach that will take into account the DEC, adjusted by something called the Visibility Adjusted Index, which considers the specifics of a location, obstructions and other variables that could thwart gazing eyes. The final step: random consumer sampling to measure the visibility of particular ads.

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Companies: OMC | KO | GM | MCD

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