The Los Angeles City Council voted unanimously to ban all new billboards in a city that currently has approximately 10,000 such structures. The Council also rejected proposals by the industry to erect 50 new billboards along high traffic volume freeways in exchange for removing about 2,500 signs on low traffic volume surface streets. Most of the Council members hailed the ban as the first step in raising the image of the city and reducing visual blight. There are at least 1,000 other communities and six states in the U.S. that prohibit new billboards.
Officials have also started planning a program to create and maintain an inventory of all billboards in the City, and remove illegal structures. The recently launched auditing system to detect illegal signs is intended to eliminate billboards that do not have permits. Additional proposals to control outdoor advertising include raising annual permit fees. The current fee level is nominal and does not come close to covering the cost of the monitoring effort that many citizens desire. Higher fees could provide the funding of the City’s efforts to begin keeping track of billboards.
The billboard industry’s offer to swap 2,500 signs on less traveled roadways for 50 new billboards at freeway locations was rejected, but it demonstrates the importance of traffic volume on billboard value. Signs on high-volume freeways are clearly worth more than similar signs on side streets with much lower traffic. We analyzed the proposed swap to gain insight to factors that drive billboard value.
The ratio of signs to be removed compared to new signs is 50 to 1 (2,500 to 50). On its face, this would indicate that some signs are worth 50 times more than others. How does that compare to traffic counts? Some freeways in Los Angeles carry 300,000 vehicles per day, while arterial streets often have volume from 20,000 to 50,000 vehicles. Assuming that the sign companies would have removed signs on the lowest-volume streets, it can be argued that the average traffic count of the relinquished sites would be 30,000 vehicles per day. This means that the ratio of traffic gained to traffic lost is 10 to 1 (300,000 to 30,000). That ratio accounts for some of the 50 to 1 trade off in removing old signs, but not all of the difference.
Other factors that would make a 50-to-1 swap attractive to billboard companies include size, demographics, and visibility. First, if the billboard companies had free choice in identifying the signs to be taken down, they probably would have included smaller displays called Junior panels. These signs are normally 6 feet high by 12 feet wide. Advertisers pay much less to display their message on these signs than on the large 14 X 48 billboards normally seen on freeways. Thus, the size of the proposed new signs is 8 to 10 times the size of many of the signs selected for removal. Second, the likely candidates for removal might also tend to come from lower income neighborhoods. These locations are often the most difficult to sell to advertisers because of the lower buying power of local residents. Billboard operators often display public service messages in these areas because they cannot easily sell the space to paying advertisers. Consequently, the signs given up would be low-income and low-occupancy, whereas the new freeway signs would be high-income high-occupancy structures. Third, the signs selected for removal would probably have included display faces with obstructed or limited visibility. These signs tend to have lower values even if they are located on high-traffic streets. Advertisers are not willing to pay full rates if their message is not easily seen by passing traffic. Finally, all of the 50 new signs might have had two faces, while some of the removed billboards may have had only one face.
Our analysis did not result in a clear mathematical allocation of the reasons for the proposed 50 to 1 swap of billboards. It can be attributed to multiple factors including traffic count, size, demographics and visibility.