From “Got Milk” to giant Budweiser bottles, billboard advertisements aim to catch the eye of everyday consumers, but they could also be attracting creative investors.
Outdoor advertising, expected to be a $7 billion industry in 2007, is behind only the Internet as the fastest-growing form of advertising, according to The Wall Street Journal.
Outdoor advertising companies are clamoring to scrape up any and all available billboard space as the spaces are continually condemned by cities and activists and are subject to ever-tightening government restrictions.
Some investors may want to rent space on their property for advertising, but it is not as easy as it might seem. Most cities contain regulations keeping billboards in specifically zoned districts as well as provisions that billboard advertisements must stand a specific distance away from parks and high capacity roadways.
Outdoor advertising company Van Wagner managed to stick billboards in a few New York neighborhoods still zoned for manufacturing purposes, although the factories are long extinct, according to The Wall Street Journal.
Van Wagner’s success shows there may be an opportunity for investors to purchase property suitable for hosting giant advertisements. A typical billboard—a 40 foot high, 14 by 48 foot sign—can net the owner an average of $1,000 to $4,000 per month, according to experts from the National Real Estate Network. Prime locations such as Manhattan’s 10th Avenue can bring in a monthly income of more than $20,000, according to The Wall Street Journal.
It is important to note that billboard investing is not rife with opportunities when compared with other forms of property investment. In addition, there is always the risk that governments will pass legislation that places limits on billboard advertising. For example, the state of California is trying to close a loophole that allows illegally erected billboards that avoid citation for five years to become legal.
A safer option, suggested in the book 69 Ways to Make Money in Real Estate, is acquiring existing billboards, which are most likely grandfathered and hard to remove. Billboards do not present many of the landlord-tenant problems associated with rental agreements. However, investors should be sure that if they are purchasing billboards or properties on which they plan to place billboards that they can easily be leased out to advertisers. A relationship with an outdoor advertising company or a prime location—such as the downtown part of a major city—are a couple of ways to keep the billboard in use and the monthly cash flows consistent.
An investor with the ability to spot a perfect undiscovered billboard location and the political know-how to see it through could be in for a sizeable payday. However, with the regulations in place in many cities, this is easier said than done. An investor who already owns a building within a high traffic zone should nonetheless give an outdoor advertising agency a call. Many of them will do the backend work to get the advertising up and running in exchange for a majority cut of the profits.