Businesses exist in a highly competitive environment. To succeed, a business must be able to communicate with customers quickly and effectively regarding the products or services it offers. For most businesses, the most cost-effective and efficient form of advertising to potential customers is on-premise signage.

Signage is a business's basic link to customers. This is true whether the sign's purpose is to promote impulse "stop and shop," to create awareness for the product or service for future reference, to reinforce other forms of media advertising, to influence purchasing decisions once the customer has stopped, or to physically mark the building site and location to aid motorist safety.

On-premise signs serve six primary functions:

Signage design and construction is site specific and an essential component of any successful business strategy. Knowledge of the various types of signs available and the numerous functions they perform can provide dramatic bottom-line results to a business if properly integrated.

Signs are classified as either ground mounted or building mounted. Both types are valid and necessary forms of signage which, when applied to a business's unique needs and location, result in proper advertising of the business.

Additionally, it is possible to design a building to support and enhance the signage. This signcentric design principle results in a reinforcing synergy between the building architecture and the business's signage and is frequently used by regional and national retailers. A number of national retailers have taken this concept further, crating a standard signature building where the building's appearance further reinforces the advertising message and brand identity. Special site lighting and landscaping are often added to further the unique appearance of the business.

The market-wise retailer uses all of these methods to create a unique brand identity for the business. In today's ever-evolving business environment, whenever possible or feasible, the modern businessperson cannot simply consider traditional forms of onpremise signs, but must take into account all forms of signage and the way a site's overall visibility functions to inform, direct, identify and advertise the business.

In the U.S. retail economy, on-premise business signage symbolizes the most universal of all advertising options, surpassing television, radio, print, and direct mail. Today's signage is expansive and innovative. It can effectively and attractively perform a vital communication function alone or in partnership with other advertising media.

The cost of media advertising is calculated in terms of "cost per thousand exposures." The on-premise sign is a permanent asset which, unlike other media, is exclusive to the business it advertises. Also unlike other advertising media, it is on the job 24 hours a day, 365 days a year.

Because a sign's exposure time to the passing public is continuous, evaluating its "cost-per-thousand exposures" is more complicated than for other media, such as television or radio, where exposure of the message is of limited duration.

For the on-premise sign, the cost-of-the-message calculation is based on the original cost of the sign (design, production and construction, and placement costs) plus maintenance expenses and depreciation, as well as factors relating to trade area demographics and traffic counts (or readership). Take a look at how inexpensive an on-premise sign is compared to other forms of advertising.

From the above media cost evaluations, one can quickly note that the on-premise sign provides exposure of its message to a large pool of potential customers at a fraction of the cost of other media. Hence, the lower your cost to gain top-of-mind customer awareness, the higher your return on your advertising dollars.

This example applies $33,000 as the cost of the sign:

Assumptions:

Initial Cost of Design, $33,000

Production and Installation: (for two faces)

Amortization Period: 7 years

Cost of Sign/Month: $393.00

Estimated traffic count (cars/day): 60,000

Formula:

Cost/1000 Vehicle Exposures Monthly Cost

Monthly Exposures

Calculation: 393.00

1.8 million

Cost/1000 Exposures = 0.22

Gross Impressions (in Millions):

On-Premise: 2

Outdoor: 20

Radio: 6

TV: 3

Newspaper: 10

Cost Per Thousand Impressions:

On-Premise: $ 0.22

Outdoor: $ 1.90

Radio: $ 5.90

TV: $10.00

Newspaper: $ 3.60

On-premise business signs are an elemental component of successful business strategies and asset management. They are as important to a commercial zone's success as sidewalks, streetlights, curbs, parking and streets. Signage should receive the same careful attention to function as these other components. It also requires attention to cleaning and maintenance.

Signage must communicate an attractive image for the business to attract a clientele. In other words, it is just as important for today's businessperson to convey the proper image to the passing public as it is for the community to present an attractive retail environment.

The goal is to attract the attention of potential customers and convince a potential customer to stop. Signage is often the only visible clue that a business exists. In this situation, site planning and development must be "signcentric" (based around the signage) to optimize the site's economic value.

Street frontage offers a unique opportunity to interact with each passerby. If well-design signs, visible to the street, do not maximize this advantage, then potential patronage will be lost. These lost sales may ultimately represent the difference between the success and failure of a business.

For freeway-oriented businesses, as many as 50% of their customers are non-locals, neither living nor working nearby. There may be only one opportunity to capture their attention. Without a properly sized sign installed at the necessary height to be visible from the freeway, these businesses will be essentially invisible and will struggle to survive.

The on-premise sign, when standing alone, should be considered and treated as a fullfunction communication and design system. In any commercial setting, the sign should be easily detectable because it (1) is of sufficient size and height not to be masked or obstructed by intervening traffic or other objects in the visual field, (2) displays "content" (copy and/or graphics) that is legible, and (3) stands out from its background. In other words, it should be optimally visible, legible, and conspicuous.

On-premise signs are one of the most important ingredients of any advertising program.

When used correctly, on-premise signage provides immediate marketing advantages.

Without a properly designed and placed on-premise business sign, a commercial site cannot function at its full economic potential. Generally, appraisal of commercial real estate addresses three location factors - visibility, accessibility and parking. When assessing a sign's contributory value to its site, appraisers concentrate on the so-called visibility factor. This factor has two components: (1) the site's overall visibility, and (2) the visibility of the sign in terms of how easily it can be seen, understood and safely reacted to from the road.

The importance of signage to mobile consumers is underlined by the fact that many are in a hurry. The example below sets out a survey conducted by Burger King Corp. over several weeks. The survey results were part of evidence submitted in a legal action brought by Burger King, among others, against Agoura Hills, California, to prevent the removal of its freeway-oriented, high-rise on-premise sign, as required under a new sign code. The subject Burger King sign was visible to the Ventura freeway; the building was not.

Surveys were conducted at quick-service food (QSF), family, and atmosphere restaurants.

SAW THE SIGN 35 26 13

ALWAYS KNEW 29 27 19

WORD-OF-MOUTH 14 30 54

ADVERTISING 10 6 4

ALL OTHER 6 7 7

DON'T KNOW 6 4 3

TOTAL 100 100 100

As described previously, another primary function of on-premise signs is to prompt consumers to stop and shop. This type of consumer behavior is measured by the Institute of Transportation Engineers (ITE) based on trip-generation rates.

While typical trip-generation rates are derived from counts taken at the driveways of various land uses, such as a business, not al trips generated at the driveway represent new trips made for the express purpose of entering that particular site; instead some are made by motorists who did not set out for the site, but who enter it as an intermediate stop on the way to or from another destination. This type of stop is referred to by the ITE as a "pass-by trip;" for our purposes, it is defined as an "impulse stop."

The percentage of pass-by trips, or impulse stops, varies by land use. Table 2 sets out ITE estimates regarding the percentage of stops attributable to motorists for whom the site is not the primary destination. It is clear from the Table that impulse trade is very important to many businesses. And because the stops are not planed, it is unlikely such stops would be made without optimum communication to the street by the sample businesses.

Shopping Center

-Larger than 400,000 sq. ft. 30%

-100,000-400,000 sq. ft. 25%

-Smaller than 100,000 sq. ft. 35%

Convenience market 40%

Discount Club/Warehouse Store 20%

Fast Food Restaurant 40%

Sit Down Restaurant 25%

Service Station 45%

Supermarket 20%

On-premise signage can be a business's single most important advertising vehicle.

Signs are critical to safe movement by the traveling public and are the primary wayfinding device employed on U.S. streets, roads and highways. Traffic risks and accidents occur in part because people are not provided easy access to information necessary to their purpose. Drivers look for, and expect to find, signs telling them where to go and what is available once they get there. A sign that is too small, inadequately placed, poorly illuminated, inconspicuous, or in disrepair will be frustrating to mobile consumers. Frustrated consumers often make unsafe traffic maneuvers to get where they want to go. Furthermore, as the present driving population ages, the visual acuity of the average driver decreases, and the need for the signage to be more conspicuous and legible will correspondingly increase.

The Americans with Disabilities Act (ADA) became effective on January 1, 1992. This sweeping civil rights act forever changed the way buildings and landscapes were conceived and designed. As part of the process, signage was impacted in a similar fashion.

Interior signage has two major purposes. First, it serves as a guidance or wayfinding system to move people through a building safely. You must always consider how the legal requirements from the Disabilities Act impact your signage, both exterior and interior, to make sure you are in compliance.

Its other purpose is to provide point-of-purchase advertising. National retail executives will tell you that effective point-of-purchase ads can influence 85% of purchases in a store. Also, major brand producers will pay substantial amounts to a storeowner to acquire this space.

A more complete discussion of interior signage, as well as store layout - another important ingredient in a successful advertising and marketing mix - is beyond the scope of this advisory.

The difference between on-premise business signage and outdoor advertising (or offpremise signage) is that the former communicates information concerning goods, products, or services available in very close proximity to the sign while the latter references goods, products, or services, and sometimes activities, available somewhere else.

Although the focus of this publication is on-premise business signage, a brief discussion of outdoor advertising is useful at this point. Outdoor advertising is a big player in the major media advertising mix of U.S. corporations, and advertising measurements applicable to on-premise signage are derived from those routinely used by outdoor advertisers. This is especially true for "cost-per-thousand exposures" calculations.

Outdoor advertising is commonly referred to as "billboard" advertising, although this is an inaccurate definition as many varieties exist. For example, advertising that appears on public buses, bus stop shelters, or benches is outdoor advertising. The term "billboard" itself derives from the colonial American custom of attaching a "bill" (or paper poster) containing a written or pictorial message on a "board" and then displaying the device about town or out on the road. Today's outdoor structure is typically defined by size.

The structures seen on major interstates and highways generally are produced and owned by large companies, and are standardized by size. The structures seen on secondary roads generally are owned by smaller companies or individual landowners and are not standardized by size.

Outdoor advertising structures dramatically expand street communication for the retailer.  They develop specific memory about a business by offering convenient and useful information along travel paths. Industry studies show that informational/directional outdoor signage that directs motorist attention to locations and activities nearby will increase business an average of 15%. These studies also disclose that signs that include time-and-temperature information increase consumer attention and enhance retention or recall of the commercial message. [Research data available at Outdoor Advertising Association of America Inc. (OAAA), 1859 M Street, N.W., Suite 1040, Washington, D.C. 20036.]

The viewer of a message displayed on an outdoor structure may act immediately upon an informational/directional message, like the weary driver observing the advertisement for a motel located two exits away. At times, the message may function as a reinforcement device for a regional or national major media campaign, which also includes television, radio, and newspaper advertising. Other times a message may provide public-service information, such as road conditions, the location of a rest stop, time and temperature data, or gasoline availability and pricing information.

Members of the business community are not alone in recognizing the value of outdoor advertising. Increasingly, cities are leasing public space to advertisers. This space is found, for example, on buses, bus shelters, transit stations, and sidewalk kiosks.

Although public advertising space is generally much smaller than that offered by traditional outdoor structures, in recognition of the intrinsic value of such exposure, lease rates of $500 per month per poster face are not uncommon.

Prepared for the US Small Business Administration

By R. James Claus, PhD and Susan L. Claus

The support given by the U.S. Small Business Administration to this activity does not constitute an express or implied endorsement of any cosponsor's or participant's opinions, products, or services. All SBA programs or cosponsored programs are extended to the public on a nondiscriminatory basis. SBA Auth. No. 00-763D-43.

MT-12, July 2001