EmailEmail
PrintPrint
Signs of the time: Billboards bring in the big bucks for advertisers
Thursday, April 17, 2008

The recent dustup at City Hall over a digital billboard on the north end of Grant Street turns the spotlight back on a familiar, even mundane, form of advertising that has found new life.

Spending on TV, radio and newspaper advertising fell last year, but the outdoor ad category rose 4.9 percent, according to TNS Media Intelligence in New York. "I think for an old medium, it's really vital," said Pat Wockley, director of consumer engagement at Strip District ad agency Mullen.

While the Internet has siphoned the newspaper audience and cable has divided TV viewers, so far no new technology has threatened outdoor signs -- a form of advertising around at least since posters for the circus went up in New York in the early 1800s.

An important point for advertisers considering a billboard is that, unlike the radio, "You can't turn it off," said Brenda Yeager Carter, a media buyer at Downtown agency Fitting Group.

Meanwhile, recent advances have driven more business to billboards. Vinyl sheets last longer than the old paper billboards and can be moved from sign to sign to put the message in front of different audiences. In some markets, global positioning technology has improved the understanding of who is driving by the boards.

In addition, new digital boards capable of changing messages every few seconds allow owners to sell the same space to multiple advertisers. Revenue can be five to 15 times that of a static board, said David W. Miller, an analyst with SMH Capital in Los Angeles.

"What advertisers love about digital billboards is they can tailor different messages to certain demographics at all times of the day," said Mr. Miller. Starbucks can tell motorists in the morning a latte would make life better. By afternoon, McDonald's could send a message to working parents headed for soccer practice and music lessons.

The ability to change the messages from a central location allows other applications as well, from the Pittsburgh Post-Gazette putting up news headlines to the recent efforts to post primary results in states around the country.

The first digital billboards went up several years ago, said Jeff Golimowski, of the Outdoor Advertising Association of America. The trade group estimates there are now around 800 and growing, although that's still a small portion of the nation's 400,000 total billboards.

Lamar Advertising, the company involved in the Pittsburgh dispute, claimed to have more than 600 digital billboard displays in 37 states and Canada as of December 2007, according to regulatory filings. The Baton Rouge, La., company has been, as Mr. Miller described it, among the most "evangelistic" about going digital.

Even as recessionary pressures seem to be slowing growth in the outdoor ad business in 2008, Lamar expects demand for space on its digital locations to buoy overall results, Mr. Miller said.

Analysts don't see the economy slowing the company's move to the new technology. "Rather, Lamar is committed to positioning the company for the long term by investing in digital displays and the infrastructure necessary to support this new opportunity," wrote Christopher H. Ensley, an analyst with Bear Stearns, in a mid-March report.

Three years ago, it cost an average of $330,000 to install a digital billboard, but now the average is around $240,000, said Mr. Miller. "We think prices will continue to come down."

The company, according to legal papers filed in connection with the current fight, has about 2,200 billboards in Allegheny County. In its regulatory filings, Lamar cites two national competitors. Clear Channel Outdoor Holdings Inc. lists mainly a mall and taxi presence in Pittsburgh, while CBS Outdoor markets large billboards here, according to its Web site.

Consolidation has been a factor in the industry but there's still a number of smaller players, said Mr. Miller. In Western Pennsylvania, that includes companies such as Gateway Outdoor Advertising, 84 Outdoor and Olympus Media.

Billboards always have had their critics and the growth of digital technology is no different. Some cities and states have agreed to permit one digital board in return for taking down several more traditional signs. Some governments still are studying how they will address the technology.

The digital boards aren't likely to ever completely take over. In addition to the expense, there are limitations by virtue of their need for electricity. Mr. Miller estimates Lamar might be able to convert up to one-third of its more than 150,000 billboards nationally. Also, some ad messages are best delivered by the old-style boards that hold a bright, bold image up all day long, said Ms. Carter. "It's a big presence."

Mullen client Highmark now has boards around town offering simple lines such as "More Doctors" or "More Choices" along with the tag, "Have a greater hand in your health." A trek down McKnight Road this week found UPMC and the Pirates delivering digital messages while Indiana University of Pennsylvania, attorney Tom Crenney and Columbia Sportswear were using static boards.

Nationally, growth in outdoor advertising spending is coming from retailers with local stores, telecommunication companies as well as beer and soft drink businesses, said Jon Swallen, senior vice president of research for TNS Media Intelligence.

Other big billboard users tend to be travel and tourism operators as well as media brands such as TV and radio stations, although those tend to ebb and flow depending on the economy.

TNS Media is projecting spending in the outdoor category will rise 5.5 percent this year. The category also can include bus wraps and even gas station video screens but it is heavily weighted toward billboards.

Despite more than one consecutive year of increased spending in the outdoor category, it's still just a piece of the overall advertising pie. Outdoor advertising's $4 billion trailed the $11.3 billion spent on the Internet.

Still if Ms. Carter is any judge, demand for billboard space has grown in the region. "The availability is not what it used to be," she said, noting a few times that billboards were no longer available by the time she got client approval to contract for certain locations.

Teresa F. Lindeman can be reached at tlindeman@post-gazette.com or at 412-263-2018. Rich Lord contributed to this story.
First published on April 17, 2008 at 12:00 am