Watchfire Digital Billboard Blog

Selling advertising space is, in practice, selling an intangible. The deliverable is the benefit that comes from running the ad. Some prospects understand this on a basic level, but have a hard time moving forward on this concept alone. You have to paint them a picture. Lucky for you, your digital billboard can be your giant canvas. 

I was always taught that every good business plan should include an exit strategy. Hopefully you have given it some thought as you grow your digital billboard business.

To begin, we must recognize that the billboard industry of today is not what it was 5 years ago, when a purchase offer might be received soon after an installation. The days of building up signs solely for the purpose of a quick sale to a larger company are gone. Consolidation has slowed because it is more difficult to access investment capital than it was 5 years ago. Small operators must now build to operate and be willing to hold on to their signs longer.

• Have a Solid Package: Have all your financials, permits, leases, construction quotes and necessary documents in one neat package. Additionally, provide a single page brief giving an outline of how digital billboards are sold and operated.  Any marketing materials you have may be a big plus as well. 
   
• Create a Cash Flow Statement: Provide them with a spreadsheet that outlines your construction costs, sales projections, ROI, debt coverage and cash flow valuation.  With this spreadsheet, you and your banker can change sales numbers to view different sales scenarios.
   
• Provide an Operator List: When banks repossess real estate, they know how to market and liquidate those assets to recoup their money.  Billboards are a different story. 
  
  One thing I have done in the past that I feel has greatly helped bankers feel more comfortable with lending for a billboard has been to give them the contact information of as many nearby operators as possible. My presentation is designed to convey that this digital billboard project will be a success (because of the location, my ability, etc), but in order to make them feel secure, they now have a list of multiple operators – and potential buyers – in the event of a loan default. 

When digital billboards came on the scene, segments of advertisers who hadn’t traditionally used outdoor began moving their ad budget from other media to outdoor.  Outdoor’s dynamic characteristics have really helped outdoor advertising become a strong competitor to print and broadcast advertising. 

I have had a few conversations recently with operators who are putting up their first digital billboards and are unsure what size they should build. At the crux of the decision lies a choice between a more expensive 14’ x 48’ bulletin or a smaller poster billboard that might cost less to build but could bring less revenue.

Lately I have noticed a digital billboard trend that has pleasantly surprised me. In my own experience and through some of Watchfire’s customers, I have seen success in several pretty small markets, markets which could be perceived as a risky place to install a digital billboard. It would seem to go against conventional wisdom for a small-market digital board to be able to bring 2-3x what static boards net, but the fact is it is happening in many small markets.

Back in 2006, when I was preparing for my first digital billboard deployment, I read every piece of marketing material, industry report and product description that I could get. Putting up one of these billboards was a big investment for my small company and I wanted to get it right. As with many business-related purchases, price was a big issue, but there were other issues that I felt were very important.

Darrin Friskney, director of Watchfire Digital Outdoor, recently published a blog post on digitalsignagetoday.com discussing five questions to ask your digital billboard manufacturer.

One thing that I have noticed while selling digital outdoor space is the lack of imagination that has kept some advertisers from using the medium properly.  Because of this, the advertisers didn’t get the return on investment that they could have.  They used digital in the same manner as they would with a static board, running only branding and directional messages.

While meeting with a new potential advertiser not so long ago, I was told that they did not believe digital outdoor worked. They had tried it months before in a nearby market with another operator. They explained to me it was a waste of money and it did not show any returns, then thanked me for my time. They just didn’t think they wanted to spend the money again without getting some sort of return.