When you look at a billboard, you probably just regard it as a company advertising something on a busy highway. What many of us don’t know is that digital billboards are a high performing machine in terms of making money. In reality, billboards provide the most ROI in the real estate sector. Here’s why:
Minimal construction and acquisition cost
Billboards are available in many price ranges. The steel monopole structures found in busy interstates are usually expensive and range from about $50,000 to $100,000. Another category of billboards affordable by the common man are the less expensive group and the actual high performers in the industry of billboards.
Reasonable ground rent
This is the main reason why ROI of billboards are so high. Ground rent cover the majority of a billboard’s expenses and yet is quite a low rate. In US, the average ground rent is about 15-20% of revenues, which is a pretty good deal in return for ground space, access, and no obstruction at all.
Low operating costs
Because the moving parts in a billboard are limited, the operating costs are very low. On the balance sheet of a billboard operation, the only expenses one would see are installation costs, rent, repair and maintenance, electricity and taxes. This means that the average expense ratio on a digital billboard would be less than 40%.
Consistent revenues, even during unstable economy
In good times and bad, billboards will never disappoint you. The reason is because the overall cost per thousand exposures of a billboard is extremely low compared to other advertising methods. Therefore, since billboards are the cheapest advertising form, their demand is consistent, even during recessions.
Easy to negotiate since no one can prove the real numbers
In America, the billboard industry is highly overlooked and that is why no one can tell exactly how much money a billboard makes. If property owners knew exactly how much ROI comes from a billboard, the ground rent would drastically increase, but they don’t have any idea of the profitability of a billboard.