Lamar expands its electronic billboard network

While Clear Channel Outdoor has been stealing most of the lime light in recent outdoor electronic billboard arena lately, Lamar fought back a few weeks ago, announcing it would be increasing its outdoor electronic billboard presence to over 600 displays in operation by year's end, according to this blurb from MediaPost:

Outdoor division president Sean Reilly announced these plans at the Wachovia Securities 2007 Nantucket Equity Conference. That's about 150 or 33% more billboards than are currently in operation. Reilly added that whereas digital revenues represented 2% of the company's revenues in 2006, by May of this year, they represented about 5% of the total so far.

While 5% may still sound like peanuts, keep in mind that Lamar did about $1.12 Billion in 2006, so they're hoping to make in excess of $50 million on their 600-sign network this year. Even assuming that they had all 600 billboards operational by Jan 1 (6 months ago), that would represent about $83,000/sign/year, or just under $7,000/sign/month. When you consider that Clear Channel has been rotating 6 to 8 ads on every screen (and assuming that Lamar did about the same), that would suggest they could charge just under $1,200 per ad per screen per month, which seems pretty reasonable to me.

The trick for both Clear Channel and Lamar right now is figuring out how much cash to spend on the initial build out while the cost of electronic billboards remains high. Because of the large initial capital expense, only the most profitable locations can justify these electronic signs right now, and while both Lamar and Clear Channel certainly know which of their locations produce the right numbers, as we continue to go forward, the question of when and where to expand the network will become more difficult.

Tags: electronic billboards, Lamar, out-of-home advertising