Even with all the marketing and advertising channels available today, billboards continue to have a massive influence on consumer behavior. Outdoor advertising in general is an effective way to reach a large amount of people, but exactly how effective is it?
To determine the financial success of your campaign, you’re going to want to calculate your billboard return on investment (ROI). ROI is a common profitability metric used to evaluate the performance of an investment — in this case, a billboard campaign.
Measuring the return on investment of a billboard isn’t as simple as measuring the ROI of digital advertising, which is often calculated by using the formula:
[((number of leads * lead-to-customer rate * average sales price) – cost or ad spend) / cost or ad spend] x 100
It goes without saying that there’s no hard and fast way to measure the number of leads generated from a billboard ad. Does that make it impossible to calculate ROI? Not exactly.
Keep in mind that while having straightforward data insights for online campaigns can be convenient, the rising use of ad blockers can put a damper on overall performance.
The good news about understanding how to approach billboard ROI calculations is that you can apply the same thinking to future outdoor campaigns.
In this guide, we’ll take a closer look at facts around outdoor advertising ROI and what factors play into calculating it. Here’s a roadmap:
- Outdoor advertising ROI statistics
- Understanding ROI basics
- Key performance indicators for billboard ROI
- Advanced analytics for outdoor ad ROI
- Utilizing technology for accurate calculations
Outdoor Advertising ROI Statistics
Don’t just take our word for it. Outdoor advertising is proven to have a remarkable ROI. The following statistics underline how powerful and cost-efficient outdoor advertising can be.
- Outdoor media has the lowest cost per thousand (CPM) when compared to other mediums like print, digital video, and cable TV, making outdoor ads a relatively low investment to begin with
- A two-part series of outdoor media research from the Out of Home Advertising Association of America (OAAA) found that OOH earned an average media investment of 4.8%
- Outdoor media works synergistically with other media and increases engagement across digital channels. 78% of surveyed consumers looked up an advertiser online after seeing an OOH ad, and 43% made an online purchase thereafter. Note: since most people are using mobile devices to search the web, it’s important to ensure that your Google Business Profile is up to date.
Understanding ROI Basics
First, it’s necessary to lay the foundation before calculating ROI. That includes determining the total cost of your billboard campaign along with considering your original objectives. By identifying these factors, you’ll have a solid grounding for evaluating campaign performance.
Evaluate Costs
Before diving into ROI calculations, it’s important to know the total cost involved in your billboard campaign. Hopefully, the outdoor media company you worked with provided a straightforward invoice. Bonus points if it’s itemized with different costs including production, design, installation, and space cost.
Define Your Objectives
As with any marketing/advertising campaign, establishing clear objectives is fundamental to evaluating the success of your billboard campaign. Whether it’s brand awareness, lead generation, or sales conversion, having well-defined goals and KPIs will guide your billboard ROI analysis.
Key Performance Indicators for Billboard ROI
What factors into the ROI of your outdoor advertising campaign? These are some key performance indicators (KPIs) that are commonly used to analyze effectiveness.
Impressions and Reach
Billboard success often hinges on its ability to capture attention. Track the number of impressions and estimate the reach of your billboard to your target audience to gauge its effectiveness in raising brand awareness.
Geopath is one of the leading analysts of outdoor media audiences. Many outdoor media companies utilize their third-party data to help inform advertisers on the potential reach of their billboard.
Conversion Rates
This is where things dip into the digital world. If the goal of your billboard is to drive specific actions, such as increased website visits or product purchases, closely monitor online conversion rates. You can do this by using unique URLs or promo codes to attribute conversions directly to the billboard campaign.
If your campaign goal is to bring people to your brick and mortar location, you can ask people how they found out about you. In some cases, advertisers include promotions on their board that provide discounts or other benefits to people who acted after viewing the board.
Customer Acquisition Cost (CAC)
This can be tricky if your campaign objective is something less tangible like brand awareness. Yet calculating the cost to acquire each customer (CAC) provides valuable insights into the efficiency of your billboard campaign. Divide the total campaign cost by the number of acquired customers for a comprehensive CAC analysis.
Advanced Analytics for Outdoor Ad ROI
There are opportunities to get more granular when calculating the ROI of a billboard. That is, you can analyze performance in specific markets or timeframes. This can be a great way to A/B test and decide when/where is best to run your campaign.
Geographic Analysis
Consider the geographic impact of your billboard. Evaluate the performance in different regions to identify areas where the campaign resonates the most. This data can inform future targeting strategies.
It’s worth noting that there are studies that have found that different audience demographics respond differently to imagery. That is, if you’re advertising in an area that is predominantly of a certain culture or age, it may be wise to depict individuals who reflect their identity.
Time-Frame Analysis
Billboard effectiveness can vary over time. Not all seasons see the same amount of foot and vehicle traffic. Similarly, there may be certain times of the year when people are interested in or in need of a product or service. It’s important to think critically about these consumer trends before launching your campaign.
Some advertisers choose to analyze the campaign’s performance at different intervals to identify peak periods and optimize future scheduling.
Utilizing Technology for Accurate Calculations
Technology has become increasingly integrated into the OOH world. There are tons of ways in which advertisers and media companies can leverage technology to understand and finetune campaigns. Here are some ways that technology can enhance ROI calculations.
Nowadays, you can leverage advanced data analytics tools to streamline the ROI calculation process. The available software and analytics platforms grow every day. These tools can help consolidate data from various sources, providing a holistic view of your billboard campaign’s impact.
Wrapping Up
Calculating billboard ROI is a vital component of a smart advertising strategy. It’s an excellent way to assess performance and make changes that can bring about further success. The best thing you can do in a competitive advertising landscape is stay informed, ask questions, and consistently evaluate your billboard campaigns. Happy campaigning!