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Why The Cost of Billboard Is Unjustifiable

The cost of Billboards.

Sometimes, it is difficult to determine the correlation between the cost of a billboard and the subsequent shift in demand.

COVID-19 and the consequences for the OOH Industry

As the economic impact of COVID-19 continues to unfold, brands and agencies need to re-image their advertising methods. The out-of-home (OOH) advertising players will need to rethink their strategies before the damage deteriorates to them bleeding clients too. According to a survey conducted by the Interactive Advertising Bureau (IAB) it is believed that traditional out-of-home advertising is expected to suffer (Forbes) an estimated ad spend decline of 51% for March and April and a decline of 41% for May and June.

The 2020 Ad Forecast released by MAGNA, a company which provides strategic investment and media intelligence it is expected that total linear ads (National and Local TV, Radio, Print, and OOH) sales will decline by -12%. OOH, and print media are expected to take a hit of -12% and -25% respectively.

Adzze has been re-thinking the advertising tactics adapting to a more sensitive message. The team has working on extending its capabilities to offer advertising concepts that can reach the consumers at their safest place: at home. One of these methods uses pizza boxes as advertising space. Think of this as small moving billboard that gets delivered at the consumer’s home. Studies demonstrated that this type of ads can evoke an 80% recall rate (8 out of 10 households individuals remember to see an ad on the pizza box) with an average ROI of 150%. This means, for every 1 dollar the advertiser invested in a pizza box advertising campaign, they received at least additional 2.5 dollars of sales. For more details, see the article Estimating the ROI of Pizza Box Marketing.

The cost of a billboard advertisement is high

Blank billboards and cancelled digital ads across the country and many parts of the globe is a strong pointer to how the coronavirus pandemic sweeping the world today has impacted sign advertising. The devastating effects of the pandemic on human lives could almost be likened to how terribly it has also dealt with businesses around the world. Some out-of-home advertising firms have withdrawn their earnings projections for the year as a result of market uncertainties at the moment. The cost of billboards will become unjustifiable. A good number of businesses that will survive the pandemic will most likely have to struggle to find their footing again. Reports also say that digital ad giants, Facebook and Google have also had their shares of the downturn. Even Coca-Cola has soft-pedaled its marketing drives.

When it comes to billboard advertisements, one thing is clear. The pricing of the billboard is high throughout the US and worldwide. On average, a business spends not less than $15,000 on digital billboards inexpensive US cities like New York. In small to medium towns, the average cost of advertising via billboards ranges from $1,500 to $4,000. Now that is a lot of money, especially for a small company.

On the contrary, alternative advertising techniques like in-the-hand marketing are very cheap and more effective. For instance, $15,000 can place ads on over 65,000 pizza boxes. These pizza boxes can cover over 32 different locations in a city. Interestingly, you will be lucky to generate 100,000 with a billboard in a city like New York per month. In contrast, pizza boxes go in the hands of the target customers.

Therefore, a business will achieve three things when using pizza boxes instead of billboards. First, placing the ad literally in the hands of the target audience helps with precise targeting. Interestingly, accurate targeting is a challenge that billboards cannot overcome. There is no way to choose particular pairs of eyes from a crowd of drivers and passengers on a busy highway.

Secondly, pizza box advertising achieve more rates of engagement than billboards.  Notably, many drivers on highways are busy avoiding accidents and in a hurry to reach their destinations. It is impossible for such a distracted lot even to notice the billboard. On the contrary, pizza buyers spend more than 20 minutes peacefully eating the pizza. During this time, they are peaceful and least distracted. As such, it is highly likely that the people will read the message hence driving up engagement levels.

Estimating the ROI of Pizza Box Marketing

Thirdly, using pizza boxes to advertise enables businesses to track return on investment (ROI) quickly. Say an advertiser dispatches 65,000 branded pizza boxes to 32 locations within New York City. If the ad contains a message about the dangers of drink-driving, one can easily track the number of DUI-based accidents within the vicinity of the 32 locations. If DUI accidents are less than before the campaign, one can quickly determine the ROI. On the contrary, it is difficult to keep track of drivers and commuters who read billboards. Some of them could be visitors from far-off places. As such, there is no way one can keep track of the ROI.

Let’s assume that you are the Marketing Manager of a local movie theater. The recent pandemic caused you a drastic business harm since the past months most Americans were forced to stay home quarantined. Now that your activities are back to normal you must recover the lost sales with more a creative approach.

You start planning a campaign to distribute 20,000 pizza toppers using local pizzerias. The pizza box ads will include a free popcorn in case they purchase a movie ticket.

Typical conversion rates of Pizza Box Marketing range between 4-6%. This percentage will depend on how attractive the offer is and how compelling the artwork is. Let’s assume for this case a 5% client conversion.

Audience Reach: 20,000 toppers

Converted clients (5%): 1,000 new customers

Sales price of the ticket: $15

Incremental sales (after the campaign): $15,000

Cost of the ads campaign: $6,000

Return on the Pizza Box Advertising investment: 2.5x.

Conclusion: for every 1 dollar you invested in a door hanger campaign, you received at least additional 2.5 dollars of sales.