The Economics of Everyday Things - 109. Billboards

Episode Date: October 6, 2025

The world’s oldest advertising medium has reconfigured itself for the digital age. Zachary Crockett looks up. SOURCES:Anna Bager, president and C.E.O. of the Out-of-Home Advertising Association of America.Dan Levi, chief marketing officer at Clear Channel Outdoor. RESOURCES:"Advertising Proves Resilient Amidst Economic Uncertainty," (Magna Global, 2025)."Clear Channel Outdoor Holdings, Inc. Reports Results for the First Quarter of 2025," (Clear Channel Investor Relations, 2025)."The Bigger, The Bolder: Outdoor Advertising," by Judy Gonyeau (Journal of Antiques and Collectibles, 2024)."How Digital Billboards Target Passersby (Hint: It's Cellphone Data)," by Karen Duffin (NPR, 2020)."The hottest advertising trend of 2018? Billboards." by Zachary Crockett (The Hustle, 2019)."Model Legislation for Banning Billboards," (Scenic America). Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Ten years ago, Dan Levy got an unusual call from a recruiter. At the time, he was a successful marketing executive who had worked at companies like MTV and World Wrestling Entertainment. He spent all day thinking about digital advertising, ads on social networks and video sharing sites. But the phone call was about an opportunity in a much less glamorous field, billboards. I originally turned down the internet. because who wants to be a Billboard marketing guy.

Everything in the media and the advertising world had been going so aggressively towards digital and towards mobile. So first pass, it didn't seem like it was the type of move that made sense for me. But Levy gave the opportunity a second pass, and he changed his mind. I learned that the job was about trying to help bring the world's oldest advertising medium into the 21st century. Today, Levy is the chief marketing officer at Clear Channel Outdoor, one of America's largest billboard operators.

In a modern advertising landscape run by Titans like Facebook and Google, billboards may seem like an antiquated way to market a product, but if you drive through any major city, you'll see hundreds of them lining the freeways. They tempt you with photos of McDonald's cheeseburgers that are 14 feet tall and 48 feet wide. They extoll the virtues of the latest AI software products. They implore you to call personal injury lawyers and to find Jesus. Traditionally, billboards have been used to reach as many people as I can to deliver my message. You know, new product launches or new TV shows or movie releases you want to get to a scaled audience. But today's billboards are more than just static tools of mass

communication. The industry is increasingly being digitized, and the advertisements you see on the side of the road aren't as random as you might think. If you've ever downloaded an app on your phone, and the app asks you, would you like to allow location services for this app? That feed of data helps with decisioning on what you're going to show on a billboard, and when, and in what locations? For the Freakonomics Radio Network, this is the economics of everyday things. I'm Zachary Crackett. Today, billboards.

A few centuries ago, merchants relied on local advertising to get people to buy things. They ran spots in newspapers, and sometimes even hired town criers. But mostly, they used painted signs and posters. As roads were built and people began to travel more, these posters got bigger. Brands or advertisers started to realize that getting a message front of consumers where there are is a good idea. That's Anna Bogger. She's the president and CEO of the Out-of-Home Advertising Association of America, the National Trade Group that represents the billboard industry.

She says that the precursors to modern billboards go back at least 200 years. Some of the earliest examples that we know were when a circus started to promote their business. by putting up large posters to advertise their traveling shows. These posters from the likes of Barnum and Bailey were hung on barns along major travel routes and featured bright illustrations of exotic animals and acrobats. By the 1870s, a small industry had emerged around building billboards and renting them out to clients.

And as cars and highways proliferated in the 20th century, so did billboards from brands like Palm Olive, Kellogg, and Coca-Cola. Today, there are so many billboards in America that it can be hard to count them. One billboard can actually be two billboards facing in different directions, sometimes three. But as of structures, there's about 350,000 static billboards in the U.S. And more than 30,000 digital billboards. To the advertising industry, billboards are a part of a category called Out of Home. You can think about it as any type of advertising that happens when you're leaving your house.

In your house, you would watch television, you would be on your phone, you'd be on your computer, and you see ads there. But when you leave your home, you're exposed to advertising too. And out-of-home ads can be anything from billboards, large digital screens in Times Square, to advertising in the subway or on buses or in airports or in shopping malls or in cinemas. You know, we're everywhere outside of the home. America's $370 billion advertising industry is largely driven by the internet. Think Facebook and Google. Out of home only makes up a small sliver of the pie, but it's still a $9 billion business, and it's thriving. As other traditional ad

mediums like print and cable TV have declined in revenue, billboard ads have continued to grow. Bogger says this is partly because they enjoy a special advantage. Think about a huge billboard. You're driving past it sometimes several times a day. Sometimes you're stuck in traffic. You tend to spend more time with physical signage than I think you do with any other form of advertising. There are a number of small local companies across the country that own and operate billboards. But around 65% of the industry is controlled by three big national players, Lamar advertising, out front media, and clear channel outdoor. We have in excess of 60,000 billboard faces across the country.

Again, that's Dan Levy, Chief Marketing Officer at Clear Channel Outdoor. On a day-to-day basis, I'll work with some of the largest multinational advertisers. Disney, Apple, Netflix, Morgan & Morgan, who's the largest advertiser from the legal services space. But I'll also work with local advertisers. It's a part of the way that they've told their story in their community for years. Some of these billboards are what are called wallscapes. They're on the side of a building or on the top of a building in the downtown area of a big city. But the more common billboard is the classic bulletin.

Those are the billboards that everyone knows, the large billboards on the side of a major freeway. Most of them are horizontal. The standard size is a 14 foot by 48 foot. In a desirable area, getting these billboards up and running is a competitive process. It's something that we don't really talk about that much externally. So we have a real estate team. And our real estate team works with landowners who can benefit from the presence of billboards on their property. And that's everything from government bodies all the way down to individual landowners and small businesses that have either a structure on their property or an interest in working with us to build something. Sometimes Clear Channel will buy land outright and build a billboard on it. This can cost hundreds of of thousands or even millions of dollars.

Other times, they may work out a lease deal where they pay the landowner a monthly rent for the right to build and operate a billboard on the property. Landowners either get a flat monthly fee or a percentage of the advertising revenue, generally anywhere from 10 to 30%. There certainly are landlords who recognize that there's value in having billboards on their property

and they will either build it themselves or they'll work with a company like Clear Channel to build it. We plan to do the necessary testing of the land, the engineering work, the design, architectural designs, and that actually do all the construction ourselves. Building a new billboard is costly. You're usually looking at $100,000 or more for a standard 14 by 48 foot bulletin along a freeway. That includes permits, steel poles, foundation work, ground testing, installation, and labor. But these days, many Billboard transactions involve pre-existing structures. The way that companies like Clear Channel and other larger national companies have grown

is oftentimes driven by acquisition, because you'll have small business owners who start a billboard company or build a handful of structures and then build a viable local business that at some point they sell to a larger company to take over the operation of those structures. On broker websites like billboard sales.com, billboards with proven ground traffic in a desirable location can run upwards of $600,000. It's a big upfront cost, and companies like Clear Channel make their money back

by renting out the blank canvas to advertisers. These deals can work in a few different ways. Most larger advertisers will buy a collection of locations, but then you also have local advertisers who have one store and they just want that billboard that's down the street from them. And is there a standard time period that you commit to for a billboard

when you rent a billboard space? So a four-week period used to be the standard, but Apple, Disney, Netflix, Verizon, GaiCo, so many brands do long-term contracts for specific locations that they don't want to ever give up. And so the inside baseball language for that

is oftentimes referred to as a perm, or a permanent contract, where it's a long-term contract for that location, where they change the creative out throughout the contract. For advertisers, billboards can be an affordable way to reach a lot of people. Nationally, the average cost is around $4,000 a month. But the actual prices can vary a lot, depending on the market, the specific location, and the size of the billboard. We have billboards that will cost you hundreds of thousands of dollars,

to rent for a few weeks, and we have billboards that cost hundreds of dollars. What's a $100,000 billboard? Times Square, Sunset Strip, places that are so in demand. Whether a billboard is in Times Square or on the side of a freeway in Arkansas, the ad has to be carefully designed to attract attention. What works in other mediums often doesn't work on a billboard.

It would make sense to assume you could take an online banner ad and just put that on a billboard because it's horizontal. Not only do you have issues with the resolution and the quality of it, but it's a completely different viewing experience. And so we advise our advertisers on, for example, seven words or less. We recommend that they have one image. There are best practices as far as color combinations to make sure that things are readable. How would you describe the perfect billboard?

Quick, well-designed, clean layout, ideally with copy that is easily understood or clever that will get your attention and get you as you're driving by going, wow, what was that? When you get to the office, it becomes something that's sort of lodged in your brain that you want to find out more about. And once you have a good design, how do you go about printing,

a massive 14 by 48-foot billboard? Back in the day, you used to break it down into individual sheets. You would have artists painting directly on that structure, and then that face will be put on a truck and hung. Today, it's typically large format printing onto a vinyl type of substrate that allows it to be put up as one image. The printing method isn't the only thing that's changed over time.

While most billboards still use those vinyl static images you see on freeways and on the sides of buildings, today's industry is increasingly going digital and high-tech. And that's shaking up the economics of the field. That's coming up. As the president and CEO of the Out-of-Home Advertising Association of America, Anna Bogger often has to respond to the suggestion that billboards are outdated. Internet ads now make up more than 70% of all advertising spending in the U.S.

But Bogger says the digital age has been a boon for billboards. It's a very shareable medium. So even though we are an old medium with big signs and we're out in the real world, we are a connector into the rest of the media world. It creates a public conversation. You can't skip us, you can't block us. Technology as it advances only enhances our medium. Billboards are also immune to the polarization that other advertising channels face.

If you're a Democrat, you're going to read certain news outlets and watch certain TV shows and avoid everything else. And if you're a Republican, you're going to go certain ways. Billboards are very serendipitous. We're out there in the real world. We will expose audiences to messages that they would normally maybe avoid, but they might have liked if they had seen them. But billboards have also embraced the digital revolution through imitation. Today, many static billboards are being converted into digital billboards.

Between 2018 and 2023, the number of digital billboards in the U.S. more than doubled. And these new signs come with a big advantage for the companies that own them. While a static billboard displays one ad, a digital billboard typically rotates up to eight different ads that run for around eight seconds each. One billboard becomes eight billboards, becomes eight times more revenue opportunity. So there's a financial gain, too,

if you can convert a static to a digital. Unlike static billboards, which are rented out for set periods of time by advertisers, Space on digital billboards is sold in programmatic auctions, much like the ads on websites and in podcasts like this one. Again, here's Dan Levy of Clear Channel Outdoor. Programmatic advertising is a way of automating the buying and the placement of advertising. You basically set the parameters for your ads. I want to reach this audience. I want to deliver this many impressions. I want to spend this amount of money. I want to drive this result. And the computer's talk to each other. When there's a digital billboard and there's a spot that it's about to change to

that doesn't have an assigned ad, what ends up happening in milliseconds is a signal gets sent out to these computers saying, I got an ad here that reaches this type of audience. Does anyone want that? And a bidding process happens where that spot is auctioned to the highest bidder and then that ad is dynamically delivered. So it's less buying a specific billboard on a specific freeway and more sort of tapping a new distributed network of digital ads that could

be anywhere that reach a demographic that you want to reach. And that process is done automatically. Exactly. Digital billboards also allow for more creativity. You can change your creative based on different times of the day. So you can have a fast

food restaurant that promotes breakfast during morning drive, but dinner during evening drive. A hot drink when it's cold outside and a cold drink when it's warm outside. We have advertisers that incorporate sports scores into their creative. You can incorporate news headlines into your creative. All of this happens by having a feed of data that goes into the ad. This isn't the only way that technology is being leveraged by billboard companies. Traditionally, says Levy, billboards are what's called a one-

to many advertising medium. You set up in one spot and hope to get recognition through broad exposure to a lot of people. But advertisers increasingly want to reach a more targeted audience. And the Billboard industry can help them thanks to the location tracking data

on the apps you use on your phone. Every smartphone has a unique identifying number on it. We don't follow individuals. We don't know anything about specific people. but we have the ability to understand the prior behaviors of those devices that we've seen. We look at the composition of the devices that we see going past that billboard. So if you have a coffee shop and you're trying to advertise to people who drink coffee at Starbucks, for example, we could show you two billboards, each of which deliver a million impressions a week.

But one of them, half the audience has been seen in a coffee shop, and the other one that's only 20% and all things being equal, the one with half drinking coffee is the right one for you. We try and minimize the inefficiency of buying a billboard by making sure that the highest composition

of those lots of people align with who you're trying to reach. These advancements are welcome to advertisers. But billboards aren't without their critics. Since the beginning of the interstate highway system, if not before, people have complained that they're an eyesore. The nonprofit Scenic America has been fighting new billboards for more than 40 years.

And billboards are outright banned in Alaska, Hawaii, Maine, and Vermont. Not everyone loves a billboard, but most people don't mind them. In Anna Bogger's opinion, billboards are actually some of the least intrusive advertisements in modern society. Consumers more than ever, I think, have an appreciation. of ads that are not interrupting what they're doing in the moment. You're watching television, and it interrupts what you're doing. We're surrounded by signage, but it's really not interrupting our journeys or what we're doing in the moment.

It's just kind of there. You see it. You spend time with it. If you don't like it, you don't look at it, and you move on. And, you know, when you're sitting there on the highway and congestion, what else are going to do? Buildboards are regulated by the Highway Beautification Act, passed in 19, by President Lyndon B. Johnson.

The Act limited construction mostly to commercial and industrial areas and set in place standards for things like sizing and spacing. That was originally intended to make sure that while billboards are an important part of the economy and the business, that the growth doesn't overtake the beauty of our country and we don't have billboards every 10 feet along a highway. But then we're also subject to state, local, and individual. municipalities, all of whom have signage ordinances. So the best way to illustrate this is most people think of Los Angeles as a city. For us, it's more than 70 different municipalities, each of which have their own signage ordinance. So something that could be allowed on one side

of a road, if that roadway is a border into the other municipality, could be disallowed, literally across the street. Companies like Clear Channel Outdoor also have to navigate all kinds of limitations around the type of content that can be displayed on a billboard. Either because the landlord says, you know what, I don't want political ads running on my property. I don't want to get involved in that. Or there are limitations on things like alcohol or cannabis or other kinds of restricted products that cannot be run on locations that are too close to schools, parks, playgrounds, houses of worship, things like that. we have landlords that have brand relationships.

So there are certain categories that they say, I work with this brand, I can't have anyone else running on that location. So it's a very complicated matrix of what can and cannot run. It may not seem like that sometimes. Driving on a freeway near a city, you'll likely see dozens of billboards, marketing everything from Apple computers to local strip clubs. But Dan Levy says that's part of what makes the industry beautiful. These days, he's happy to be a Billboard marketing guy.

Having a media environment where you can tell your brand story effectively and creatively, where we also now have the data to help you understand not just did it work or not, but how is it contributing to your mix? It seems to me that that would be something that most marketers should be considering, if not embracing. For the economics of everyday things, I'm Zachary Crackett. This episode was produced by me and Sarah Lilly and mixed by Jeremy Johnston. We had help from Daniel Moritz-Rapsin and Dalvin Abilaji. And thanks to listeners Christine Nessleroth, Mariah Van DeVur, and Kaylee Hall, who suggested this topic.

If you have an idea for an episode, feel free to email us at EveryEy. day things at Freakonomics.com. Our inbox is always open. All right, until next week. We did a billboard on the sunset strip that snowed. You could drive past it or walk underneath it and snow in Los Angeles would be falling from the billboard. The Freakonomics Radio Network, the hidden side of everything. Stitcher