Starting this topic, you should acknowledge the fact that billboards are very similar to the retail industry if not exactly the same. At the end of the day, it’s an asset consisting of a demanded space on our beautiful blue planet, yet this space has traffic and demand.

Knowing this you can attain the knowledge that it is one of the safest investments that is going to inevitably attain profit, but as much as it sounds nice to make an inevitable profit, this profit ranges in speed, some billboards are going to break even and provide profit faster than others, whilst some may end up break evening in a very long time.

Location and traffic are obvious reasons, but it's not as simple either, if a billboard has big traffic on a highway for example, such a billboard is going to usually cost as much as it rents in a few years, and the current income of a billboard is correlated to its selling price, exactly like an administrative retail asset.

Thus, picking off billboards is also similar to trading in company shares, you have to have an estimation for its future possible income, and these estimations will vary in accordance with the increase in traffic over time.

For instance, loads of billboard owners started selling their billboards at discounts within 2020 due to the covid 19 issue, where demand on streets was non-existent. Some investors saw this as an insane opportunity hence the traffic is inevitably going to go the way it is, it was like a bet that humanity is going to beat the virus either now or later. That did happen!

But such as the previously mentioned example in relation to covid 19, it is simply a macroeconomic problem where the risk is unsystematic and global based. Billboards are usually within the micro economical movements where a street may have a mall attracting traffic, and just the knowledge that this mall is doing good ROI (Return on Investment) or not can give you an idea if this area is going to keep up the good traffic or increase or even decrease.

A governmental movement of subsidizing an area, maybe even building a compound may also create new traffic in areas that had no traffic, buying billboards in such areas in the early stages may be extremely cheap in comparison, which allows for small entry rather than the big barrier of entry, with an assured ROI for the billboard over the short term with good ratios.

New buildings are vital, as traffic isn’t the only indicator for a billboard to return ROI, billboards’ customers are companies who are advertising their services or goods right? Thus, if it’s not providing them effective marketing its rental value will drop. Meaning if a building is being built and this building suddenly over 2 years blocks the view of this billboard, it will definitely affect the billboard’s rental value and overall price.

If you are a big whale of an investor, going for the very expensive billboard may offer you an inevitable ROI, such as buying a huge billboard on Wall Street, yes it costs millions of dollars, but it rents well and it will keep going up in value unless a meteorite hits it or the world floods, by then your problems will be on a much higher scale than your billboard not returning your investment breakeven.

However the type of billboard is also important, as some billboards may be cheap initially yet display a single ad where the cost of changing the display exists in comparison to a digital billboard that costs nothing to change its display yet costs initially a lot more, click here to check out our article about the type of billboards so you can know which one suits your budget and situation.

Omar Fouad Marketing manager