By Dick Rhodes, Dusty’s Outdoor
Covid has wrought “unusual” times to the out-of-home advertising arena. And while media attention focuses on the occupancy and financial results of the publicly traded firms, their results are not necessarily reflective of the private operations, nor should they be the only concern.
The economic conditions brought on by Covid makes Warren Buffett’s famous line well timed, “Only when the tide goes out do you discover who’s been swimming naked.” Most businesses that entered 2020 with too much debt are suffering the biggest challenges of navigating the rough economic waters of 2020. While PPP provided relief for many billboard customers, until the SBA backed debt is forgiven, it appears that most firms are holding onto the cash.
In many rural markets, the economic pullbacks have hurt traditional media channels (TV, Radio and newspapers) the hardest. Radio stations are fighting an increasingly fractionalized marketplace (SiriusXM, Podcasts and streaming music services) very similar to TV. And an anecdotal poll of young professionals was particularly telling. “When was the last time you picked up a physical newspaper?” they were queried. “6-8 years” was the typical response. But most agreed, it was only when their name was actually featured in an article. Good luck building brand awareness in that channel!
From an economic standpoint, and despite Covid, many businesses are thriving. Most drive-up service restaurants are exceeding pre-Covid numbers. Recreational based businesses can’t keep up. The demand for boats, RVs, and off-road vehicles is, in some cases, exceeding manufacturer’s production capabilities. And all those new purchases need insurance. Similarly, campgrounds are sometimes booked out months in advance.
Many customers will contend that billboards are losing money to the “online” marketplace. SEO or “Search Engine Optimization” is a critical buzzword in the online industry. And yet, in a sampling of customers that were “thrilled” with their SEO activities and bragged about their high Google listing, the pay-back measurements ended there. They couldn’t identify specific business that came as a result of improved SEO.
When it comes to the billboard business, Buffet’s famous line could be applied to the customer base, as well. While tempting to deal with national firms and multi-face orders, it’s become apparent that those opportunities that can “roll in like a tide” can depart in a similar manner. Long term, small businesses grow in appreciation for the critical branding that billboards offer. That leads to a loyalty not found in the largest of buyers.
By analogy, many years ago, the banking industry had the opportunity to secure deposits on the open market and deploy that money into loans that they could purchase. The margins were a little thinner, but without the need for loan officers, enhanced profits could be realized. Until they couldn’t. Banks that moved away from a customer-focused approach sacrificed their identity. And in the process diminished the enterprise value of their firm.
While some customers can no longer justify their billboard expenditure. Loyal customers remain and new ones have emerged. While the tide has rolled out, those firms that are standing on a foundation of strong customer relations, will endure.
Dusty’s Outdoor Media operates more than 500 static and digital out-of-home faces across four Midwestern States.
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