Part
01
of one
Part
01
Please provide a list of the Top 5 digital billboard advertisers in Times Square, and the methodology or formula used to calculate revenue.
Hello! Thank you for your request to provide the top 5 digital billboard advertisers in Times Square and the formula used to calculate revenue. The short version is that Amazon, Google and Coca-Cola are among the top digital billboard advertisers. The cost per thousand Impression (CPM) is the popular method used by advertiser operators to determine rate card per billboard. I have also included some formulas and a step by step method of estimating and projecting annual revenue for digital billboard advertising. Below is a deep dive of my methodology and findings.
METHODOLOGY
I began by searching for a pre-compiled list of the top digital billboard advertisers in Times Square. After an extensive search, I could not find such list. I, however, noticed that most of my search queries consistently returned three prominent brands based on billboard advertising size and cost of advertising. I have also included an extra two brands based on the popularity of their advertisement. Next, I focused on finding a methodology and formulas for finding annual revenue for digital billboard advertising. I also researched billboard advertising terms and glossary to familiarize myself with specific terms used in that particular industry.
TOP DIGITAL BILLBOARDS ADVERTISERS IN TIMES SQUARE
Amazon Company in partnership with out-front media deployed a 79-foot tall digital billboard in Times Square. It was known as the largest installation to be built by an advertiser. According to Adweek, the billboard which displays the Amazon Echo product has a 22-foot circumference and weighs more than 7 tons.
The company became the first to rent the biggest and most expensive digital billboard in Times Square. Google signed the deal with Vornado Reality Trust. The billboard is 77 feet tall and 323 feet wide and it displays Google different offerings especially the Android. According to Gloaxsolutions, the Mitsubishi Electric screen is 20 million pixels big with a resolution of 2,368 x 10,048. The cost of hiring the billboard is estimated at $2.5 million for four weeks.
Coca-Cola launched the first 3D robotic sign in Times Square. The 68-foot tall and 42-foot wide billboard has 1,760 independently moving LED screens. The billboard was awarded the first of its kind and largest 3D robotic billboard by Guinness book of records. Coca-Cola did not disclose the actual cost of developing the billboard, however, according to a report, the billboard took about four years to complete.
EXO
According to a report, EXO spent between 1$-$4 million dollars to rent a billboard Times Square. The K-pop superstars celebrated their fifth anniversary with a massive Reuters billboard at the middle of Times Square to display greetings, photos and videos by EXO.
OREO
Oreo is one of America’s popular cookies and their billboard advertisement in Times Square was chosen as one of the 40 must see examples of advertising. "This piece also takes advantage of the Times Square space by creating a visual tapestry of sharing that spreads across the screens and leaps from building to building” according to the creative director of Magnus Hierta enthuses.
DIGITAL ADVERTISING REVENUE FORMULA AND METHODOLOGY
1. DETERMINE THE BASE ADVERTISING RATE
According to Watchfiresigns, the tool advertisers commonly used to determine their efficiency in using a digital billboard in a particular location is the CPM (cost per thousand impressions or cost per mille). The CPM looks at the cost of delivering one thousand impressions from people who see the advertisement on display daily. The CPM is also used by advertisers to compare the difference in advertising in different media outlet such as TV, Radio, Newspaper, etc.
(Cost per Month /Exposures per Month) x 1000 = CPM
To determine the cost of the advertising per month, we will rework the previous formula which gives:
(Exposures per Month/1000) x CPM = Cost per month.
Therefore, if we have an exposure of 100,000 people monthly and a CPM of $2, then the Cost per month would be
(100,000/1000) x $2 = $2000
This means that an operator would be expected to charge a rate above $2,000 per month per board and not less.
Also, the length of advertising contract is significant as billboard operators often rent their boards in 4 weeks increment making 13 billable increments per year.
CALCULATE RETURN ON INVESTMENT
The next step is to determine how profitable a digital billboard will be in a location. Below are list of formulas for calculating projected annual revenue.
Daily Traffic x 1.5 Adults Per Car = Daily Impressions
Daily Impressions x Billing Period = Impressions per Billing Period
Impressions per Billing Period /1,000 = Thousands of Impressions per Billing Period, or, M
M x Cost Per Thousand or CPM = 28-Day Rate per Advertiser
Rate per Advertiser x Total Advertisers per Board = 28-Day Revenue
Revenue x 13 Annual Billing Periods = Total Annual Revenue
The above formulas apply to all level of digital billboard advertising revenue. Several factors might affect the cost per thousand or revenue. Daily traffic, location, and the billing cycle strongly affect advertising revenue. Most advertising operators would prefer the 4-week billing cycle as that would amount to 13 times billing cycle in a year instead of 12 billing cycles.
CASE SAMPLE - TO ESTIMATE ANNUAL REVENUE FROM A DIGITAL BILLBOARD ADVERTISEMENT IN TIMES SQUARE.
According to an article in Fitsmallbusiness, advertising cost for small to mid-size US cities cost around $1,500 to $4,000 while it could be $14,000 or higher in big cities like New York.
Using an estimated data figures for Times Square, I have attempted to walk you through on how to calculate projected annual revenue.
To calculate annual revenue, we can follow the following steps:
Daily impression = 300,000 x (1.5 * 115,000) = 51,750,000,000
Impression per billing period (4 weeks) = 51,750,000,000 x 28 = 1.449 billion
Thousands of Impressions per billing period (M) = 1.449 billion/1000 = 1.449 million
To calculate for 28-Day Rate per Advertiser, we first calculate the CPM using the formula
28-Day Rate per Advertiser = 1.449 million x $6.36 = $9.2 million
28-Day Revenue = $9.2 million x 1 = $9.2 million
Total Annual Revenue = $119.6 million
INDUSTRY TREND
According to Ibis report, the Billboard & Outdoor Advertising in the US is estimated at $8 billion in 2017 at CAGR of 0.2%. The industry is set to grow at a steady rate of about 4% in 2017. A 2016 Nielsen OOH ad study found that 91% of 16 years or older, noticed some form of Out of Home advertising while traveling and about and about 82% of billboard viewers reported they watched the advertising message at least more than once. Also, another study stated that 71% of digital billboard viewers find them to stand out more than online advertisements.
CONCLUSION
To wrap it up, Amazon, Google and Coca-Cola are among the top digital billboard advertisers. The cost per thousand impression (CPM) is the most popular method used by advertiser operators to determine their rate card per board. I have also included some formulas and a step by step method of estimating and projecting annual revenue for digital billboard advertising.
Thank you for using Wonder! If you need anything else, please let us know.