By Nick Coston,

A few weeks ago, a good industry friend asked me point blank “am I wasting my time starting up a place-based, DOOH network? Give me an honest answer, don’t be your usual nice-affable self” he said.

I paused at first then said, “sure, why not, seems to be successful for other companies and it’s a nice product” I told him. He was silent, I wasn’t very convincing.

So, I did a follow-up to my answer asking him “are you buying an existing network or starting from scratch”? He seemed flummoxed by what I said then blurted out “of course from scratch, why would I want someone else’s problems”?

At that point he realized he had answered his own question. Someone else’s problems. Even though I was soft-pedaling my nicey-nice answer, he knew I didn’t mean it.

“No, don’t do it”, I said. I then reminded him while they are good looking products, there’s no guarantee of positive business flow no matter what your projections tell you. Then I asked him the dagger.

“Why not pull your resources and buy an existing small market, profitable billboard company”? He would have existing leases, running advertisers, community relationships, maybe some veteran employees and a most importantly, cash flow.   Maybe even a real office and a pick-up truck. You have none of that now.

I went on to tell him that from there he could build out a smaller, less expensive digital network locally, using the same recognizable billboard company name and upsell existing advertisers. All while not relying on programmatic dollars, save those for later when you have a real digital network.

My point being, why compete in the larger urban areas where display space is at a premium and there’s at least five other companies trying to do the same all using the same business model? I’ve been fortunate enough to attend numerous OOH media shows, whether its OAAA or IBO, and gotten to know plenty of small to mid-size market media owners. They seem happy.

Why? Because most of them have consistent occupancy rates of better than 70%, many of which are renewals. Consistently loyal cash-flow, occasional regional clients too. I then asked him did he know the average occupancy rates for the companies he’s trying to emulate?  He said he could break even at 15% occupancy but that’s based on scaling up quickly and having enough units for real revenues.

Don’t get sold on voodoo numbers I told him. Some of the most successful digital networks today were born out of traditional OOH, be it transit, urban posters, or street furniture. They were patient, found the right business, and built up from there.

Then in a few years, Lamar can swoop on in and buy your entire plant. It happens.

Did my chat change my friend’s his mind? Heck no.

I want him and his company to make it. But don’t discount what has worked for over a hundred years. Start with a sure thing and build out from there.

You won’t even have to come up with a company name; it’s already there for you.

Insider’s Note: Nick Coston has been writing opinion pieces for the OOH industry for 10 years now. His weekly pieces also appear on Substack where you can view the last 2 years worth. Full-time, Nick is the VP, Sales and Sales Strategies for Moving Walls, the Singapore based media and ad tech giant, here in The America’s.

If you are interested, here is Nick’s Substack LINK

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