It’s easy to get excited about the value proposition that comes with owning a mobile advertising vehicle. Playing with a calculator can generate some eye-popping numbers.
Compare with other forms of advertising
Background: One can finance a new Spark 407, including the truck chassis, for around than $1500 per month (varies with down payment, etc). Assume that the truck owner only shows 6 ads per side, for a total of 18 ads. (Of course, one can display an unlimited number of ads, but it’s better to keep the numbers conservative.) That means that each of the 18 ads would have a monthly cost to the truck owner of $83 (payment of $1500 divided by 18)
Comparison #1 — It costs $199.95 to run a classified ad in the Charlotte Observer. The ad has 6 lines of text and runs in the newspaper for 14 days. Double that cost for a monthly rate. That’s $399.90 per month for a one-inch high by two-inch wide text-only ad. Back to the calculator. Remember, the comparison is for 18 ads on the Expo. Eighteen classified ads in the Observer will cost $7198 per month vs $1500 for 18 ads on the Spark.
Comparison #2 — Lamar Outdoor Advertising charges $3,200 per month for a single billboard in Marietta, Georgia. Lamar’s rate sheet indicates that one must rent six billboards in Marietta for $19,200 per month to achieve total market coverage. Six ads on the Spark would cost $498 — and remember, that includes the cost of the truck.
When one looks at the cost of radio and TV advertising, the comparison number start to look silly. The calculator is good at this.
Exercise in Fantasyland
$1,000 per month is a commonly quoted price that some mobile advertising truck owners charge their customers for each individual ad. Thirty ads on a truck, at $1000 each, equals $30,000 per month gross revenue from one truck — INCREDIBLE! Remember, you’ve got unlimited ad capacity? Sixty ads per truck — that’s $60,000 per month from a single truck! Are you starting to think you’re in the wrong business?
This financial model, which has been promoted elsewhere, bears no resemblance to reality. Just because one can show twenty ads per display doesn’t mean one should show twenty ads. The speedometer in your car might go up to 180 MPH, however it’s not recommended that you drive that fast. The faulty part of this financial model is any assumption that advertisers will regard it as a good idea for their $1,000 ad to be displayed in rotation with fifty-nine others.
If you display twenty ads per display, if each ad is shown for ten – thirteen seconds (including time for any animated transition), it’s impossible for each ad to be displayed more than 14 times per hour. Each individual ad is shown for only two minutes per hour. While it’s theoretically possible to sell sixty advertisers on the merits of investing $1,000 a month for an ad that is shown for only two minutes per hour, it’s not likely.
The sweet spot for mobile advertising vehicles is between three to six ads per side. It’s enough to be entertaining, but not so many that an advertiser’s message is lost in a clutter of other ads.
Realistic business models
Take a look at the other articles in the business model series on this web site. Calculators get a real workout there. Over the years, Spark has shared the best practices of many customers around the world and the company publishes that information to help potential customers understand the realistic opportunities and costs of buying and operating Spark products.
If you plan to start a mobile advertising business, the Spark business model series gives a sobering look at what you might reasonably expect to earn after you consider all of your expenses. It’s always important to remember how difficult advertising sales can be. If it were easy, everybody would do it. It’s not, and they don’t.