The Economics of Everyday Things

109. Billboards

October 6, 2025

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  • Despite the dominance of digital advertising, the billboard industry, categorized as Out-of-Home advertising, is thriving and growing by digitizing its medium and leveraging mobile location data for targeted impressions. 
  • The economics of billboards involve significant upfront costs for structure acquisition or construction (often $100,000 or more), with revenue generated by renting space, traditionally on four-week cycles, though long-term 'perm' contracts are common for major brands. 
  • Digital billboards significantly enhance revenue potential by rotating up to eight ads per structure and utilizing programmatic auctions, allowing for dynamic creative changes based on real-time data like weather or sports scores, and enabling demographic targeting based on aggregated mobile device location history. 

Segments

Introduction and Dan Levy’s Role
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(00:00:31)
  • Key Takeaway: Dan Levy transitioned from digital advertising to become CMO of Clear Channel Outdoor to modernize the billboard industry.
  • Summary: Dan Levy, previously focused on digital advertising, joined Clear Channel Outdoor to help bring the world’s oldest advertising medium into the 21st century. He is now the Chief Marketing Officer at one of America’s largest billboard operators. Billboards, despite seeming antiquated compared to Facebook and Google, remain highly visible in major cities.
Billboard History and Scale
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(00:03:40)
  • Key Takeaway: Modern billboards evolved from large posters used by traveling circuses over 200 years ago, growing alongside road infrastructure.
  • Summary: The precursors to modern billboards date back at least 200 years, starting with large posters advertising traveling circuses like Barnum and Bailey. By the 1870s, a small industry emerged around building and renting billboards. The U.S. currently has about 350,000 static billboards and over 30,000 digital ones.
Out-of-Home Advertising Context
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(00:05:19)
  • Key Takeaway: Out-of-home advertising, including billboards, is a $9 billion business that is growing while print and cable TV decline.
  • Summary: Out-of-home advertising encompasses any advertising seen outside the home, such as in subways, airports, or on billboards. While it is a small sliver of the $370 billion U.S. advertising industry, it is a $9 billion business that continues to grow. Billboards offer a special advantage because drivers often spend more time viewing them, especially when stuck in traffic.
Industry Structure and Real Estate
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(00:06:38)
  • Key Takeaway: The billboard industry is dominated by three national players, and securing prime locations involves complex real estate negotiations with landowners.
  • Summary: Around 65% of the billboard industry is controlled by Lamar Advertising, Outfront Media, and Clear Channel Outdoor. Securing a location involves working with landowners, which can include government bodies or individuals, often through lease deals paying 10% to 30% of revenue. Building a new standard 14x48 foot bulletin costs $100,000 or more.
Renting Billboard Space
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(00:10:14)
  • Key Takeaway: Standard billboard rental commitments used to be four weeks, but major brands now secure long-term ‘perm’ contracts for specific high-demand locations.
  • Summary: Billboard rental deals can involve advertisers buying collections of locations or securing a single billboard near a local store. While four weeks was the standard rental period, major brands often sign long-term contracts, referred to as ‘perm’ contracts, for specific spots. National average rental cost is about $4,000 a month, but prime locations like Times Square can cost hundreds of thousands for a few weeks.
Billboard Design Best Practices
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(00:11:33)
  • Key Takeaway: Effective billboard design prioritizes brevity, clarity, and high contrast, recommending seven words or less and a single image.
  • Summary: Online banner ads do not translate well to billboards due to resolution and the different viewing experience. Best practices advise advertisers to use seven words or less and one image, focusing on clean layouts and clever copy that sticks in the viewer’s mind. Modern printing uses large format vinyl substrates applied as one image, replacing older methods of painting individual sheets.
Digitalization and Programmatic Sales
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(00:13:00)
  • Key Takeaway: The conversion of static billboards to digital displays multiplies revenue opportunities eightfold and shifts sales to programmatic auctions.
  • Summary: The increasing digitization of billboards is shaking up the industry’s economics, with the number of digital billboards more than doubling between 2018 and 2023. A digital billboard can rotate up to eight ads, creating eight times the revenue opportunity of a static sign. Space on these digital signs is sold via programmatic auctions, where computers bid in milliseconds based on audience parameters.
Targeting via Device Data
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(00:20:10)
  • Key Takeaway: Billboard companies leverage location tracking data from smartphone apps to analyze the prior behaviors of devices passing a sign, allowing advertisers to select the most relevant audience composition.
  • Summary: Advertisers increasingly seek targeted audiences, moving beyond the traditional one-to-many model. Billboard operators analyze the composition of devices seen passing a billboard by looking at prior location data from apps. This allows them to advise advertisers on which billboard location delivers the highest percentage of the desired demographic, minimizing buying inefficiency.
Criticism and Regulation
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(00:21:18)
  • Key Takeaway: Billboards face criticism as eyesores, leading to bans in four states and regulation under the 1965 Highway Beautification Act, which is further complicated by local municipal ordinances.
  • Summary: Scenic America actively fights new billboards, and the medium is banned outright in Alaska, Hawaii, Maine, and Vermont. The Highway Beautification Act of 1965 limited construction primarily to commercial areas and set standards for size and spacing. Companies must also navigate content restrictions imposed by landlords or local ordinances regarding proximity to schools or houses of worship.