Return on investment (ROI) isn’t just a buzzphrase in advertising. It’s a critical measure of which media are the most effective, and it proves what we always tell our clients — outdoor advertising works.
Out of home delivers outstanding ROI. Study after study has shown a return on investment above most other media, especially traditional formats, and advertisers say they are happy with the results. Of course, the biggest indicator of solid ROI is repeated use of the medium, and we can say from experience that outdoor is a medium people return to again and again because it works.
Here’s what you need to know about ROI of outdoor advertising in the United States in 2023.
What Is Return on Investment?
First, it’s important to understand the parameters of ROI. Return on investment measures how much of the investment in the medium the advertiser earns back. Essentially, you want to know if the advertising paid off. Proving efficiency supports using the format again.
There is a formula you can use to track ROI, though it can be tricky to follow depending what type of data you get back from the campaign. It is:
[((number of leads * lead-to-customer rate * average sales price) – cost or ad spend) / cost or ad spend] x 100
So, say a label spends $2,000 on a billboard promoting a new album. The board generates 2,500 clicks on the artist’s website (number of leads), generating 1,000 album downloads (0.1 lead-to-customer rate) at an average sales price of $10 per album. The ROI is:
[((2,500 * 0.4 * $10) – $2,000 / $2,000 x 100 = 400
The label gets a 400% return on its investment, a very impressive number (anything below a 2:1 return is considered disappointing).
All that said, this idea of subtracting marketing dollars from sales generated is sort of old school. We like to look at campaigns holistically, and oftentimes the return on investment isn’t visible. For instance, you can’t efficiently measure increased brand awareness or how many people keep the advertiser’s URL open in their Safari tab. The best results may be intangible for outdoor advertising, but all those small steps toward a bigger goal count toward ROI.
What Does ROI Mean for Outdoor Advertising?
We tell advertisers that you can measure ROI a couple ways. The first is organic, and it includes tangible methods of calculating results. It might include:
- How many times your campaign hashtag is used on social media.
- Number of clicks on a QR code.
- Promotional codes redeemed.
- Visitors to a campaign website.
Note that we didn’t mention product purchase here—outdoor advertising is often used for brand awareness and engagement, so buying something right away isn’t always a goal. Out of home plays the long game, with repeated exposures to a product eventually leading to sales.
The second way we measure ROI for clients is some type of paid attribution. That could include geofencing locations, pinging mobile phones to perform retargeting campaigns, looking at the pixels on the campaign site to see what mobile devices were nearby, and monitoring website traffic. We’re always keeping tabs on viral activity, which can be sparked by a particularly clever OOH campaign, to see where ROI levels land.
Outdoor Advertising ROI Statistics
The outstanding return on investment for outdoor advertising isn’t opinion; it’s fact. Consider these compelling statistics:
- Outdoor ads have the lowest cost per thousand (CPM) of almost any medium, ranging from $2 to $7, and that efficiency also means they deliver high return on the relatively low investment.
- Billboards have an astounding 497% return on investment, according to the Out of Home Advertising Association of America (OAAA).
- Billboard advertisers see a return of $6 for every $1 they spend on advertising, that same study found.
- OOH isn’t just great alone. Adding out of home to a mobile advertising campaign can improve ROI by 316%, per OAAA.
Ways to Improve ROI for Outdoor Advertising
Ultimately, ROI is about being seen. The best way to raise your return on investment is to ensure your campaign gets seen by as many people as possible, which increases the chances of more purchases or website visits. A few ways you can improve your ROI include:
- Identify your target audience better. You can put a great campaign in a place where your target audience doesn’t hang out and get a terrible ROI, even though you executed all other aspects of the campaign to perfection. So, for instance, don’t run a campaign for surfboards in a landlocked state.
- Find the best medium for your message. Billboards are awesome, and they work for almost everyone — but have you considered bench advertising? Wild posting? Experiential advertising? Depending on what you’re selling, a different form of outdoor advertising may connect with an even more engaged audience and naturally raise your ROI.
- Perfect your budget. This doesn’t necessarily mean lowering the budget. It might be that by taking a bigger swing (advertising in Times Square vs. getting a little-noticed but way cheaper board in Brooklyn) will boost your ROI because you connect with more potential customers, and more people see and act on your message.
- Hone your creative. The best messaging tends to be the simplest. If someone has to look at your board for more than two seconds to understand what’s going on, you made it too complicated, and you may poorly impact your return on investment. Make your message straightforward.
- Simplify your call to action. If you give people a website, a promo code and a hashtag, they’re going to be confused—should they be surfing, shopping or tweeting? In all likelihood, they’ll feel overwhelmed and do none of those things, moving on to the next billboard. A short, simple call to action ensures people follow through, raising your ROI.
- Consider virality. Of course, no one can anticipate what will go viral and what won’t, but you can send your ROI skyrocketing by winning free exposure to thousands of more people online.
Get the ROI you want with a smart and eye-catching campaign. Contact us today to discuss outdoor options.