The number one thing that almost everyone asks me, after I tell them that we are billboard consultants is, “Ooh interesting, so that’s based on how many cars pass the signs, right?” I politely tell them that circulation one of the many things that we consider, but we have found a way to complicate it far more than just counting cars.
We’ve talked about the fact that building owners in Times Square NYC receive 80% of advertising revenue and landowners in Louisville, KY may only get 20% in BillboardInsider articles. I thought we’d dive a little deeper today and talk about why that is the case and the many other things we consider when we are estimating a fair lease rate for a billboard site.
Here’s a short list of the things we consider when evaluating any sign site.
- Market Size
- Other Leases
- Advertising Rates
- The new thing that will probably come up later today that makes each location unique and keeps our job interesting!
I’ll take a small part of the first one (Circulation) in this week’s newsletter. You may have read articles recently about the head of GeoPath Kym Frank stepping down. Or you might have heard someone mention that there is a debate raging about OAAA’s new guidelines for measurement. I’ll leave most of my opinions about those things out, but the root cause for the debate raises a valid question. Should the industry ask advertisers to rely on the “opportunity to see” or the “likelihood to see” a sign?
The argument for discounting OOH circulation (traffic counts discounted for lighting) numbers in 2009 was that other media were discounting their circulation numbers based on a “likelihood to see” and OOH numbers were not believable. Advertisers were reportedly discounting OOH numbers when they put their sign buys into the advertising campaign mix. We think that was a valid argument, but the way that GeoPath did the discounting was deemed a proprietary secret that they could not share. Advertisers could not replicate the formula, so they were told to accept it as a reliable discount.
Whether the industry (pronounced “the big three”) decides to go backward and use an “opportunity to see” or pulls back the curtain and shows the world their secret sauce for discounting to a “likelihood to see” number really doesn’t matter too much in the evaluation of a sign site. As long as we are comparing one sign to others based on the same rules, we will be able to use circulation as one metric for evaluating signs.