Billboard revenues are increasing in the U.S., after many years of weak performance due to a number of factors including competing advertising products, Covid, and corporate distractions from marketing to such initiatives as DEI. Now, suddenly, billboard rates of return are increasing. In this Billboard Mastery podcast we're going to explore why the sudden shift has occurred and if it's a fad or a permanent change.
Episode 110: Has The Tide Turned? Transcript
The billboard industry used to be so simple. We had no competition coming in from the Internet. We were the old fashioned form of marketing that everyone embraced and loved. And then suddenly the whole advertising world went into a tailspin and the Internet became the big way to reach consumers. And the demand for all other kinds of media, whether it's newspaper, radio, television or billboards, started to diminish. And now suddenly, the tide is changing. This is Frank Rolfe, the Billboard Mastery Podcast. We're going to talk about the simple reasons why billboard occupancy and rents are starting to trend up. Now, back in the olden days, and by olden days, you could go back a century because there were plenty of billboards a century ago. In fact, there were billboards another century before that. In fact, we can go back many, many more centuries because the first billboards existed with the Egyptians who used to carve billboards on big slabs of stone, telling you where you can go to get more hay and water for your animals. But let's talk about the modern industry. And by modern, I would say the modern billboard industry, really the advent of it is probably in the '50s and the '60s, probably around the time of the Highway Beautification act in the early '60s, in fact.
And so what happened was an industry was born by Lady Bird Johnson's unwillingness to have billboards go up near her ranch, on the highway, down near Austin, down in the Hill Country. So she convinced LBJ, who was then president after Kennedy was assassinated, to pass something called the Highway Beautification Act. Most people didn't even know what it was or meant. They could care less. She only cared because she didn't want to screw up the view of her property. But what it did is it limited billboards. So now you could no longer just put a billboard anywhere you wanted. You could just literally before the Highway Beautification Act, you could nail a 4 by 8 sheet of plywood to a tree with your ad on it. And since there was a proliferation of signs with no laws or structure, there's no value in any of it, because who cared if they wanted a sign, they didn't need to rent your sign, they would just go paint it on a piece of plywood and hammer it on themselves. Look at some Pictures of Route 66, which is in operation back in the 1920s, '30s, '40s. Have you ever seen so many signs? Look down a picture of an old Route 66 on Google Images.
You could hardly even see where the businesses were. There were so many signs because you could literally put them anywhere. Beautification act changed all that. Now you could only put signs in certain zonings and spacings. And suddenly there became value to the signs, because with limited supply and rising demand, prices went up. And that's the basic bones of capitalism is supply and demand. So in issues where you have limited supply, with rising demand, prices go up. Where you have unlimited supply and lowering demand, prices go down. So billboards had a huge run of success, starting with the Beautification Act. And it ran for a long time. Many, many, many decades of ever growing demand and rates, and occupancy. And then what happened? Then in the late '90s came things like Google. Google started in 1998, right around the same time as the rest of the Internet. And suddenly you had a new issue, a new supply that came on the scene that had never been seen before. So a lot of advertisers thought, wow, I got to try out this Internet. This seems like the new hot thing with supply going down. What did it do? It hurt all different forms of advertising's revenue and occupancy because there's a limited number of businesses in America with a limited amount of budgets.
And if they all started putting it into Internet, well, then billboards weren't that essential anymore. Nor were newspapers, radio, or any of that. But the good news was that billboards were able to persevere when others were not. Because if you have a newspaper and you're trying to sell as the newspaper, you have a huge amount of operating costs producing the content for that paper. You have to hire writers, have giant presses, big office buildings, just to get those little bit of ads. Billboards, on the other hand, don't provide content. We don't have to get readers. Our readership is derived by people looking through their windshields when they're driving down the road. They have no choice to look or not. We don't have to attract them to the sign. They inherently do it because they're incredibly bored sitting in traffic. So radio, TV and newspapers started to completely fall apart. They could not afford to keep the doors open, trying to create content for people who didn't want to rent the ads anymore. So there came a time when the other guys just completely fell apart. But the billboards kept going and they kept going because they have some underlying strengths that the Internet doesn't have.
The main one being the ability to point of purchase direct traffic. The Internet has no such capability. So if you're driving down the road and you want to eat if you're hungry, so what do you then do? If I'm driving down the road and I want to eat a hamburger, what am I going to do? Well, I don't know. Let's see. Let's look at the billboards. McDonald's exit, two miles. I'll go to McDonald's and I'll get a McChicken sandwich. There I go. Can the Internet do that? Nope. Internet can't sense when you're going to be near that restaurant. Not a chance at all.
Now, your cell phone, there are some forms of advertising you can put on a cell phone where it sends you a text message called Geo-spacing. And that's something, but it's not that great. There's no sex appeal in that. It doesn't really give you a big giant picture of a hamburger with McDonald's golden arches with a big arrow saying exit. Now, it's very passive. And most people, when they're driving, they don't look at their text. They're not supposed to anyway. In some states, in fact, it's illegal, like Illinois to even look at your phone while you're driving.
But it's not the same. So billboards have that one huge attraction. Another huge attraction they have is they're different. They've always been different. They've always been the odd man out in the world of advertising. Newspapers, magazines, they're a dime a dozen. Go to the bookstore today. There's I don't know what, 300 different magazines out there and every topic known to man. But billboards were always kind of weird. They were just these big lumbering creatures on telephone poles or big metal poles standing there staring at you when you drove down the road. And they benefited from being strange because since they're strange, they got attention. They rose above the clutter of everybody else. So now what's happened is the Internet has kind of replaced all other forms of media now as having a whole lot of clutter and hard to get exposure in because the Internet itself is fragmented so much. It used to be the people just went to the same old things, same old places, and advertisers knew that they would always be lurking there, and so it was easy. Today, the Internet has a gazillion options for readers, so it's much, much harder to reach the traffic.
The old originals are no longer the hot thing. You've been following the saga with TikTok. Who knows where all that goes. But there's just so much clutter, so many different competing options, whereas billboards don't have that. The billboards are always just sitting there every day, not going anywhere, but they have no competing messages. When you have a billboard sitting there in the sky above the trees, there's nothing else to look at. Advertisers like that, they like that lack of distraction. They think that's really, really great. And the other part about billboards, which the Internet can never ever do, nor can radio, nor can TV, nor can newspapers, is that exit now point of purchase mentality, the ability to direct traffic off at exactly the right moment to stay at that hotel, exactly the right moment to go into that Arby's drive thru. And that's an ability that nothing else can or will ever match. Familiarity breeds contempt is a phrase some people use. And what that means is over time we get bored with stuff. It's just basically the way humans are. They call it the seven year itch in certain circumstances. And it just means that we always like the new thing.
We get tired of the old. And the Internet has now become the old. So in rapid fire fashion, it went from the new, the new kid on the block that everyone was interested in meeting and hey, what's up? And now we don't really care anymore. And yet those old things are suddenly becoming more attractive. You see it in home design, where people want to move away from modern homes more, back to historical homes. You see the fact that people don't like listening to music so much on YouTube as they like buying vinyl records. Today, many of the old ways are starting to become popular again. And billboards are no different. This is Frank Rolfe with the Billboard Mastery Podcast. Hope you enjoyed this. Talk to you again soon.