Can the Location of Signs Make Them Worth More than the $1.3 Million Building they Identify?

In Cincinnati, OH, in 1997, a building was situated on Pete Rose Way in an ideal location, proximate to the confluence of I-71 and I-75. The building housed Caddy’s, a 50s style entertainment complex. The Cincinnati Bengals NFL football team was about to build its $400 million Paul Brown Stadium, and the land and building were being taken by Hamilton County under eminent domain. The county offered $1.3 million in just compensation for the taking.

However, the five-story standalone building, which had three sides readily visible from the interstate, included five exterior signs. Three of the signs were murals that spanned approximately 2,500 sq. ft. each.

Outdoor advertising is different than on-premise signs in that it is sold as advertising; rates are based on “reach” — the traffic count for the nearby road. Traffic counts are well established for thoroughfares, and this particular stretch of road was traveled daily by an average of 170,000 to 190,000 vehicles. The standard multiplier is 1.6 people per car, so the signage received approximately six million “exposures” monthly.

Given these statistics, the standard rate for the signs would have been $3,000 each ($180,000 annually) if they were sold as outdoor advertising. Total advertising value was subsequently based on a multiplier of 10. (Because the signs branded the building on which they were located, they were not considered outdoor advertising. However, the value of the space was calculated based on the fact that it could be sold as outdoor advertising.)

For the prior decade, Caddy’s had averaged $2.5 million in annual sales, with a net annual income of $840,000. Caddy’s owners originally asked for $5.5 million in compensation. The jury awarded Caddy’s owners $3.1 million. So the $1.8 million the owners received exactly matched the $1.8 million that was deemed to be the value of the advertising space.

Can a Grand Opening without a Sign Directly Cause Loss of Revenue?

On August 18, 1995, a Best Buy store was set to open in San Antonio. By contract, the store was to receive two double-faced pylon signs that faced I-470 by June 1. One 297-sq.-ft. sign did become fully operational the day before the grand opening. The second, 207-sq.-ft. sign, however, didn’t become operational until September 4. Contractually, Best Buy was deprived of one sign for 78 days and the other sign for 96 days. Best Buy hired an appraiser to assess the damages.

Of particular note, the value of the signs had nothing to do with the cost of their fabrication or installation. Instead, their value was based on their communicative and visibility function. In such cases, three property-valuation methods are warranted:

  • Market comparison
  • Income capitalization
  • Cost of replacement

For this particular case, the latter two methods were used.

Cost of Replacement

Traffic Audit Bureau (TAB) numbers, which measure the average number of cars (and people) who would pass the signs daily, state that 99,000 people would see the signs. Thus, the two signs “missed” 15.4 and 19 million “exposures,” or roughly 3 million exposures a month, by not being erected in time. According to a licensed appraiser’s “market comparison,” achieving similar exposure would require one mid-week newspaper insert (200,000 exposures @ $7,258) and one Sunday newspaper ad (345,000 exposures @ $12,520), plus a saturation of TV exposure (2.5 million exposures @ $16,926). This totals $36,704 per face or $146,816 per month for all of the signs. By prorating this one-month cost over the 78- and 96-day delays, the replacement cost becomes $424,767.

Income Capitalization

For this approach, 120 Best Buy customers were surveyed over a two-week period. Thirty customers (25%) said they first became aware of the store because of the sign. Another 38 (32%) said the signs were “useful in locating the store.” Only 22 (18%) said they didn’t use the signs to find the store. The other 30 people didn’t answer the question. This suggests 25% of the store’s business was directly attributable to the signs. Historically, a sign’s direct impact on a business’ sales ranges from 10-50%, with QSRs (quick-service restaurants) at the high end.

In its first year of operation, the Best Buy store averaged $308,687 in monthly sales. If the 25% figure is used, the Best Buy signs generated $77,172 in monthly sales the first year. For the 78- and 96-day periods, then $224,000 was directly attributable to the signs.

Best Buy paid monthly rent of $34,626 (approximately 75 cents per square foot), or $1,154.20 daily. Local industrial buildings that don’t need signs paid approximately 40 cents per square foot. So a signless building would pay approximately $620.27 daily, or $533.94 less daily. Again, using the 25% figure, rent directly related to the signs would be $133.49 daily. Thus, for the 19 days, a rebate of $2,536 in rent would be due.

Estimated total damages were calculated at $227,536. Although the case was settled out of court, Best Buy did receive compensation in the form of rebated rent for less than the assessed damages. Terms were not officially announced.

But clearly, the value of the signs, even for just a 2.5-month period, exceeded $200,000.

Do Electronic Message Centers Cause Traffic Accidents?

Subjective statements often suggest that electronic message centers (EMCs) cause traffic accidents because they are distracting. Yet, is there any empirical evidence that documents this theory?


In 1980, the Federal Highway Administration published its “Safety and Environmental Design Considerations in the Use of Commercial Electronic Variable-Message Signs” study, which was hugely inconclusive. It conducted the study to support its theory that electronic signage (with changeable messages) caused traffic accidents, but couldn’t generate supporting data.

In March 2011, the FHWA released a study entitled “Driver Visual Behavior in the Presence of Commercial Electronic Variable Message Signs (CEVMS)”, which is another name for EMCs. Two tests were each conducted in Reading, PA and Richmond, VA. It also showed no evidence that electronic billboards cause accidents, as indicated by the following:

-The presence of digital billboards did not appear to be related to a decrease in looking toward the road ahead.

-According to the National Highway Traffic Safety Administration (NHTSA), safety concerns arise when a driver’s eyes are diverted from the roadway by glances that continue for more than 2.0 seconds.

-The longest fixation to a digital billboard was 1.34 seconds, and to a standard billboard, it was 1.28 seconds, well below the accepted standard.

-When comparing the gaze at a CEVMS versus a standard billboard, the drivers in this study were generally more likely to gaze at a CEVMS than at standard billboards.

– The FHWA study adds to the knowledge base but does not “present definitive answers” to the questions investigated.

The study states: “In general, drivers devoted more glances at CEVMS than at standard billboards; however, there were no significant decreases in the proportion of time spent looking at the road ahead (i.e., eyes on the road) that could be directly attributed the CEVMS at the measured luminance and contrast levels.”

Glances away from the forward roadway of greater than 2 seconds or 1.6 seconds’ duration have been proposed as indicators of increased risk of crashes. In the current experiments, there were no long glances at billboards meeting or exceeding 1.6 seconds. The longest glance at a target billboard was less than 1.3 seconds in both studies. Glances with a duration of 1 second or greater were rare: there were 5 in Reading (0.47% of the glances to CEVMS) and 7 in Richmond (0.78% of the glances to CEVMS). All of the glances greater than 1 seconds were to CEVMS.

The full study can be viewed at

A shorter article about its highlights can be found at

Additionally, Texas A&M specifically studied EMCs and “before” and “after” traffic-accident data in 2012. For that full story, go to|/universitiesblog

Similarly, in 2010, Tantala Associates, a consulting/engineering firm, conducted its fourth study about the relationship between traffic accidents and electronic signage on billboards. Most recently, Tantala examined eight years of law-enforcement records that documented 35,000 traffic accidents on state and local roads around Reading, PA, to determine accident rates near 26 digital billboards. For the first time, the Empirical Bayes Method predictive tool was used to determine if accidents near digital billboards are inconsistent with what is statistically predicted. The answer: Digital billboards are “safety neutral.”

In 2008, Tantala investigated more than 60,000 traffic accidents in Cuyahoga County (Cleveland) Ohio for an eight-year period, before and after EMC billboards were installed. Accidents in the county, as a whole, had decreased in the last four years. Accidents where digital billboards were visible also decreased.

In Rochester, NY, Tantala reviewed police records documenting 18,000 traffic accidents that occurred within a mile of digital billboards over a five-year period, and in Albuquerque, it reviewed police records documenting traffic accidents that occurred within a mile of 17 digital billboards over a seven-year period. The studies showed no statistical correlation between digital billboards and accidents.

The January 7, 2014 edition of The Hill, a Washington, DC newspaper, included the following:

“Drivers are not distracted by digital billboards alongside roads, according to a study conducted by the Dept. of Transportation. The study, which was released by the Federal Highway Administration (FHWA), found that drivers are not any more likely to be distracted by digital billboards than stationary signs.

‘On average, the drivers in this study devoted between 73% and 85% of their visual attention to the road ahead for both (CEVMS) and standard billboards,” the study said. “The range is consistent with earlier field-research studies. In the present study, the presence of CEVMS did not appear to be related to a decrease in looking toward the road ahead’.”

How Do to “Impulse” Buys Relate to Signs?

An “impulse” purchase is distinguished from a “destination” purchase. If you get into your car to specifically go to the hardware store, everything you buy there is a “destination” purchase because it’s why you drove your car. However, if, on your way home, you see a convenience-store sign that says “All two-liters $1,” and you stop to buy some, that’s an impulse buy. You made the purchase on impulse, and the sign’s information compelled you to stop and make the purchase.

How important are impulse buys to various businesses? You probably never saw a sign for a dentist’s office and decided to drop in. But if you’re traveling, unless you already have a reservation to lodge and/or eat, virtually every “stop” would be an impulse buy. You wouldn’t know to stop unless a sign informed you about available goods and/or services.

The Institute of Traffic Engineers estimates the following to represent impulse buys as a percentage of overall sales for various retail categories:

For a discussion about how a court case highlighted the effects of signs and impulse buys, see the entry in this section entitled “What happened in the Denny’s v. Agoura Hills Pole-sign case?”.

Do Signs Help Non-profit Charities Raise More Money?

A Goodwill Industries store in Sarasota, FL was underperforming, even though it was located at an intersection through which 100,000 vehicles traveled on a daily basis. Other entities at the same intersection included a Wal-Mart, a Home Depot, a chain motel and a hospital/medical complex.

Unfortunately, a canopy of trees blocked the Goodwill’s wall sign, and a Sarasota ordinance forbade tree removal.  The Goodwill store’s administrator had a county commissioner ride with him in a car, and the commissioner acknowledged that both the building and signage were obscured. A variance was granted, and one sign was moved to a more visible location, which was better, but still less than ideal.

The results?
Typical monthly donations had been 309. After the sign was moved, these increased to an average of 424, a 37% increase. Typical sales had been $4160 per month. After the sign was relocated, the average became $5215, a 25% increase.

How quickly did this occur?
In the first week, donations increased by 2.8%, and sales increased by 6.5%. In Week 2, donations increased by 36.9%, and sales increased by 28.2%. By Week 5, donations had risen by 45.0%, and sales jumped by 25.8%. Overall, in the first year, donations increased by 45.5%, and sales rose by 22.8%.

What about adding an electronic billboard to a non-profit?
The Community Foundation for Greater New Haven (CT) hosts a 36-hour online fundraiser called the Great Give®.  To bolster its 2015 campaign, this consortium of more than 300 local charities purchased  month-long advertising (several times per day for 10 seconds) on an electronic digital billboard located near a confluence of I-91 and I-95, where (fortunately for the charity), traffic congestion is common.

The results?
Money raised from the prior year increase by 65% to $1.3 million, whereas the original goal for the year had been $1 million. More than 7000 donors provided more than 9600 gifts.

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