Digital Billboard Rate Setting 101
If you’re new to the digital billboard market, you may have some questions. Getting started is not difficult, but it does mean acquiring new skills beyond what you may have used to market other, more static forms of outdoor advertising.
Watchfire recently met with Neil Bell at Rose City Outdoor to talk about some of the common concerns that new digital operators have. As a 15 year industry veteran, he has great advice on what to consider when setting rates and working with advertisers to develop long term revenue for your business. (Check out Neil’s video on rating setting.)
For many operators, the digital billboard business is new territory. Whether you’re the first digital billboard in your area, or starting with a new digital board in an already established market, rate setting is at the very heart of your success. Set your rates too high and you might scare away prospective advertisers, but set them too low and you’re leaving money on the table. Because every market is different, there are no one-size-fits-all rates for digital billboard spots; but with some research, competitive pricing can be established that provides a good return on investment.
Start with some solid research in the market. If other digital billboards are in operation, look at the advertisements on those boards. Talk to those advertisers about what rates they’re paying and if they’re satisfied with the return they receive on those dollars. If your digital billboard is the first in your area, turn to other, more traditional media as a cost reference for setting digital rates. Look at rates for a full-page ad in the local Sunday newspaper. This amount is a good starting point for setting your digital rates.
Getting a traffic analysis done for each board’s location is important. By using figures from the analysis to calculate the cost per thousand impressions – or CPM – for your customers, you can compare your rates to local, traditional media. You’ll also be able to demonstrate the significantly lower CPM that digital offers compared to other forms of advertising that don’t have dynamic features.
The most important, and often overlooked aspect of digital advertising is educating customers on its capabilities and value. By understanding the advantages that digital billboards offer over static boards and other traditional media, you can help customers see significant increases in traffic and business. Features like ad timeliness, day-parting and dynamic content will change the way your customers envision their advertising campaigns, and convert them to repeat digital customers.
Unlike static boards, creating content for digital billboards allows for more creativity and responsiveness to market changes. Charging for help with content creation will limit opportunities for both you and your advertisers. Instead, build the cost of creating content into your rates as a value-added resource. This gives you the opportunity for increased interaction between sales and advertisers, and strengthens the relationship you have with each customer.
It’s been shown that businesses who change their content often during a contract are far more likely to renew. This happens because the dynamic features of digital tailors advertising to the time of day or special promotions with vibrant, continuously updated content that is relevant to advertisers’ customers. Digital outdoor combines interactive and responsive messages with proximity marketing to powerfully promote advertisers and their products.
A final thought on setting rates – always begin with a rate that’s a little higher than what you initially calculate. If you set your initial rate too low, you’ll find it’s very hard to increase it later. It’s easier to start high, then discount your rates if the market or competition requires it.
Remember, the CPM of your digital billboard is going to be far lower than any other advertising medium. Don’t sell yourself short right out of the gate or you’ll miss out on a lot of revenue potential.