Billboards the Prize in CBS’ Acquisition of Van Wagner

velocity Market Information

It seems that every week we hear news about leading tech companies undergoing mergers and acquisitions, whether it is Facebook buying WhatsApp or Apple taking over Beats Electronics. While tech M&A’s practically happen every day, the advertising world rarely sees as big a merger as what occurred on Monday when CBS Outdoor Americas acquired Van Wagner Communications for more than 1,000 billboard displays. Today, billboard ads are an excellent way to strengthen your brand. Learn more about billboard advertising and how you can expand your brand.

But what are these mergers really about? In the case of massive social media networks (or media companies in general) is all about eyeballs. The way most media companies generate revenue is through advertising, and to be successful they need the right balance between content and user base. CBS Outdoor Americas announced on Monday that it had reached an agreement to acquire Van Wagner Communications for $690 million in cash. This move comes only four months after the company was spun out of CBS in the networks attempt to increase viewership and promote in new markets. The deal will consist of more than 1,000 advertising billboard displays in 11 large US markets. The expense seems to capitalize on new market opportunities over the summer by promoting shows that will premiere in the Fall. You may remember Facebook bought out WhatsApp for the paltry sum of $19B back in February. While there was tons of criticism of CEO Mark Zuckerburg, the move was seen as a worthwhile strategic risk that would expand Facebook’s user base by more than 500 million people.  Although the CBS deal was nowhere near the scale of the WhatsApp buyout, the media company hopes to accomplish a similar goal: expand its consumer base to as wide an area as possible.

What does CBS hope to gain by plastering its programs all over?

Money (obviously), but in order to achieve revenue from ads they must drive a consumer to action. Most ordinary consumers doubt the effectiveness of billboards to do that. They tend to think that messages on billboard ads are just too short to be persuasive and that there are more effective, more measurable, ways to advertise. Let’s take a look at some stats that delve into this argument.

According to the 2009Arbitron National In-Car Study, “that 71 percent of Americans ‘often look at the messages on advertising billboards’.” Additionally, the study found that 56 percent of Americans reported talking about a funny billboard ad they saw while in the car at a later time. Consumers may argue that there is a big difference between noticing a billboard and deciding to purchase something as a result (they are completely right), but the study revealed information that is critically important to advertisers; 72 percent of viewers shop on their way home, 68 percent make shopping decisions in the car, and 32 percent reported that they visited a business or bought a product advertised on a billboard they saw within one week of seeing it.

People miss the mark when thinking about the benefits of advertising billboards. They aren’t plastered everywhere to persuade you to buy something, not overtly anyway. Instead, they strengthen brand recall and reinforce images. People might not look at ads for longer than a couple of seconds, but they do look. For companies like CBS that want their name and image everywhere (check out how much CBS owns), the opportunity to buy prime real estate billboards is something they can’t risk passing up.

Velocity Agency is a digital marketing and advertising firm specializing in digital and internet marketing & advertising, print, web design, graphic design, film, and HD video promotion and post-production. Velocity serves clients all over the United States from our Metairie, LA office just outside of New Orleans by strategically implementing proprietary tools and techniques to get you the most conversions for your business through lead generation, cost-per-acquisition, and top line revenue.