Outdoor Billboards: Valuable Real Estate Investment With Significant Returns
As a Billboard investor/company, the return on investment is very impressive. For example, on average the cost of putting up a two-faced billboard is about $40,000. After this initial investment, you rent the advertising space for $1,500 - $4,000 dollars per face per month. Once the structure is in place, a billboard will be used for many years and this means a very attractive return on the investment.
You can find new billboard locations, and obtain ground leases and permits for them.
Ground leases and permits can be bought and sold to other billboard companies (there are normally about two or three huge, public companies in every city) at phenomenal prices. On the low end, you can get $5,000 to $15,000. On the high end, on a very desirable location, you can get $100,000 or more.
Purchasing the land/property as an alternative option to leasing. The property location on which billboards are placed should be visible, have high traffic counts and suitable for giant advertisements. Advertising revenue for a typical billboard a 40 foot high, 14 by 48 foot sign can net the owner an average of $1,000 to $4,000 per month. Prime locations such as Manhattan's 10th Avenue can bring in a monthly income of more than $20,000. A relationship with an outdoor advertising company or a prime location --such as the downtown part of a major city are a couple of ways to keep the billboard in use and the monthly cash flows consistent.
With the ability to spot a perfect undiscovered billboard location and the political know-how to see it through could be in for a sizable payday. However, with the regulations in place in many cities, this is easier said than done. An investor who already owns a building within a high traffic zone should nonetheless give an outdoor advertising agency a call.
Tips for Generating Advertising Revenue
The key to maintaining 100% occupancy on a billboard is to have different types of advertisers in place for the billboard space.
The retail advertiser is the one that pays the bills and makes the budgets work. However, try as hard as you will, this layer will always have some degree of vacancy. Every time the advertiser does not renew, there will normally be some time of lag time before you can find a replacement. That being said, you should normally start re-leasing a billboard sixty days before it becomes vacant, if the existing advertiser will give you that much lead time in the form of notice of non-renewal. Start pushing the advertiser to renew at least 60 days before lease expiration.
Reduced Rate Advertisers:
The second type of advertiser is the smaller/local advertiser who would like that advertising space, but does not want to pay the retail rate. This person will tell you that they really like to sign, but cannot afford the price. So offer them a discount to be on the sign now. Often the price is only 50% of the retail rate. You print this ad on a sheet of vinyl, and have it at the ready to put up the minute the retail advertiser has expired. Even at 50% of retail price, this advertiser offers needed cash flow to pay the ground rent when otherwise the sign would sit vacant.
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