Selling EDS to a Shopping Center

Here's another column to educate the sign-sales professional on justifying a high-priced, digital display to a customer. Most salespeople tend to squirm when asking a customer to sign a contract for a hundred thousand or even a million dollars, for a single sign.

However, for a business owner, the return-on-investment (ROI) is key to understanding a sign's value. Once we understand this, as compared to money a business owner is already spending for advertising, the asking task becomes much easier.

In my last column, I said the automobile-sales industry is an excellent source of business for digital-display providers. Auto-industry signs, as then described, are generally very expensive displays. For example, signage that ranges from $500,000 to $1 million, when measured against other media options, seems like money well spent.

Another excellent prospect for large-format, digital displays is the retail shopping center. I'm not talking about malls, per se, but the developed, corner retail center, occupied by a handful of smaller shops, restaurants and specialty stores. Although the shopping-center owner or management can't justify a $250,000 to $500,000 electronic digital signage (EDS), in reality, its tenants' advertising needs may be best met by an on-premise digital display. Pooled contributions from each retailer's advertising budget may cover the monthly lease (or loan payment).

Before assessing this market's potential, remember, we're selling advertising. Our potent, intrusive medium's greatest impact is helping businesses obtain a larger portion of local-market sales.

Small-tenant shopping centers need to reach passing traffic — it's their lifeblood.

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Chris Cardell of Cardell Media (www.cardellmedia.com) says to use only direct-response media: "The only purpose of direct-response advertising is to produce a clear response." An on-premise sales message directed at a mobile audience exemplifies direct-response advertising.

An EDS ad, for example, that pictures a pair of Nike Jordans with the notation, "Now only $85," is a powerful selling message that demands a "clear response."

Advertising is expensive, yet necessary. A small business' advertising-budget effectiveness may mean its survival. A very compelling story can be made for an onsite, digital display's effectiveness. Consider the following:

• Retail centers are usually located at high-traffic locations.

• Many centers are at a traffic-signaled intersection.

• Retail centers are usually located in commercial districts, with zoning favorable for EDS advertising.

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• Retail-center merchants offer a wide variety of products and services.

• Single-location retailers benefit most from on-premise, EDS advertising because it's place specific, as is their business.

• Shopping-center owners benefit from digital displays because they're a proven medium with the power to increase the center's business.

When selling EDS, be sure to measure the display's effectiveness, compared to other media, because the results may be favorable. The following information, provided by www.iesbdg.org/resources, assesses the pros and cons of each medium:

• Newspapers' advantages are flexibility, timeliness, good local-market coverage, broad acceptability and high believability. The limitations are a short life, poor reproduction quality and a small passalong audience.

• Television has good mass-market coverage and low cost per exposure. It combines sight, sound and motion, and appeals to the senses. Its limitations are high absolute costs, high clutter, fleeting exposure and less audience selectivity.

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• Direct mail provides high audience selectivity, flexibility and no ad competition within the same medium. It allows personalization, but also has a relatively high cost per exposure and a "junk mail" image.

• Radio always provides good local acceptance, high geographic and demographic selectivity and low cost. It's audio only, however, with fleeting exposure, low attention (the "half-heard" medium) and fragmented audiences.

• Magazines offer high demographic selectivity, credibility and prestige, high-quality reproduction, long life and good passalong readership. The limitations are a long ad-purchase lead time and high cost.

• Outdoor advertising gives you flexibility, high repeat exposure, low cost and low message competition with good positional selectivity, but with limited audience selectivity and creative limitations.

• Online advertising offers high selectivity, low cost, immediacy and interactive capabilities. Its limitations are a small, demographically skewed audience and relatively low impact. Besides, the audience controls its own exposure.

Here are the average costs for advertising, as negotiated for a 12-week campaign:

• Newspapers — $1,300 per week for 2-in.-sq. ad

• Television — $200,000 for one 30-second, prime-time commercial

• Direct-mail — $1,500 for 1,000, 4 3 6-in. postcards (includes postage)

• Radio — $90 to $120 per week on a rotator (prices higher if for selective time slots)

• Magazine — $1,200 to $5,000 per month or issue (depending on ad size and circulation demographics)

• Outdoor (billboard) — $3,000 for artwork, print and billboard installation. However, the rates depend on the impress level (it ranges from $5,000 to $500,000, with the higher rate paralleling artwork and print quality) and the demographic count (exposure affects price). Also, the usual contract is 16 weeks.

• Online — 60 cents pay-per-click or $1,200 to $1,800 a month for aggressive campaigns, and this doesn't include search-engine optimization. An advertiser can also pay $200 or more annually for a website banner.

When selling an EDS system, the most important factor is comparing if other media can supply the information. The local department of transportation (DOT) can provide a traffic count on an existing street or highway by contacting the city or state. In many instances, such information can be found on the authority's website. You can access the California DOT (www.cal.gov) and find specific location listings of all state and federal highway traffic counts.

Multiply the traffic count by 1.35 — the average number of people per car — as determined by the Traffic Audit Bureau (TAB). This provides the total audience for a given day. To compare with other media, multiply the total audience by the number of days that the other medium is contracted.

For example, a billboard is sold in monthly increments. Therefore, if you're measuring the number of exposures as provided by the DOT, multiply it by 30 before comparing the exposure with an outdoor-advertising contract. Likewise, the monthly loan payment, plus electrical, maintenance and programming costs, will effectively provide a measurement against the monthly billing for the billboard display.

When talking with a shopping-center owner, emphasize that the EDS advertising costs are borne by the tenants. You can accomplish this three ways:

1. The center owner adds the advertising cost to the common area maintenance (CAM) fee.

2. The center owner assigns an advertising fee to the rental agreement and requires contribution on a per-square-foot basis.

3. The center owner invites you to the tenant-association meeting where the concept is pitched in hopes of voluntary contribution.

Obviously, the last option is the most difficult.

Should the developer or management group choose either of the first two options, you may still be required to meet with the center's tenants, to explain the advertising value.

While this may seem like significant work, remember the overall sale may equal several hundred thousand dollars. Also, include a multiple-year, maintenance agreement contract. Further, many sign companies now offer a programming service to their customers that could generate another, highly profitable, long-term revenue source.

The bottom line is this: You're selling a high-resolution, full-color display. It's an advertising opportunity for your client that, when measured in monthly expense and compared to other monthly advertising costs, utilizes many of the dollars already being spent for less-effective media.

All advertisers wrestle with the concept of media dilution. The number of media options is continually growing, and, because the pie is getting bigger, each slice becomes a thinner serving, while the cost per slice continues to grow. When comparing the on-premise digital display as an advertising medium, with the power to reach every traveler who passes the shopping center, your argument for a winning solution will be heard by people who are already looking for an answer.