This industry includes establishments primarily engaged in the preparation of poster displays and painted and electronic spectacular displays on billboards, panels, bulletins, and frames, principally outdoors. Such establishments may construct, repair, and maintain display boards and may post advertisements. Establishments primarily engaged in manufacturing electrical, mechanical, or plate signs and advertising displays are classified in SIC 3993: Signs and Advertising Specialties.
541850 (Display Advertising)
Outdoor advertising was the first, and at one time the only, form of advertising in the world. By 1997, with the competing advertising media of television, radio, magazines, newspapers, and cable television, outdoor advertising—primarily billboards—made up less than five percent of total advertising expenditures in the United States.
Historically, outdoor advertising agencies have relied heavily on tobacco and alcohol advertising — at one point these accounts provided more than 50 percent of their revenue. However, in the past few decades outdoor advertising of these products has dropped substantially because of the public's increasing concern for health and safety.
With the decline in tobacco and alcohol advertising, outdoor agencies began to focus on attracting new business. Some advertisers were quite successful in doing so as the most popular billboard spaces, once dominated by long-standing tobacco contracts, became available. According to the Outdoor Advertising Association of America (OAAA), advertisers spent more than $4.4 billion in 1998. Billboards alone generated the lion's share — $2.3 billion, an increase of 9.1 percent over 1997. This increase marked the sixth consecutive year of growth in the industry. This trend was expected to continue during the late 1990s, when the OAAA projected spending on billboards would increase by ten percent each year.
In an attempt to win new clients in the 1990s, outdoor advertising agencies began to use such technologically-advanced equipment as computerized painting and mapping services. These tools allowed outdoor ad companies to provide high-quality images and to target specific geographic and demographic markets. Additionally, outdoor agencies promoted the cost effectiveness of their medium. Outdoor advertising, which in 1999 cost about 81 cents CPM (cost per thousand), was relatively inexpensive compared to other media. A 30-second television ad averaged $10.40 CPM on prime-time network and $18.90 CPM for a prime-time spot. A 60-second radio ad during drive-time cost $5.57 CPM. A quarter-page newspaper ad averaged $11.03 CPM, while a four-color magazine ad cost $9.14 CPM.
Marketers of apparel, packaged goods, financial services, entertainment, and other consumer products and services began to increase their usage of outdoor advertising in the early 1990s. For example, in 1992 McDonald's launched its first outdoor campaign with the introduction of its Value Meals program. Unlike McDonald's, however, most marketers do not use outdoor advertising for product launches, but instead work the medium in conjunction with television and radio. By 1995, such marketers as fashion designers Calvin Klein, Ralph Lauren, and Donna Karan started using outdoor advertising as a major part of their ad campaigns—a move many in the industry took as a sign of the medium's growing strength. "The fashion industry has definitely brought respectability to the medium," Terry McGrath, a partner at the PGR Media ad agency, told Marketing News. "It's bringing in advertisers that wouldn't have even considered it before."
The outdoor advertising industry can be divided into two major classifications: on-premise and off-premise. On-premise advertising basically entails the use of signs to identify a business establishment. Off-premise advertising is a service in which outdoor displays are erected and maintained on property owned, leased, or controlled by a third party.
Off-premise outdoor advertising has generally been geographically subdivided—rural versus urban. The rural road sign tends to the immediate needs of the traveling public, such as food, fuel, and lodging. In urban settings, three kinds of off-premise advertising have historically been found. The first two, transit advertising and neighborhood point-of-purchase, have historically produced only a small volume of business, although by the late 1990s the industry had begun to fully utilize advertising on mass transit buses, subways, taxicabs, and more. The third category of off-premise advertising—called a standardized medium, but better known as a billboard—has dominated the outdoor industry.
Bulletins are the largest kind of billboards and can be found in three sizes: 14 feet by 48 feet, 10.5 feet by 36 feet, and 20 feet by 60 feet. Usually these boards are found on interstate highways. The traditional billboard, sometimes called a 30-sheet, runs 12 feet by 24 feet and has been used for niche marketing. Relatively new to the industry has been the eight-sheet billboard, measuring 6 feet by 12 feet. Previously found in highly dense areas with limited space, eight-sheets are being used in suburban communities and have been especially popular for regional and ethnic marketing. At an average price of $100 to $150 per board in the 1990s, eight-sheets were significantly less expensive than the traditional posters, which sold for an average of $500.
New, technologically-advanced boards have also begun to show up in outdoor advertising. One example has been the Premier panel, created by Patrick Media Group. This type of board offers improved graphics by printing ads on vinyl using computer technology. The Premier panel also has 30 percent more space than a traditional 30-sheet because it stretches the advertisement around the board rather than containing it inside the frame.
The history of outdoor advertising can be traced to the development of mass communication. Until the fifteenth century, public posting was the only means (other than the town crier) of disseminating information. In 1450, when Johannes Gutenberg invented printing from moveable type, messages could be duplicated on a widespread basis and advertising in its infancy took the form of a handbill. Around 1480, William Caxton introduced a new type of printing in England and the first poster was printed. When German Alois Senfelder perfected the lithographic process in 1796, he provided the means for merging the all-type handbill with graphics, creating an illustrated poster.
The printing press made possible the development of two other media: the handbill and the circulated bill. The handbill was popular because it could be distributed in quantity. The circulated bill was the forerunner of newspapers and magazines.
At first, bill-posting consisted of sticking advertisements on walls and fences around London and hoping that the competition would not tear them down or cover them with postings of their own. Eventually, standards were developed to ensure exposure for a set period of time, which required gaining the exclusive rights for posting. As the areas with the most traffic grew, billposters soon began to build their own surfaces. Due to the tendency to use fences for posting, these new structures took the name of "fences." Bill-posting spread overseas with the development of the colonies in North America, and the new structures built in America soon were referred to as "billboards" or "boards."
Early poster advertising in the United States consisted of notices selling farm stock and equipment and announcing county and state fairs, theatricals, circuses, horse races, community parades and celebrations, carnivals, and medicine shows. Since a large portion of the posted material was used to advertise the theater, the local theater manager was often in charge of the outdoor advertising in the city. It also was a common practice to ensure the protection of a posting by giving a present, such as tickets to the circus, to the owner of the billboard.
Outdoor advertising broadened its scope with the advent of the automobile and the U.S. highway system. From the 1920s to the 1960s, outdoor advertising was considered one of the best ways to reach consumers outside the home, especially in areas not covered by the major daily newspapers or magazines. The unchecked growth of outdoor advertising subsided by the early 1970s as environmentalists began to complain about the "clutter," especially in rural communities. Through the work of Lady Bird Johnson, the Highway Beautification Act, which set limitations for billboards in rural areas, was passed in the mid-1960s. December 1991 saw the passage of the Intermodal Surface Transportation Efficiency Act (ISTEA), which banned the construction of new billboards along scenic highways. Despite these and other local restrictions, U.S. cities remain covered with out-of-home advertising opportunities.
Tobacco marketers were the largest outdoor advertisers in 1992, spending $123 million. At the same time, however, the category posted the greatest decline in spending—33.5 percent. To illustrate, TDI, a large outdoor advertising agency, received 23.5 percent of its total revenue from tobacco companies in 1991, but that percentage had dropped to less than 5 percent by 1994.
Because the outdoor ad industry relied so heavily on alcohol and tobacco advertising, it was hit hard by the continual drop in outdoor spending by alcohol and tobacco producers. These reductions can be credited to health considerations and legal restrictions—such as those adopted by many states that forbade liquor, beer, and tobacco billboards from being within 500 feet of places where children spend a significant amount of time.
Annual spending for out-of-home or outdoor advertising has remained relatively small, accounting for less than five percent of all media billings in the mid 1990s. Although agency executives do not foresee outdoor advertising surpassing, or even approaching, the reach of broadcast television, they do acknowledge that the industry has gained popularity with their clients since it has become a cost-effective and timely medium. Advertisers use billboards to support primary media plans, and some major accounts have stepped up their outdoor coverage.
By the late 1990s, as outdoor advertising by alcohol and tobacco companies waned, other categories increased their spending in this medium. According to the OAAA, in 1998 the category of local services and amusements was the greatest spender, accounting for $190.9 million, or 10.6 percent, of all outdoor advertising revenues. Public transportation, hotel, and resorts, was a close second, with $176.8 million, or 9.9 percent of total spending. Retail accounted for $162.7 million, or 9.1 percent; miscellaneous merchandise for $161.7 million, or nine percent; restaurants for $158.1 million, or 8.8 percent; and media and advertising for $143.5 million, or eight percent. A relatively sharp decline preceded the seventh-place category, automotive dealers and services, which accounted for $120.3 million, or 6.7 percent of outdoor ad dollars. The remaining top ten categories were insurance and real estate, with $94.6 million, or 5.3 percent; automotive, with $90.2 million, or five percent; and financial services, with $73.6 million, or 4.1 percent.
Outdoor Systems, Inc., was the largest outdoor advertising firm in North America in 1999, generating revenues of $705.9 million in 1998. The company had 112,500 bulletin, poster, mall, and transit advertising displays in the United States, Canada, and Mexico, and about 125,000 subway advertising displays in New York City alone. The company operated in each of the 50 largest U.S. markets, 13 of the 15 largest Canadian markets, and 44 of the largest 45 Mexican markets. Founded in 1980, the company served the local Phoenix market until it went public in 1996. With that influx of capital, the company expanded rapidly, purchasing Gannett's outdoor advertising operations before acquiring Mediacom, Van Wagner Communications, and dozens of other competitors by the late 1990s. In May 1999, the company agreed to be acquired by Infinity Broadcasting Corporation in an $8.3 billion transaction.
Following that purchase, Infinity Broadcasting Corporation became the nation's leading outdoor advertising company. Outdoor Systems' 235,000 displays were folded into Infinity's outdoor advertising subsidiary, TDI Worldwide, which operates in the United States, the United Kingdom, Ireland, and the Netherlands. Infinity was founded as a small collection of radio stations in 1973, but aggressively began increasing its holdings during the 1980s. By the mid 1990s, it was the largest radio group in the United States. The controversial antics of such radio personalities as Howard Stern and Don Imus generated publicity for Infinity — and fines from the Federal Communication Commission. Westinghouse Electric (later renamed CBS) purchased Infinity in 1996, then spun it off two years later.
By 1999, Lamar Advertising Company was the largest U.S. outdoor advertising company in terms of the number of displays. Operating in 42 states, the firm had erected approximately 125,600 billboards and signs as well as 23,600 Interstate logo signs and 6,100 transit ads. The company has grown steadily since its formation as a bill-posting company in 1902. Beginning in the 1970s, Lamar fueled its diversification and geographic expansion through acquisitions. In 1998, the firm acquired about 40 companies, contributing to its annual revenues of $288.6 million. In September, 1999, Lamar paid $1.9 billion for the outdoor advertising business of AMFM Inc.; as part of that deal, Lamar was required to divest itself of approximately $30 million worth of billboards.
The work force of outdoor advertising agencies is relatively small. According to the U.S. Bureau of the Census, more than 1,300 establishments operated in this industry in the mid 1990s. This figure was expected to increase to more than 1,400 by the late 1990s. The number of employees in the mid 1990s totaled approximately 13,500 and was expected to reach 14,000 by the late 1990s. According to the U.S. Department of Labor, these figures represented less than 25 percent of the work force for the entire advertising industry.
Technological developments such as computer painting, 3-D effects, weekly changes of boards, and geographic and demographic mapping have transformed outdoor advertising into a timely, targeted, and cost-effective medium. One of the most significant technological advancements has been the creation of computerized painting, which has eliminated the quality problems associated with traditional painting methods. Computerization allows advertisers to see their ads beforehand on a computer screen, easily make changes, speed delivery time, and assure consistency in reproduction.
The introduction of computerized mapping and tracking systems has been another important technological development for the out-of-home advertising industry. In late 1995, the OAAA established voluntary industry standards involving the use of bar coding and geocoding technologies. Global Positioning Systems (GPS) are used by many outdoor companies to track the precise location of billboards, as well as to incorporate other geographic and demographic data in order to devise customized marketing solutions. Standards for bar coding facilitate the tracking of advertising copy for all interested parties, including advertisers, printers, and outdoor companies.
Another innovation came with the invention of Poster Audience Research (Postar) in 1996. The system uses both demographic research and neural network technology to estimate the traffic passing billboards in a specified location and the relative visibility of the advertisement. Advertisers can use this information to manipulate other technology, such as rotating billboards that stay fixed during certain times of the day. For instance, advertisers seeking to reach businesspeople can have their signs appear during rush hour, while consumer goods appear during the middle of the day.
In July, 1996, the Federal Highway Administration reversed its ban on off-premise changeable message signs. This technology enables a single structure to display up to three different messages or images. While still subject to state regulations, this federal decree has given outdoor campaigns a boost in competing for the advertising dollar, particularly since consumers have increasingly come to expect flashy and otherwise high-tech ad campaigns.
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