The electronic billboard industry has continued to grow steadily since 2008 despite the economic recession, but the reception of these displays continues to be one of mixed feelings. Younger generations find these displays to be “hip,” “cool,” and “eye-catching,” but politicians and lobbyists are having a hard time accepting them. Of the 50 states in the U.S. only 39 allow these displays to be erected, with some states keeping a watchful eye on their effects. Regardless of one’s personal feelings on this subject, electronic billboards are on an unstoppable path of growth due to the profit they provide their owners. One large publicly traded billboard-advertising conglomerate noted that it obtains 10X more profit from electronic billboards than traditional printed billboards. But yet, the U.S. will not be overrun with electronic billboards any time soon—depending on where you live. Even the most optimistic growth assumptions project that electronic billboards won’t account for more than 3.5% of all billboards in existence in the U.S. by 2015.
U.S. Electronic Billboard Market Size
Despite the 2008 to 2010 slowdown in demand for electronic billboards due to both the recession and manufacturing capacity, IT Strategies expects strong growth of electronic billboards to continue. Electronic billboards are too valuable to their owners: the revenue that is generated from an electronic billboard is more valuable than printed billboards in part because the number of advertising turns is typically 6–20X greater, and in part because owners can charge more since the retention rate on electronic billboard advertisements is said to be over 94%, compared to 40% on printed billboards.
To project growth, we’ve provided two growth rate scenarios: one at 30% and one at 40%. The difference in percent seems small, but the effect on units compounded over time is significant. Based upon the unit projections, the installed base is likely to grow to between 12,000 to 16,000 units in the U.S. by 2015. This may seem aggressive, but as a percentage of the total billboards in the U.S. (estimated at 450,000 including both bulletins, 30-poster and 8-poster sizes) electronic billboards will still only account for approximately 3.5% of all billboards installed. These projections don’t mean that there are no obstacles to the growth of electronic billboards. On the contrary; the barriers remain as high as they were in 2008.
Community Reception of Electronic Billboards
Several states have proposed temporary bans on electronic billboard displays to further study the effects on distractedness of motorists—public safety is a priority. The plan is to put cameras in motorists’ vehicles tracking their eye movements. Early studies showed that there is no difference between the levels of attention paid towards digital displays vs. traditional billboards. As the public and companies become better informed about the upside and governments relax their grasp on regulation, the growth of these displays will be even more rapid, moving from steady to exponential growth. Expect to see more markets open up and old ones get makeovers.
Counteracting local community resistance to electronic billboards is millions of dollars spent by the major billboard real estate space owners, including CBS Outdoor, Lamar, and ClearChannel. These companies collectively own roughly 400,000 traditional billboards each and are looking towards digital displays as the future. IT Strategies estimates that in 2012 over $25M was spent by the billboard owners collectively lobbying for the allowance of electronic billboards.
Electronic Billboard Locations
Over 75% of electronic billboard placements can be found in 17 major metropolitan regions, where the four major players often overlap. Six of the 17 markets are in the top 20 for most congested highways (Los Angeles, San Francisco, Chicago, Miami, Dallas, and Atlanta). Strategically placed at bottlenecks and heavily congested areas such as the highway through San Francisco, digital displays have an opportunity to reach over 875,000 people daily. Boston is another area of high density and large commuter presence with 4.4 million residents and commuters as well as 16 million tourists yearly. Even areas with low populations such as White Plains, N.Y. (56,000) have high commuter presence (200,000).
The addition of billboards in these areas could boost sales significantly when reaching the right clients. Less than 25% of electronic billboards are found in markets with populations less than 250,000 residents. As the cost for electronic billboards continues to decrease, more growth is likely to be found in those smaller population markets in part because there tends to be weaker community opposition. For example, the market between Appleton, Wisc., and Chicago, Ill., appears to have more electronic billboards per capita than any other market in the U.S. States that have so far banned electronic billboards include Arizona, Vermont, Alaska, Hawaii, and Maine.
Public Service Message Uses for LED Billboards
The possibilities for LED billboards go beyond advertisements. Some of the more common uses of these displays include streaming live news, scores, weather updates, etc., but one of the more unique uses is helping the government track down criminals. The FBI has contracted with several outdoor companies to display most-wanted criminals on billboards. One man, a notorious bank robber, was at large for two years before his face was displayed; it then took a mere nine days to track him down. In keeping with law enforcement, billboards have also displayed Amber Alerts, with similar results and children reunited with parents shortly thereafter. All of this would not be possible on traditional billboards.
While over 96% of billboard locations will continue to be printed billboards in the U.S. market through at least 2015, electronic billboards will become more ubiquitous. CBS Outdoor, Lamar Advertising, JC Decaux, and ClearChannel are all putting LED billboards at the forefront of their vision, investing more and more into them each day. The driving factor is the ability to provide more advertisement into the same space, increasing the revenue utilization of that space, followed by a reduction in labor costs. Factors holding back more placements and conversion from printed to electronic billboards will eventually be not hardware cost and return-on-investment, but mainly outside factors, such as regulatory and community opposition. The court of public opinion may slow down placements of electronic billboards, but it is unlikely to stop them entirely.