Anyone who visits Manhattan will recognize the bright signs and billboards that are a hallmark of Times Square. If you've never been there, this landmark piece of New York real estate is often seen in television or film, so you'll understand what the fuss is about. Billboard advertising today enjoys a great deal of ad dollars thanks to digital. In May 2018, the Outdoor Advertising Association of America (OAAA), said digital billboards experienced the most significant increase among all of the out-of-home categories: billboards, street furniture, transit, and place-based. Digital billboards accounted for more than 21% within the billboard category.
With that, companies willingly pay out hefty sums to place their ads in Times Square. These billboards are high-tech installations, glowing with light emitting diodes (LEDs) and high-definition displays, captivating and distracting all at once.
Advertising in Times Square
According to Times Square NYC, in September 2018, the famed site welcomed 390,368 average daily visitors. And in 2017, NYC: The Official Guide says 50 million tourists visit the site each year. This makes it one of the busiest tourist attractions in the world. For marketers, Times Square signage advertising takes in roughly 1.5 million impressions day-to-day. If you factor in the New Year's Eve ball drop, when more than a million people crowd the area, the numerous incidental appearances in movies and on television shows, like the morning talk shows that film in the heart of Times Square, now those impressions are upwards of 150 million per year.
It costs between $1.1 and $4 million a year to buy advertising space in Times Square. Moreover, it can cost up to $3 million per month to advertise on Time Square's largest billboard. Taking the average of the cost range and the estimated 150 million impressions a year, the cost breaks down roughly to 1.7 cents per impression. The average cost per impression for a billboard advertisement for the rest of America is much lower, ranging from 0.2 to 0.5 cents. Is putting up an expensive electronic billboard in Times Square nevertheless a cost-effective method of advertising?
Let's see how this cost compares to other forms of advertising. The majority of online advertising platforms, including Google (GOOG) AdSense, on LinkedIn (LNKD) and on Facebook (FB), offer a pricing model based on cost per views or impressions. These cost-per-impression, or CPM systems vary in cost based on a website's popularity and how often ads will be run. Typically CPM counts cost per 1,000 impressions (the 'M' stands for mille, Latin for that number). When using a CPM billing model with Google Ads, a single impression can cost 0.4 cents, making a Times Square billboard 4.25 times more expensive. Ads embedded in emails like Gmail can cost 0.5 cents per impression and those embedded in videos such as on YouTube can run 2.5 cents per impression. Typically, internet advertising is a lower cost option for advertisers.
A 30-second spot during the 2018 Super Bowl cost $5 million and reached 103.4 million viewers. That gives it a rate of around seven cents per impression – and for an advertisement only shown once. Advertising during the Super Bowl is over 4.5 times more expensive than advertising in Times Square.
Direct mail advertising still persists even though much of it is thrown away as junk mail. A typical direct mail campaign has a CPM of around three cents per impression, making Times Square a better deal dollar-for-dollar.
According to the OAAA, the average CPM rates for other popular advertising media are one cent for radio, 1.4 cents for magazines, and 3.25 cents for newspapers.
The Bottom Line
Advertising in Times Square, one of the world's most trafficked tourist attractions, commands a relatively high price per impression compared to billboards placed elsewhere in America. Surprisingly, based on cost per impression, advertising in Times Square competes with traditional media, but is more expensive than online advertising alternatives. However, companies that advertise by placing an electronic billboard there are paying a premium the same way that advertisers pay up for big sporting events such as during the Super Bowl. Compared to a 30-second spot during the big game, however, a billboard displayed in Times Square could be a good bargain.