What Is the Best Value for Advertising Your Business?
Outdoor signage is one of the most cost-effective ways to advertise your business. But how do you measure its real value? Let’s take a look at an example:
Mya is opening up a new bistro and wine bar in a location that previously housed a pizzeria. She likes the idea of getting a set of illuminated channel letters and is trying to decide between the following two options:
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Option 1: Replace the faces on the cabinet of the existing pole sign that’s in front of the property or
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Option 2: Remove the existing cabinet on the pole sign and replace it with a new illuminated cabinet with a digital message center to promote specials and events.
To make a smart choice, Mya wants to calculate the cost per thousand impressions (CPM) for each option.
How to Calculate a Cost per Thousand Exposures for Your Sign
1. Determine the Total Cost of the Sign
Include all expenses:
- Initial investment
- Installation
- Estimated service & maintenance over the lifespan
2. Estimate the Lifespan of Your Sign
Well-constructed signs typically last 12–15 years, depending on materials and environment.
3. Break Down Monthly Cost
Divide the total cost by the number of months the sign will last. Factor in the amount of service and maintenance expenses that you might incur during the lifetime of your signage. Again, this is going to depend on the type of sign you're getting and why it’s important to know what materials are being used during the manufacturing process.
For a newly manufactured sign, expect to require about 1-2 service a year. Divide your average annual cost per month for your sign by 1,000. This will give you your monthly gross impressions in thousands.
4. Estimate Monthly Impressions
Conduct a traffic study to determine the total number of possible consumer exposures (over a 30-day period). This is information that the public of transportation should be able to supply, if not, you can refer to a sign company.
5. Adjust for Sign Visibility
Since all signs are not equal it is good to narrow down the level of effectiveness of the signage. Things such as illumination, contrast, and type of signage can determine the level of consumer exposures for that specific sign:
- The probability that a vehicle will have more than one person riding in it
- The likelihood that not everyone will actually notice your sign.
The number used above for On-Premise Sign (30,000) is typical of a four-lane road that passes through a commercial business district in a mid-sized American city.
6. Calculate Cost Per Thousand Impressions
Take your monthly cost and divide it by your adjusted monthly impressions (in thousands). Think of how much advertising you would need to purchase in other forms of media to obtain the same number of effective consumer exposures. On-premise signage is one of the most affordable forms of advertisement to gain brand recognition.
Now going back to our example, Mya’s Bistro and Wine Bar - we determined that the illuminated channel letters would cost her $9,500, replacing the cabinet faces would be $5,260 and to re-do the entire cabinet with a new message center, it would be $38,000.
The traffic study that was conducted determined that there are 52,761 vehicles a day that are exposed to her restaurant. Out of those, only 6 out of every 10 drivers were aware of the pizzeria that was located there from poor on-premise signage. With a new pole sign and message center, we expect that the lifespan of the sign will last an additional 3 years and 9 out of 10 vehicles will notice her signage.
So let’s take a look at what the cost per 1000 impressions would be for the above example:
Option 1 : No Message Center
- $ 9,500 illuminated exterior signage + $5,260 face replacement + $3,600 service over lifetime of sign = $18,360 (Total cost of sign)
- Estimated lifespan = 12 Years
- $18,360 / 144 months (life span of sign) $127.50/month
- 52761 impressions/day * 60% = 31,656 adjusted impressions/per day
- (31,656 * 30) = 949,680 adjusted impressions a month
- (949,680 / 1000) = 950 / $127.50 =
- $7.45 cost per 1000 impressions
Option 2: LED Message Center
$9,500 illuminated exterior signage + $38,000 electronic message center + $3,600 service over lifetime of sign = $47,500
- Estimated lifespan = 15 years
- $47,500 / 216 months (life span of sign) = $219.90
- 52,761 * .9 = 47,485 adjusted impressions per day
- 47485 adjusted impressions/day * 30 =
- (1,424,500 adjusted impressions per month /1000) =
- $6.48 cost per 1000 impressions
What the Numbers Tell Us
So as you can see, Mya’s cost per 1000 impressions is nearly $1.00 less if she was to go with the LED message center. While the LED message center costs more upfront, it delivers a lower cost per impression. That means greater long-term value and better visibility for Mya’s new business.
One thing to keep in mind is the importance of the design and aesthetic look of your signage. High exposure is only effective if your signage is well-lit, modern, and easy to read. The last thing that you would want is getting thousands of impressions a day with outdated or broken signage.
Feel free to contact us if you would like more information on calculating the CPM for your signage.
“How Did You Hear about Us?”
Taylor, Charles R. and George R. Franke (2011), “Public Opinion toward Digital Billboards in the United States: An Analysis of Recent Polls,” in Advances in Advertising Research (Volume II): Breaking New Ground in Theory and Practice. (Shintaro Okazaki, Ed.)Heidelber,Germany:Gabler.
Thinking About New Signage?
We’ll help you understand the numbers, lifetime value, impressions, and cost, so you can make a confident, informed decision. Reach out to our team to discuss your signage project.
