The Art Of Pre-Leasing Signs

When you build a billboard you naturally have to rent the ad space out – but you don’t always have to wait until the sign is constructed. In this Billboard Mastery podcast we’re going to discuss the concept of pre-leasing this advertising space prior to construction. It’s a whole lot easier to get a loan and reduce your stress when you already have a paying customer in your back pocket.

What is The Billboard Mastery Podcast?

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.

So you're gonna go out there and you're gonna build a brand new billboard. That's always an exciting thing, but what's a little scary is you're gonna build the sign, but there's no one who's gonna be renting the ad space from you when it goes up. But what if you could go in there and pre-lease the ad space. How does that work? What's the art to doing that? This is Frank Rolfe with The Billboard Mastery Podcast. We're gonna talk about just that one finite concept of pre-leasing billboards. Done it a hundred times, and let me tell you how exactly it works.

The first thing you have to do if you wanna pre-lease a sign that you're building is you've gotta have something to show the advertiser what the sign will look, because that's what they're really buying, that's what they're renting, is a sign on a highway or on a major road, and they've gotta visualize what exactly they're gonna get for their money. Well, how do you do that then? Okay. Well, it's not that difficult. Here's what you do. You have to start off by either getting what's called a flagging pole. This is a pole that you can buy at a survey store that goes up to 45 feet in the air.

It's made of fiberglass, little sections that you pull up and twist and they lock together and has a little flag on the top, and you can then mark down on that flagging pole to what the height of the sign is and the size of the sign face, and you can hold that flagging pole up and you get somebody else to go out there on the road, take some pictures with their iPhone, and you can then graphically put in what that sign is gonna look like, 'cause you know the measurement of the top, you know the measurement of the bottom of the ad face, and you can extrapolate the width based on that height number, and you can do a pretty good representation of what that sign will look like just using Photoshop.

Now, if the sign is even more complicated and much larger and higher than you can do with a flagging pole, once again, you can do that using what is called a Sky Hook crane, a very light crane. You drop the ball down to where the bottom of the face would be, the top of the crane is the top of the face, and you lift all that up in the air 'til it's the exact same height of the sign. You repeat the same exercise, take the photos with your iPhone and you can then Photoshop the image and you can put that billboard exactly as it will appear right in those photos. Many advertisers can visualize that. They can look at that picture. They can see the other signs in the picture. They can see roughly the size or roughly the location. They can think with location. That gives them the confidence to make that purchase because they can see what that is going to be all about.

Obviously, you also wanna take a map and put a dot on the map of where the sign is, and as always, when you're trying to rent any form of a billboard, you wanna give them a traffic count to let them know how many exposures they're going to have per day. You can get that from the traffic count map. Additionally, they'll wanna know whether it's gonna be lighted or not, and whether it's gonna be a monopole or multi-pole, wooden pole. You can provide them all that information and they'll be relatively happy with that. But now what about the rate you say? "What should I ask for that sign? What do I do?" Well, you're gonna have to comp what all the other signs are renting for around you. Look down that road and see if there's any vacant signs for starters. Hopefully there's one, maybe two. It doesn't have to be in the immediate proximity of your location. Call them up and find out what the rates are. If you can't find any vacant signs, call the occupied signs. Call those sign companies and figure out what their rates are. Once you have the rates, now you know what you can ask.

Now, an asking price is often different than what the final price you'll get. That's okay. Nothing wrong with that. This is America. There's some badgering allowed, but you don't wanna ask a ridiculous amount on the front end. Now, also to pre-lease your ad space, often with billboards, it will behoove you to break it down into smaller increments. Take whatever their price is and divide that by 30. Instead of saying, the sign is $900 a month, say the sign is only $30 a day. Many advertisers will look at that and say, "Wait, only $30 a day? Heck, I can't go wrong with this. My hotel is $200 a night. I only have to rent one room every seven days to pay for it." So break it up into bite-sized packages that work for them.

Also be very flexible on your term. Remember, if they don't pre-lease the ad space and you put the sign up, you'll have a pretty good lag period before you get the sign face up, and the rent this sign phone number on there. So be a little more flexible. If you want to say, "Hey, introductory special. You can rent this sign. I'll give you the... You pay me for 12 months, I'll give you 14 months. I'll give you two months free on the front end when I first put it up." But have them put an allowance in there during that period, acknowledging it may not have its lights working during that period, it may not even be fully complete.

There's many, many tricks involved in pre-leasing signs, but they're the same tricks you use in leasing any sign. The only difference is you're trying to rent something that doesn't quite yet exist, and that still require you to have really good graphic package to help people get over the hump as to how it will be. Now, some people will say, "Gosh, you know what, I'm still afraid of it." I've seen your pretty looking photoshopped picture of what the sign will look like, I see the dot on the map, I understand all of that, but hey, what if you get it up and I don't like it? What happens then?"

Well, when you're pre-leasing a sign, sometimes what's gonna be required to get the job done is to give them some ability to cancel if they hate it when it goes up. Now, how does it typically work? Well, make it where they have the right to cancel with 60 days advanced written notice, maybe after they've been up on the sign for 60 days. That way at least you're getting yourself four months of revenue. That's probably gonna get back your final production cost and still give you some money on it. Additionally, when you start to sign off with an ad when it first goes up, it makes people feel like that sign is really in demand. It seems really hot because it's so hot that an advertiser somehow sort it out and slammed their ad up on it when it first went up, so that's actually gonna benefit you when you go out to rent that sign to the next person.

And I found, historically, that when you give people that money back concept where they can get out of it, give them that kind of warranty, like at the auto supply shop, they seldom exercise it. They just like that to feel good, but rarely do they actually want to use it. And particularly if your sign is new and it is well placed, and it is visible and you have good creative, why would they? They're out there selling product. They're making money with the sign, why would they cancel that? Another item when you pre-lease signs is it makes the lending so much easier. When I built my first billboard I ever built, sign number one, ground zero for me in the billboard industry, one thing that made that possible was I had pre-rented the sign to a Toyota dealership.

Doing exactly the techniques I'm talking about, I laid it out, I put it all out there, I went out, I called on some people, I got a Toyota place and they said, "You know what, I'll rent that sign over at both sides from you for $3000 a month." And that is what it took me to get that first loan. That is what broke the ice with the bank, 'cause I went in and said, "I wanna build this billboard and here's how much it will cost, and I've already got it pre-rented for $3000 a month." They were hugely impressed. They couldn't believe I had found someone who would sign a lease on something that didn't even exist yet. And you know what, it worked out so well, they stuck on that sign for years and years and years.

The bottom line to it all is that pre-leasing sign can be done. It's a great idea to do. There are some tricks you gotta use. This will give you an idea to get you started. So if you're building any signs, go out there and pre-lease them first. This is Frank Rolfe, The Billboard Mastery Podcast. Hope you enjoyed this. Talk to you again soon.