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Welcome to the Billboard Mastery Podcast, where you will learn the correct way to identify, evaluate, negotiate, perform diligence on, select the construction type, build, rent the ad space and operate billboard signs. And now here is your host – the guy that built from scratch the largest privately-owned billboard company in Dallas/Ft. Worth – Frank Rolfe.
All of us, regardless of whatever industry you're in, want to try and distill our business model down. We want to get it as simple as possible so we can make fast, good decisions. And in the billboard space, one thing that comes up constantly is trying to assess quickly if a location has promise or not. This is Frank Rolfe with the Billboard Mastery Podcast. We're going to be talking about things we like to see in a location that typically have historically meant good things, and then things we don't like to see, which normally has meant bad things to come. Now, this is true whether you're looking at buying a billboard that already exists or building one from scratch. So here are the things we like to see and then the things we don't like to see. On the like to see, the very first thing we like to see in a billboard location is traffic. Because without traffic, no one needs a billboard. And there are roads in America which serve almost no traffic. How did they get built? I don't know. We live in a corrupt society. Someone knew someone within the good old boy network and they convinced someone at the road department to build the road because it goes past their farm and that saves them from having to drive down that muddy gravel road to get to their entrance gate.
Those kinds of things do occur in America. But if you're looking at building or buying a billboard on a street, you're going to need to see traffic in at least the thousands as far as the traffic count. And a good secondary street, even in rural America, should be able to deliver at least several thousand to five thousand cars a day. And on your state highways, typically that count is going to be up there, 10,000 plus. On your interstate highways, even in rural areas out in the middle of nowhere, interstate highways still probably produce normally about 30,000 vehicles a day, something like that. And at the high end of the spectrum, there are highways in America that produce several hundred thousand cars passing a day. The 405 freeway in Los Angeles is a perfect example. The LBJ freeway in Dallas is another good one. These are roads that deliver hundreds of thousands of viewers and buyers of goods and services every single day. So when it comes to billboards, the first thing we want to see is traffic. The next thing we want to see is the demographics of that traffic. Because if you have traffic out in the middle of nowhere, that is not as valuable as traffic in a defined area of very high demographics.
For example, a high traffic street in Beverly Hills will rent probably 10 or 20 times more than an average street down in San Bernardino. Why is that? Because the quality of the traffic is also very high. So when you merge high rates of traffic with high rates of high demographic traffic, that is a very saleable and easy item to find an advertiser who wants to appeal to. Now what's another thing we like to see in a location? Well, physically, we like to see that it's got the road orientation such that the sign is in the curve. Now, if the road is straight, then it's fine. But if the road has a curve to it, we want to be where you're curving into the sign as opposed to curving away from it. If you think about it, imagine a road and you're coming to the bend and the bend goes to the left. I want to be on the right side of that bend so that as you turn, you're looking into the sign. But if you're on the other side of that street, then as you go to the bend, you're further orienting your head away from where that sign is located at.
So physical orientation of the location also is important. Another issue is blockage. You don't want to be looking at a billboard where it's coming up, oh, here it comes, here it comes, and bam, it vanishes behind the trees. Or it's completely overwhelmed with a quantity, a plethora of premise signs and power poles. So we also want to have a clear read. That's another important part of the location process. Additionally, we want to see if we can as little supply of signs as possible. If you have a highway and there's a billboard on it every 500 feet, or let's just take old Route 66, which was built before there was any highway beautification laws. I've seen parts of old Route 66 where there's a billboard literally every 50 feet. Ads are lost in that environment. So also in a great location, we would want scarcity. We would want to have very few signs to compete with. It just makes total sense in supply and demand. Another good attribute is, we want to see lots of businesses around that sign to advertise. Because the most powerful saying on a billboard is exit now. So is the billboard in a position where there are businesses that can say exit now? Is there a ramp leading off not far down from the billboard that we can utilize as a tool to get advertisers? Or are we out in the middle of nowhere?
We've all probably driven on highways, for example, the highways that pass out of New Mexico where there's nothing for miles and miles. You might not even see a gas station for 50 or 100 straight miles. It's really hard to find advertisers in that juncture. What are you going to put on the sign? Come to my McDonald's. Exit in 109 miles. People don't like that. You wouldn't even remember it. 10 miles after you saw the billboard, even if you thought I want to stop at McDonald's and get a sweet tea, you won't even remember the exit when you get there. So proximity to advertisers is also something we want to see. So are the requirements on the size and height of the sign that we can build. Some cities hate billboards so much that even though they do allow them, they only allow them so tiny you can't even read them. I've seen cities where they only allow them to be 5 by 5 feet. You can't see a sign that's only 5 by 5 feet. A typical big highway sign is 14 by 48 feet by comparison. Or they'll have provisions where the sign can't be taller than let's say 10 feet tall.
That's never going to work. You can't see a 10 foot tall billboard from the highway at all. Highway typically is going to be higher than that sign would even be. The bottom line to it is, there are certain things about locations that are beneficial that we know from experience are going to work well. But then what are the ones that don't work? It's the exact reverse of everything we just said. It's locations in which you have very low traffic count, very poor quality of traffic, not near any businesses at all, only allows for a short sign and a small sign. Those are the kind of attributes that historically have never proven to be winners. Now can you, at the right price, buy a billboard that's lacking some of this criteria and make it work? Yes, you probably can't build one because building signs is much more expensive in some cases than buying signs, particularly if you're a good shopper. And I've owned signs in areas that violate many of the rules I just stated and they still made money and done well. But that's only because I didn't pay a whole lot for them because typically when you start going against what people want, it means the ad revenue goes down and the vacancy goes up.
But if you can find a sign and you can buy that sign in an area that is not that attractive but you can still rent the ad space very very low then that sign might still work. The bottom line is, there is exceptions to every rule and everything I just said you could handle some degree of exception if there's something that outweighs that as a positive. I once had a location that was in an area where they only allowed signs to be very small and very short but it was the only sign in that whole side of town so I had no trouble finding an advertiser for it. So there are exceptions, qualified exceptions, based on the strength of its other attributes. But the bottom line to it all is, when you're looking at locations, if you stick with what I just told you that will be a good precursor when you're doing your due diligence to whether or not that location has promise or not. This is Frank Rolfe with the Billboard Mastery Podcast. Hope you enjoyed this. Talk to you again soon.