THE SIGNAGE FOUNDATION FOR COMMUNICATION EXCELLENCE, INC.

The economic well being of many communities depends to a significant degree on the success of their commercial districts. Retail and service businesses generate jobs and income for local and surrounding populations. Commercial districts also contribute to property and sales tax bases, which translates to revenues for the local government from a source other than residential property taxes, helping to reduce or stabilize local homeowner's tax bills. Therefore, when a municipality establishes a commercial zone, a primary goal should be to optimize the chances for the economic success of all permitted uses in the zone. On-premise business signage is an elemental component of business success, and signage regulation should not be undertaken without a fundamental understanding of its impact on both private business revenues and public fiscal health.^[1]

North American society (United States and Canada) is consumer-oriented. Billions of dollars are exchanged annually for goods, products and services. In 1997, the United States' retail economy alone generated in excess of $2.5 trillion. Of this total, approximately $200 billion represented expenditures on local, regional and national advertising; another $75 billion was spent on marketing programs.^[2]

Because consumer interests dominate the North American commercial environment, the variety and range of consumer products and services expands in direct proportion to consumer demand. In this context, the North American retail model differs significantly from that of other industrialized nations. For example, the retail economies of Japan and Western Europe, although "market" oriented, are more directed by government policies than by consumer tastes or preferences. In Japan, the state approves domination of its retail distribution and marketing system by the producer/manufacturer through a form of "captured" capitalism; in many northern European countries, state and local governments protect the local business community by assuring district conformance to existing retail patterns and restricting access to newcomer businesses -- a form of "controlled" capitalism. Neither model is comparable to the consumer-directed, competitive capitalism of North America.^[3]

Additionally, continuing increases in North American automobile use, together with shifts in population and expanding job opportunities, have fostered significant changes in consumer behavior.^[4] These changes require land use planning models and approaches to building urban environments which recognize the information needs of a highly mobile consumer society and the role on-premise signage plays in meeting those needs. However, few current land use planning models or theories recognize the role commercial communication plays in the North American commercial environment.

Finally, the fact that signs are place based, or immoveable and "silent", may encourage assumptions that signs do not constitute any recognizable form of speech, and therefore, do not deserve free-speech protections. Federal court cases since the 1976 landmark decision in Virginia Pharmacy^[5] have mandated otherwise, i.e., the sign is no different from any other form of communication medium, and as such, its "message" is entitled to certain First Amendment protections. Minimally, these protections guarantee time, place, manner and content neutrality.^[6] And, legal protections increase for signs which contain a political expression or embody a "work of art " or trademark emblem or display a copyrighted slogan. Because of the federal cases, whenever a regulatory body undertakes restriction of commercial communication (including signage), it must always keep in mind that it is engaging in an act of censorship which may have actionable adverse impact on a basic civil right. It cannot be said too often that in the commercial milieu, regulations which seek to control signage, particularly the message of a commercial “speaker”, must be objectively enacted and imposed, always taking particular care that content or copy is not compromised absent a substantial state interest.

The task of establishing value as a prerequisite to sign regulation is one of the more complicated assignments of the urban planner because regulatory results affect not only individual speech and property interests, but also reverberate throughout the increasingly varied commercial environment. Because signage is a complex communication medium, functioning in a complex society engaged in a multitude of economic activities, no single research or valuation technique can answer all signage valuation questions. This paper will concentrate on the two most basic market-based measurements used to establish the cumulative economic value of on-premise signage: (1) advertising effectiveness measures, and (2) standard appraisal practices.

Individuals engaged in business activities spend significant amounts of money for the commercial message provided by a sign. Advertising agencies and commercial real estate and business valuation services assist these individuals in determining what a sign is actually worth -- not in terms of how much it may cost to produce and place, or lease, but how much it is worth in terms of the business revenue its presence may generate. Those who understand standard economic and advertising effectiveness measures, and the varied ways commercial communication users establish the value of their on-premise communication system, will be better able to coordinate land use planning with emerging communication research and technology, optimizing benefit to the community -- both economically and "aesthetically".

Discussion of the two commonly used valuation techniques will be prefaced by discussion of the underlying complexities involved in the valuation assignment and the assumptions which are made during the research and analysis stages by those actively engaged in business and commerce.