Revenues Increase, and So Does Pressure to Limit Signs : Billboard Firms Get Mixed Message
It may be a part of Americana, but outdoor advertising has come under mounting pressure from those who contend that billboards are plastering the nation’s landscape with commercial slogans and pitches.
The often bitter debate has done little to trim revenues of the well-muscled industry, which is enjoying a renaissance sparked by new technologies that enhance the quality of images on the large signs, luring clients that have shunned billboards in the past.
Revenues from outdoor advertising, which amount to less than 2% of the $100 billion spent annually on advertising, have increased steadily in recent years and topped $1.3 billion last year. Sales are expected to grow by as much as 6% this year.
“I tell you it’s part of Americana. I really believe it’s part of the fabric of roadside America,” said Gerard Joyce, president and chief executive of Patrick Media Group Inc., the nation’s largest outdoor advertising company.
That fabric has become increasingly knotted, though, as growing numbers of cities and states have either banned or restricted outdoor advertising, branding the industry a blight on the urban, suburban and rural landscapes.
‘Most Pampered Polluter’
The industry’s critics have blasted billboards since the first roadside sign appeared with the advent of the automobile.
“In our opinion, the billboard industry has become the nation’s most pampered polluter. The billboard industry has taken the view that all of America is a free-fire zone for intrusive advertising,” said Edward McMahon, executive director of the Coalition for Scenic Beauty, a Washington lobbying group.
McMahon said more than 500 cities throughout the nation have either banned or restricted outdoor advertising.
“We are not out to put the outdoor advertising industry out of business,” he said. “We feel it is appropriate in certain locations.”
The number of cities to ban or curb billboard growth is rising and includes Denver, Philadelphia, Anchorage, Tucson, St. Louis, Little Rock, Austin, Charlotte, Jacksonville and San Diego.
A billboard ban recently was defeated by the Los Angeles City Council, which with an estimated 10,000 signs has more billboards than any other city in the nation.
Political clout, McMahon said, has enabled the outdoor advertising industry to withstand any attempts of regulation at the federal level, other than the Federal Highway Beautification Act of 1965.
The act limits billboards on federal interstate highways and roads, but opponents contend it is riddled with loopholes. Under the act, billboards are permitted in areas zoned for commercial or industrial purposes and in unzoned industrial areas.
‘Law Is a Joke’
“The law is a joke, McMahon said. “You can put up a billboard virtually anywhere in this country.”
Executives in the outdoor advertising industry disagree and say they subscribe to the act and have removed billboards from areas in which they no longer are allowed.
“The number of billboards is not increasing. We’ve had somewhat of a thinning of the herd as part of the highway beautification plan,” said Joyce, of Patrick Media.
The Outdoor Advertising Assn. of America, the billboard industry’s Washington lobbying group, said 36 states have reported a decrease in the number of billboards since the Highway Beautification Act was enacted.
According to the association, there were 260,659 legal signs along federal roadways in 1966, the first year under the act, compared with 256,539 now. In 1966, there were 839,361 signs that did not conform to the law, compared with 147,089 now.
Based in Scranton, Pa., Patrick Media has more than 50,000 billboards. Other forces in the outdoor advertising industry include Gannett Co., through its Gannett Outdoor Group unit, and Naegele Outdoor Advertising Co.
Even if more cities join the cry against outdoor advertising, the industry is not likely to be affected significantly. In fact, sign rates are likely to increase under the economic laws of supply and demand.
“(Regulation) really isn’t going to hurt the outdoor industry. It just makes the existing inventory more expensive,” said Sandra Rifkin, editor of Marketing & Trade Decisions, a New York trade magazine for marketing executives.
Monthly rental rates now range from $100 for signs in less-traveled rural areas to $10,000 in big cities.
Rifkin said a survey of media directors conducted recently by the magazine showed outdoor advertising to be in the midst of a “mini-boom” despite the growing efforts to restrict the medium.
In an effort to bolster their image, the members of the Outdoor Advertising Assn. of America approved a revised code of ethics in May, renewing their pledge to respect the desires of localities.
Staying Where They Belong
“From our viewpoint, I think you’ll see we truly believe we should just be in those business areas where other businesses operate. We belong where business belongs,” said Myron Liable, a spokesman for the association.
Although largely supported by revenues from tobacco and hard-liquor companies, both of which are banned from television advertising, the billboard industry recently has caught the eye of a wider variety of advertisers, including travel, food, cosmetic, health care and financial service concerns.
The broadening client base is due in part to declining revenues from tobacco and liquor companies. Rifkin said revenues from tobacco companies had accounted for almost 43% of all outdoor sales in 1981, compared with 23.5% now.
Revenues from liquor companies have been more than halved in the past seven years from 20.3% to 9.9%, she said.
Newcomers Bolster Revenues
Overall revenues, however, have not declined, in part due to strong gains from newcomers to the world of billboard advertising, including health care companies, which have represented the greatest growth of all product categories in the past four years.
New technologies that allow for computer-controlled printing have enhanced the quality of billboard images have led to more creative outdoor advertising campaigns.
“The art departments of advertising agencies have gotten quite proficient at coming up with spectacular artwork,” Joyce said. “They are really playing into some of the strengths of outdoor, its size and full-color capabilities.”
In addition to broadening its range of clients, outdoor advertisers are expanding their horizons to other countries. Earlier this year, Patrick Media began exploring outdoor advertising possibilities in China.
“There are some prevailing thoughts that China is the place to be for the next two decades,” Joyce said. “We are positioning ourselves to be in a position to respond to opportunities that may exist.” He added that the company has no firm plans for China, saying, “We have some ideas, but it is premature to identify them now.”
Despite the steady attacks on the industry, Joyce believes there are bigger threats to outdoor advertising than sign ordinances.
“I think the greatest challenge facing the industry today is to garner a greater share of the advertising dollar,” he said. “I think, as an industry, we do very well on the local and regional level, but we need more national dollars.”
