Property owners are looking at all methods and strategies to reduce building management costs that eventually flow through to the bottom line and eventually increase investor returns. The question is: Are we not neglecting a very obvious and rational income stream? The exterior of multi-storey buildings is very valuable real estate. I’m basing this on experience I have gained in researching the cost of billboards.
Let’s look at a board that I was considering for one of my own concerns: A 7m x 25m board on the N1 highway. I must note that this is a smaller board flanked by two larger boards. The monthly rental cost is R60,000 (excluding VAT and production). That equates to 175m2 at R342.86 per square metre (excluding VAT). We are leasing floor space at the higher end of the market at approximately R200 per square metre. This suggests that building owners could probably extract building revenue from a tenant’s facilities budget allocation as well as the above-the-line marketing budget allocation to increase project yields. The income is also higher than the floor area revenue.
Billboard advertising is arguably one of the oldest forms of advertising. In the UK and other parts of the world they are known as hoarding. So what is the purpose of billboard advertising? Wikipedia says “Billboard advertisements are designed to catch a person’s attention and create a memorable impression very quickly, leaving the reader thinking about the advertisement after they have driven past it.” Billboards have extended to buildings due to the high densities of cities and pedestrian traffic, such as in Times Square, New York City.
However, this is not the type of advertising that I’m suggesting. Branding rather than advertising is where the real revenue lies. It’s only a matter of time before high-rise buildings open up completely new panoramas of pulsating advertising and branding, once the property market realises the measure of revenue that can be tapped into. Depending on the height of a particular city’s skyline, high-rise buildings are distinctive landmarks. This type of branding is not about persuasion, but rather about recall and making the brand as visible as possible. The more omnipresent the brand is, the less likely it will be forgotten: “Out of sight, out of mind”. And when you are able to connect your brand to a landmark then you are entering the all-pervading exposure of “top-of-mind”. Buildings can and should assist their tenants to achieve the very core of effective branding and ensure that their brands become a household name.
Globally, it is supported that building owners who allow their tenants to brand or advertise their businesses on their buildings in an organised fashion, are more likely to attract tenants or sales. There are specialists in the gobal market that focus on consulting with building owners and tenants on how to create clear and effective branding and advertising of their businesses and products to attract “the last window of influence”.
A very significant aspect about this type of outdoor advertising or branding is that it does not have to be invited in. It is part of the environment; it cannot be turned off in the case of a radio or television. The environment has no control of whether it is seen, therefore giving more impact to the campaign for a longer period of time than the viewer may expect. Because the buildings are high and the advertising space sizeable, it demands attention. Research gathered by the UK’s OMC (Outdoor Media Centre) shows that outdoor advertising and branding is the advertising medium most seen by shoppers in “the last window of influence” before shopping.
Buildings that are correctly located and can support billboards, static or digital, can offer tenants an exclusive advantage. Most tenants have budgets to facilitate these costs as they are paying a certain amount towards branding on a monthly basis. This revenue may as well be realised by the building owners as the building is affording the anchor tenants the opportunity to communicate and connect with consumers 24 hours per day.
With technology that exists today and that is being developed, there are patented processes that allow projection onto clear or tinted glass. The glass is totally transparent. No film is used in the glass; it’s called the pixel improvement process. No power is supplied to the glass, neither is there any heat generation from the glass, it is a green display with some of the highest resolution available. This digital option is very exciting for an ever-changing branding and advertising environment.
Modern buildings should be designed to generate additional income from branding and advertising which are substantial budgets that can improve building returns for investors. The time is imminent in South Africa when tenants are going to demand more from their building than just a good location and four walls.
Words: Rodger Warren writing in the latest Asset Magazine