USSC Whitepaper Analyizes Sign-Code Practices

The regulation of signage is as much an inevitability as death and taxes. However, consider the motivations behind their regulation. Are code administrators taking the long view and considering how the ordinances they administer will bolster local economic growth? And, are they interested in business owners being informed about how a well-executed sign program will benefit their businesses?
David McAdams, a professor of economics at Duke Univ., considered these points in a paper he’s authored for the United States Sign Council (USSC), entitled The Economics of On-Premise Signs. Setting a strong, definitive tone, he cites the failure rate of retail stores – more than 50% shutter within four years – and quotes Advertising, Promotion and Other Aspects of Integrated Marketing Communications authors Terence Shimp and Craig Andrews: “No amount of money spent on other communication media will equal the investment returns of the well-designed … optimally visible on-premise sign.”
McAdams juxtaposes the sign codes of Henrietta and Brighton, NY, two towns with similar populations near Rochester, NY. Henrietta’s permissive ordinance, for example, allows a storefront sign with 20 ft. of frontage up to 80 sq. ft. of signage, whereas Brighton permits only 30 sq. ft. The report features a photo of Brighton’s Twelve Corners Plaza. This strip mall features virtually identical, diminutive channel letters with no logos. Even the center’s main-ID sign is nearly indistinct. If you’re a motorist new to Brighton, good luck finding Twelve Corners’ Fed Ex, Starbucks or Panera locations.
So, why are signs antagonized by local code enforcers?
First, McAdams notes The Protective Rationale, which means officials must consider some arbitrary “public good”, regardless of the benefit a rule would provide for parties involved. He cites the example of the blocked Time Warner-Comcast merger, when the Department of Justice cited the potential for a monopoly that would adversely impact customer service. More germane to signage, he provides a hypothetical of a Scenic America-style group that would advocate smaller signage for “aesthetic” reasons. He notes the harmful effects of such a proposal: lost business revenue from making businesses harder to find, decreased tax revenue from less business volume, and potentially more dangerous roads because drivers are distracted trying to read smaller signs.
Second, he analyzes the Strategic Rationale, which essentially says that when one company makes a better sign for itself, other businesses will invariably suffer, which creates a “public-good problem”. McAdams recognizes that business owners may wish to jointly enact sign standards that ultimate identify and brand a district to their betterment. To that end, he suggests civic leaders empower owners in a business district to establish standards and decide upon enforceable rules for signage.
To evaluate on-premise-sign regulation, McAdams leads with the question, “What’s the purpose of on-premise signs?” He said effective signs must be detectable, understandable and attractive – he qualifies attractive as easily seen and understood, not necessarily beautiful.
Rather than making an assumption that one company investing in a better sign creates harmful competition for other businesses, McAdams argues that cities are better served when administrators pursue sign ordinances from a standpoint of beneficial competition – one company’s better sign will inspire others to have better signs built, and, ultimately, create a more vibrant business district and local economy.
As a case in point, McAdams references the aforementioned Twelve Corners development. If Panera, FedEx and Starbucks were allowed larger signs, and to incorporate their signature colors and logos, who’s harmed? No one! If someone is able to more easily spot the FedEx sign, they’re also more likely to stop at Panera or Starbucks as well. As such, beneficial competition helps all.
Richard Crawford, a USSC consultant, wrote a companion piece, Introduction to Game Theory and On-Premise Sign Regulation, which explains such terms McAdams uses as “game theory” and “prisoner’s dilemma” and how they create context for McAdams’ theories.
McAdams’ paper provides an interesting perspective on the principles that (mis)guide code administrators, and how they may be countered. Just as a community’s business owners need to unify to recognize signs’ role in bettering their economic interests, the sign industry must also advocate its own sense of purpose.
Thanks to McAdams and USSC for providing a unique insight into “the other side.”