The Economics of Everyday Things
00:06:49 · Dan Levi, Zachary Crockett
[00:06:49] S5: We have in excess of 60,000 billboard faces across the country. [00:06:54] S4: Again, that's Dan Levi, chief marketing officer at Clear Channel Outdoor. [00:06:59] S5: On a day to day basis, I'll work with some of the largest multinational advertisers, Disney, Apple, Netflix, Morgan and Morgan, who's the largest advertiser from the legal services space. But I'll also work with local advertisers. It's a part of the way that they've told their story in their community for years. [00:07:20] S4: Some of these billboards are what are called wallscapes. They're on the side of a building or on the top of a building in the downtown area of a big city. But the more common billboard is the classic bulletin. [00:07:33] S5: Those are the billboards that everyone knows, the large billboards on the side of a major freeway. Most of them are horizontal. The standard size is a 14 foot by 48 foot. [00:07:43] S4: In a desirable area, getting these billboards up and running is a competitive process. [00:07:49] S5: It's something that we don't really talk about that much externally. So we have a real estate team, and our real estate team works with landowners who can benefit from the presence of billboards on their property. And that's everything from government bodies all the way down to individual landowners and small businesses that have either a structure on their property or an interest in working with us to build something.
00:07:49 · Dan Levi, Zachary Crockett
[00:07:49] S5: It's something that we don't really talk about that much externally. So we have a real estate team, and our real estate team works with landowners who can benefit from the presence of billboards on their property. And that's everything from government bodies all the way down to individual landowners and small businesses that have either a structure on their property or an interest in working with us to build something. [00:08:16] S4: Sometimes, Clear Channel will buy land outright and build a billboard on it. This can cost hundreds of thousands or even millions of dollars. Other times, they may work out a lease deal where they pay the landowner a monthly rent for the right to build and operate a billboard on the property. Landowners either get a flat monthly fee or a percentage of the advertising revenue, generally anywhere from 10 to 30%. [00:08:42] S5: There certainly are landlords who recognize that there's value in having billboards on their property, and they will either build it themselves or they'll work with a company like Clear Channel to build it. We plan to do the necessary testing of the land, the engineering work, the design, architectural designs, and then actually do all the construction ourselves. [00:09:04] S4: Building a new billboard is costly. You're usually looking at a $100,000 or more for a standard 14 by 48 foot bulletin along a freeway. That includes permits, steel poles, foundation work, ground testing, installation, and labor. But these days, many billboard transactions involve preexisting structures.
00:09:04 · Zachary Crockett, Dan Levi
[00:09:04] S4: Building a new billboard is costly. You're usually looking at a $100,000 or more for a standard 14 by 48 foot bulletin along a freeway. That includes permits, steel poles, foundation work, ground testing, installation, and labor. But these days, many billboard transactions involve preexisting structures. [00:09:26] S5: The way that companies like Clear Channel and other larger national companies have grown is oftentimes driven by acquisition Because you'll have small business owners who start a billboard company or build a handful of structures and then build a viable local business that at some point, they sell to a larger company to take over the operation of those structures. [00:09:48] S4: On broker websites like billboardsales.com, billboards with proven ground traffic in a desirable location can run upwards of $600,000. It's a big upfront cost, and companies like Clear Channel make their money back by renting out the blank canvas to advertisers. These deals can work in a few different ways. [00:10:11] S5: Most larger advertisers will buy a collection of locations, But then you also have local advertisers who have one store, and they just want that billboard that's down the street from them. [00:10:20] S4: And is there a standard time period that you commit to for a billboard when you rent a billboard space?
00:10:20 · Zachary Crockett, Dan Levi
[00:10:20] S4: And is there a standard time period that you commit to for a billboard when you rent a billboard space? [00:10:26] S5: So a four week period used to be the standard, but Apple, Disney, Netflix, Verizon, GEICO, so many brands do long term contracts for specific locations that they don't wanna ever give up. And so the inside baseball language for that is oftentimes referred to as a perm or a permanent contract, where it's a long term contract for that location where they change the creative out throughout the contract. [00:10:54] S4: For advertisers, billboards can be an affordable way to reach a lot of people. Nationally, the average cost is around $4,000 a month, but the actual prices can vary a lot depending on the market, the specific location, and the size of the billboard. [00:11:11] S5: We have billboards that will cost you hundreds of thousands of dollars to rent for a few weeks, and we have billboards that cost hundreds of dollars. [00:11:21] S4: What's a $100,000 billboard? [00:11:23] S5: Times Square, Sunset Strip, places that are so in demand. [00:11:27] S4: Whether a billboard is in Times Square or on the side of a freeway in Arkansas, the ad has to be carefully designed to attract attention. What works in other mediums often doesn't work on a billboard. It would make sense to assume you could take
00:11:27 · Zachary Crockett, Dan Levi
[00:11:27] S4: Whether a billboard is in Times Square or on the side of a freeway in Arkansas, the ad has to be carefully designed to attract attention. What works in other mediums often doesn't work on a billboard. It would make sense to assume you could take [00:11:43] S5: an online banner ad and just put that on a billboard because it's horizontal. Not only do you have issues with the resolution and the quality of it, but it's a completely different viewing experience. And so we advise our advertisers on, for example, seven words or less. We recommend that they have one image. There are best practices as far as color combinations to make sure that things are readable. [00:12:06] S4: How would you describe the perfect billboard? [00:12:08] S5: Quick, well designed, clean layout, ideally with copy that is easily understood or clever that will get your attention and get you as you're driving by going, wow. What was that? When you get to the office, it becomes something that's sort of lodged in your brain that you wanna find out more about. [00:12:24] S4: And once you have a good design, how do you go about printing a massive 14 by 48 foot billboard? [00:12:30] S5: Back in the day, you used to break it down into individual sheets. You would have artists painting directly on that structure, and then that face will be put on a truck and hung. Today, it's typically large format printing onto a vinyl type of substrate that allows it to be put up as one image.
00:12:30 · Dan Levi, Zachary Crockett
[00:12:30] S5: Back in the day, you used to break it down into individual sheets. You would have artists painting directly on that structure, and then that face will be put on a truck and hung. Today, it's typically large format printing onto a vinyl type of substrate that allows it to be put up as one image. [00:12:50] S4: The printing method isn't the only thing that's changed over time. While most billboards still use those vinyl static images you see on freeways and on the sides of buildings, today's industry is increasingly going digital and high-tech, and that's shaking up the economics of the field. That's coming up.