Neil Bell has started a new Billboard Industry podcast called The Bell Board Podcast. You can find it on Apple Podcasts, Spotify or the usual podcast outlets or by subscribing to the Bell Board Podcast on youtube. Billboard Insider C0-Publisher Dave Westburg was Bell’s first guest. Dave talked about four mistakes he sees out of home companies make.
Not staying close to your markets.
First…you need to be close to your markets. If someone wants to do a billboard 500 miles away, or even two or three hours away, they’re not going to pay attention to that billboard. They’re not going to be able to service it. John Arnold has saying: “Never buy or put up a billboard farther than two hours away from your house, because it’s always the billboard that’s farthest away that needs the most work.” So that’s the first thing — operators get overextended and aren’t able to maintain the billboard because it’s too far away. I see this happen again and again.
Building a two sided digital just because you can.
Second: Just because you can build a digital doesn’t mean you should. Maybe your location is in a beach community and the digital on the way out to the beach is great, but you’re going to have a hard time selling a two-sided digital…Maybe you’re putting up a billboard…and the right read heading into town should be a digital…but the left read heading out of town should not be a digital. I asked Bill Ripp, who put up thousands of digitals for Lamar, what he had learned, and that was essentially his answer: just because you can put up two digital faces doesn’t mean you should.
Assuming the economy always goes up
Third, people get in trouble because they think the world always goes up and to the right. It does not. I’ve lived through COVID, where out of home operators saw a severe drop in cash flow and revenue. The decline was maybe six months, but it was severe. I’ve lived through the Great Recession in 2009, where there was a 30% decline in revenue that took years to come back..Having been through 2009, I now bristle whenever anybody says, “Things are different this time — it’ll never happen again.” It will happen again. You need to run your out of home company in a way that could handle a 30% decline in revenue in a single year. Operators, particularly young ones, don’t understand that. All they know is up and to the right. I always say: it’s better to leave a few dollars on the table and not push your leverage to the maximum, because it’s better to live another day. It’s better to be anti-fragile than to maximize your profit completely, because the operator who tries to maximize profit — if he’s lucky, he makes a lot of money, but if he’s unlucky, he loses everything.
Thinking a bad lease will fix itself
The final thing is thinking that a bad lease will fix itself. A bad out of home lease never fixes itself. It’s like pulling out someone’s tooth without anesthesia — it’s not going to happen. Everyone who’s been in the business long enough has encountered a lease with 5% annual inflators, where some guy came in when inflation was spiked and said, “OK, 5% — sure, I’ll give it to you” to get the location and permit. He sells it off to an operator. Well, that operator is 10 years in and now the rental rate is 50% higher. At the end of 20 years, that rate has doubled…So a 5% annual inflator is a bad lease. A lot of operators, maybe, aren’t tough enough in their initial lease negotiations because they want the location.
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