I own a small, one truck mobile billboard company in Toledo Ohio that I started earlier this year as a project for business school. It was originally just a business plan on paper for one of my business classes, but after a ton of research I decided it made sense to make it a reality. I got my parents to invest, and 9 months later, I have nearly earned back the total investment. My professor was quite impressed, and had only seen a few other students do that.
The next logical step is traditional billboards. I feel that if I do this correctly, it will provide a more stable and predictable income than the mobile aspect. I am approaching this very carefully, and have a few questions. My biggest question is: If there is money still to be made out there, why aren’t the big players in my area (Lamar, CBS, and Brooks) building more billboards? Are they just not interested in doing work for a locations that don’t bring in substantial income? I have identified several locations that seem to most definitely be build-able, and there are permits available… assuming everything works for that location… why has this 24 year old with no experience in static billboards identified a moneymaking location (in an obvious spot that just stands out to you when driving down the street, with a traffic count of 13,000 across from a university) while the professionals haven’t seemed to touch it? While driving around town, nearly 100% of the billboards I see are rented. There are virtually no vacancies, aside from ones that have become blocked or obscured. If this is so, why would the big guys not jump on these locations? Do they just wait for someone else to discover them, do the work, and then sell it to them?
I am patiently awaiting your course. Is there anything you could suggest I do over the next week while I wait for it?
Thanks!
Phil Ritter
First of all, don’t necessarily abandon the mobile billboard concept. If you already have one working, I’d add more to it. Mobile billboards are a perfectly acceptable member of the outdoor advertising fraternity, and you already have one portfolio piece to work from.
On billboards, the first thing you have to realize is that a big company is nothing more than a large group of regular people. They have no hidden magic – particularly in the billboard industry. And the average person in a big company is much less motivated than someone on their own. They regularly miss locations because they really don’t care. Any money that they miss out on is not their personal money anyway – so they aren’t really that concerned about it. One-on-one, the small guy will beat the big guy every time. The only exception is when the landowner is worried about the security of the small guy’s finances – but that really is pretty rare, as long as you have the big company “look” as I describe in the course.
Before you get too excited, make sure those locations you found are legal. It takes a while to appreciate all the subtle nuances in the sign ordinance. But my very first billboard was a location on a major freeway at a major intersection – completely obvious to any idiot that it was a great billboard location. It was 100% legal. Big companies had been working that corridor for 30 years. So why was it there? I have no idea. Nobody had apparently ever bothered to contact the landowner. And they had also missed out on the location next door.
The bottom line is that the market is not nearly as efficient as you think. A lot of people don’t do their job, and another subset could care less. Big companies are particularly weak at executing on their corporate strategies.
In the next few days, I’d study the state billboard ordinance you can get from your Department of Transportation. That law will apply to all signs in the state, so you need to be an expert at it.
Thanks for the prompt reply! Don’t worry, Im not giving up on the mobile aspect. It is still not rented out more than about 40% of the time, so I cannot buy another truck yet. I am just building recognition with the clients I have now, and it is slowly picking up. I want to expand and grow my company into other avenues, and static billboards seemed perfect, as most of my clients have inquired if I had any in addition to the mobile one.
I also had a question about flipping. Is it possible that you could do all the work for a landlease permit, but have no interest from any of the bigs players, evenif it is a good location? What are the realistic chances of a sale happening in the $5,000+ range in today’s market?.. for instance at the location I explained in my last post (university, 13,000 count, many businesses). It would seem almost too good to be true! My goal is to build a portfolio of billboards that I manage, but the thought of flipping to first gain some capital to construct them debt free is very appealing.
I have never had a lease and permit I could not sell. The least I have sold one for is $5,000. My average has been about $15,000 to $20,000. It’s really a matter of economics. If a monopole costs $50,000 to build, bumping the loan to $65,000 does not have a material impact for the buyer. If the location is for a wooden sign that costs $10,000 to build, $5,000 is more appropriate. Even in this recession, most sign companies want to grow. Remember that sign companies lose a certain number of units per year to new construction, ground lease disputes, etc. – so they have to keep adding new locations to keep from shrinking.
You should be able to use the advertising space renting section of the course on the mobile signs. It’s the same business model. I use a multi-point plan on renting each face. I bet there may be some concepts in there you have not used yet. I bet you can get from 40% to 90%+ if you put a microscope on that part of the business. Let me know.
I sold out to Universal Outdoor for $5.8 million, and then sold the Los Angeles operation for around $1 million. I was offered cash or stock, and I should have taken the stock – it would have ended up being about $15 million. But back then, nobody new where the industry was heading – it was before the internet destroyed all the other media competition.
I just find your topic. I need some help with starting my own mobile billboard business in Chicago. I was thinking at first to buy a mobile billboard trailer,just for the beginning to see if I will be able to find any customers. If the business will start up somehow I was thinking about purchasing a mobile billboard truck. Does anybody of you know how much usually a mobile billboard company charge for their service? Do they charge for an hour? I was thinking of hiring a driver (I have a full time job right now which one I would like to keep until my business grow) and let him drive around for 8 hours 5 days a week. Also I will work on weekend but only park the trailer on the event parking lot and let it sit there for the whole event. Can one of you guys help me start the business? I need some more information. Or maybe you guys know where I can research about mobile billboard advertising?? I cannot find any resources where they explain the campaign contract which I will sign with the client.
Please help me.
You need to become an expert on that industry segment first before anything else. Get the marketing materials from the competition and study them, analyze their rates, go look at the product, talk to some advertisers. You need to be the most knowledgable guy in the world on mobile outdoor in Chicago before you buy your first truck. That way you can’t screw up.
Thanks for the quick replay. So what you are saying is that I should contact the competition and ask them how much they charge and for how many hours? I know I have to study first that’s why I want to purchase a trailer first (it cost much less then the truck) and learn. I will probably work only on weekends first and do the job myself. What I need to do so the customers knows that I’m on the market? Should I go and knock to theirs doors?
You can do everything by phone. Gather all the rate and marketing information from your competitors, and talk to a bunch of advertisers. I would also start with a trailer before progressing to a truck, just to minimize my downside risk.
As far as renting the ad space, I’ve got a ton of information on how to do that in the course. It’s the same technique to sell mobile outdoor as static outdoor.
Frank…I just have purchased a Mobile Vehicle Advertise Truck Billboard. I will mount it next week on my tailgate. Can you please let me know where I can find customer which would like to put a ad on my billboard? I know this is a small billboard ( 1.5’ X 4’ ) but like I said I want to start on something small first. Can you advise me how much should I charge for 1 hour? Probably I will drive around the town (mostly on highways) I understand that it will be really hard to find a customer for this little sign but I assume if Taxi drivers can find them without any problems why shouldn’t I?? Is there any website where I can look? Do you think that I should register this service as a business? I will not make much of it on the beginning.
You’ve got to become an expert on that market. Study the competition and their rates. Talk to advertisers. You need to be able to know exactly what the fair price would be before you start selling the ad space.
Selling is a volume business. Make a list of companies that are on taxi billboards for a start. Also get the names of small businesses in the area that would benefit from this service. Follow the ad sales part of my course to the letter.