7 STRATEGIES

TO SIMPLIFY

DIGITAL OUTDOOR SALES

AND INCREASE YOUR REVENUE

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©2007, Watchfire Digital Outdoor

So you’re thinking about digital outdoor. We happen to know there’s a lot more on your mind than which manufacturer you should choose.

You, like most independent outdoor operators, no doubt have your share of questions about stepping up to digital outdoor. The big one being, “How do we make money with this thing?” So, in order to make you a more informed buyer with a better understanding of the digital outdoor process and how to maximize profits, we’d like to address the seven marketing- and sales-related issues we hear about most from people in your position:

1 :: How do I build an appropriate rate card for my digital board?

2 :: What should I expect in terms of ROI?

3 :: How can I “steal” advertising dollars from other media, thereby growing my per-board revenue in a stagnant market?

4 :: What, exactly, is dayparting, and why will digital outdoor advertisers find it so attractive?

5 :: How do I justify sharing board time with 6–8 other advertisers?

6 :: What is the ideal make-up of a digital sales team and how do you train them?

7 :: What is the straightforward “sales pitch” that advertisers respond to?

ANSWER::

First things first. What should you charge?

Cost Per Thousand, or CPM, is a tool that advertisers and media buyers commonly use to compare different advertising media, leveling the playing field between them. CPM is a measure of how much a medium costs per 1,000 impressions, or people who see it. Most advertisers simply want to know how to most efficiently invest their finite advertising budget (whether it’s in television, radio, newspaper — or digital outdoor), and CPM is the tool they use to see how they can get the most from their dollar.

To successfully sell a digital billboard, you must begin to compare your digital medium’s benefits and costs to newspaper, television and radio. Because of digital outdoor’s flexibility and ability to communicate time-sensitive messages, it has much more in common with these other forms of media than with the rest of your traditional outdoor plant of vinyl, paper or painted boards. You must teach yourself to avoid comparing digital outdoor’s abilities and pricing to any other form of outdoor advertising — it should be directly compared to other forms of “timely, relevant” media.

In general, digital outdoor operators around the country — both national and local — are pricing digital billboards at a CPM of $2–3 (some sources say that number is as high as $5 CPM, but for our purposes, the more conservative number works just fine). The only question left is, how do you price a board to give your advertisers a $2 CPM, for instance?

To get your CPM, divide your gross impressions (the total number of viewers) by 1000 (M) and then divide your total cost of advertising purchase by that number. In other words:

CPM = total cost of advertising purchase / (gross impressions / 1000)

CPM = $2000 / (996,000 / 1000) = $2.008

So if you know you want to achieve a $2 CPM and you know 996,000 people will see that board each month, you simply work backwards. Multiply 2 by 996 (your gross impressions divided by 1000) to come up with the cost of running an ad on your board, $2,000 in this case.

Total cost of running the ad: $2,000

Total audience: 996,000 people

The CPM: $2,000 ÷ (996,000 / 1,000) = $2.008

From a rate card perspective, then, you would start with $2,000 per month per board. Another factor to consider, though, is how long you can lock up a board. The longer you can secure a board with the same advertiser, the less time and energy you have to spend finding another prospect. Typical time frames that board operators use are 4, 12, 24 and 52 weeks. So it goes without saying it might be worth your time to give advertisers a price break on the cost of your board to get them to commit to a longer time.

So a good, sound strategy is to build a competitive rate card (calculating CPM based on the cost of your board and the number of people who see it each month) that positions your digital board as a better alternative to television, radio and newspaper.

QUESTION 2 :: What should I expect in terms of ROI?

ANSWER::

Now that you know how to calculate your CPM, just how profitable can it be to go digital?

Well, in one example, OAAA cites revenues on a group of seven boards in Cleveland jumped from $380,000 to $3.5 million after converting them to digital. *

That’s certainly exciting news, but this is about what you can do. Most independent operators have a portion of their plant that they consider A+ locations — those that command the highest rates or typically have long waiting lists. For most operators these A+ locations are viable candidates for your first digital boards regardless of overall population since digital outdoor is successful well beyond major markets. In fact, daily traffic counts as low as 15,000 can yield substantial profits. These may not be 14’ x 48’ boards, but posters in these situations can make for a tremendous investment.

Which brings us to the bottom line. How would you calculate your potential revenue?

Revenue Formula:

Daily Traffic x 1.38 Adults Per Car = Daily Impressions

Daily Impressions x 28-Day Billing Period = Impressions per Billing Period

Impressions per Billing Period / 1,000 = Thousands of Impressions per Billing Period, or, M

M x Cost Per Thousand, or, CPM = 28-Day Rate per Advertiser

28-Day Rate per Advertiser x Total Number of Advertisers on the Board = 28-Day Revenue

28-Day Revenue x 13 Annual Billing Periods = Total Annual Revenue

Again, bringing it back to something tangible, let’s take a location where you have about 25,000 daily cars. Most digital outdoor operators (from large national operators to independents with local focus) are typically pricing digital billboards at a CPM of $2–$3 (Question 1 shows you how to calculate this rate). So your formula for projected revenue, using the conservative revenue generating CPM of $2, would look something like this:

25,000 x 1.38 = 34,500 daily impressions by adults aged 18+

34,500 x 28 = 966,000 impressions per 28 days

966,000 / 1,000 = 996

996 x $2 = $1,932 per advertiser every 28 days

$1,932 x 6 advertisers = $11,592 total revenue per 28 days

$11,592 x 13 annual billing periods = $150,696

Naturally, your exact revenue is going to depend on traffic and what you can justify billing for a given board. But suffice it to say, this is a great way to open the flood gates on what may well have been a stagnant market due to local ordinances and restrictions on new plants. One way to look at digital outdoor is to consider one digital face a 6–10-time “cloning” of the absolutely best face in your entire plant. If you could magically replicate that face, or structure, with 6–10 others wouldn’t you do it in a heartbeat? That’s the crux of the investment story for digital outdoor.

* Outdoor Advertising Association of America

QUESTION 3 :: How can I “steal” advertising dollars from other media, thereby growing my per-board revenue in a stagnant market?

ANSWER::

As we’ve mentioned, digital outdoor’s flexibility gives it much more in common with newspaper, television and radio than traditional outdoor will ever have. And digital offers that same flexibility of messaging with practically no lead time on changing creative, which leads to dayparting — communicating messages that are time-sensitive throughout the day. Which means you’re suddenly going after money that was previously slated for something other than outdoor. The best potential advertisers on digital billboards are not utilizing your traditional billboard plant right now. They value relevant, timely marketing, and your traditional plant simply can’t deliver it. So they turn to more costly advertising media that can. With a digital board, you can capture a portion of those dollars that you have no shot at today, and you do it without cannibalizing your existing customer base.

Voila. A whole new pool of revenue.

For the advertiser to reach a consumer, digital billboards cost significantly less than broadcast and print. Many advertisers probably aren’t currently maximizing (or for that matter, even using) outdoor because traditional billboards don’t offer them the time-sensitive, flexible advertising opportunities that digital outdoor does.

Digital outdoor offers unique selling points you won’t find in broadcast or print:

:: The ability to change artwork with practically no lead time.

:: It prevents an audience from changing the channel or fast-forwarding through a commercial.

:: A significantly lower CPM than either medium.

:: Proximity to the buying decision that’s at the very heart of all outdoor advertising.

So it stands to reason that positioning your digital board as a cost-effective alternative to the flexible, dayparted messaging advertisers could previously only find in broadcast and newspaper is a great way to “steal” dollars previously budgeted for those media.

Get the rest of 7 STRATEGIES TO SIMPLIFY OUTDOOR SALES AND INCREASE REVENUE at

http://www.watchfiredigitaloutdoor.com/strategies1.