Cutting Costs

A number of surveys have been conducted before and after installing signage to determine effectiveness.  One of these, from late 1996, involved a Los Angeles auto dealership.  Three previous auto dealers had failed at the location.  The new owner, Aztec Motors, spent much time, energy and money improving the building and lot. 

 

Once renovations were complete, the new owner invested $7,400 in replacement signage that entailed one wall and one double-faced pole sign. 

 

A survey found the new signage, not the renovations or other advertising, was responsible for a minimum of ten new walk-in customers per week, resulting in at least six additional sales per week. 

 

 It took less than a month for the new signs to pay for themselves, and the owner was able to reduce his advertising budget from $16,000 to $4,000 per month an annual  savings of $144,000. 

 

As part of your advertising you’re probably considering one or more of the following: TV, radio, newspapers, Internet, direct mail, etc.  The most basic way to evaluate the cost effectiveness of these or any marketing method is the cost per 1,000 exposures.  Here’s how business signs measure up to other media.

 

The price and life expectancy of signage varies widely depending upon the type, but let’s assume you invested in signage costing $16,500 that should last seven years.  If your business is located on a street with 60,000 people passing each day, the cost per 1,000 exposures would be only 11 cents.

 

 The same $16,500 spent on outdoor advertising (i.e.,any sign that is not appurtenant to the use of the property, a product sold, or the sale or lease of the property on which it is displayed) for 1,000 exposures would cost $0.83. A similar expenditure in newspaper advertising would cost you $1.57, while television advertising for 1,000 exposures would cost $6.60.

 

 If you’ll remember from Table 1, only 1% of first-time customers come in because of your television ad.  But 50% come in because of your sign.  If you’re spending only 11 cents per 1,000 exposures to get that 50%, that’s a good use of your money.

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