THE SIGNAGE FOUNDATION FOR COMMUNICATION EXCELLENCE, INC.

The economic worth of an on-premise business sign is almost totally dependent upon its ability to effectively "speak" to the intended receiver or communicate its message in the marketplace. Precisely because the business sign is a form of commercial speech, as are magazines/newspapers, direct mail advertisements, and radio and television commercials, the primary entity looked to for valuation assistance is the advertising industry.^[35] The North American advertising/marketing economic sector relies on four effectiveness (or valuation) measures: reach, frequency, readership, and cost per thousand exposures.

1. Reach. This measurement addresses the type and numbers of consumers being exposed to the advertiser's message. For example, newspaper advertisers obtain address lists of subscribers and from the demographics disclosed by the lists, determine fairly accurately where their messages are going. With respect to on-premise signage, consumer information is obtained from motor vehicle department records, based on the plate numbers on vehicles passing the sign. From this data, a dot map identifying the source of daily vehicular traffic can be constructed, and "reach" can be determined. (Note:Dot maps and motor vehicle department records also assist in defining a commercial trade area.)

2. Frequency. This measurement addresses how many times a viewer/reader/listener is exposed to the advertiser's message. For example, a newspaper advertiser can accurately determine how many people were exposed to an ad based on the number of newspapers purchased. Frequency measures are more difficult to determine for sign advertisers and owners, particularly those dependent upon on-premise signage. Many drivers are "just passing through" and may see the sign only once; other drivers live in or near the sign's trade area, and therefore see the sign many times a month. Origin/destination studies offer very reliable data in these circumstances. However, while traffic counts provide accurate information on the number of vehicles daily passing a sign, this number must be adjusted, using tested formulas, to account for the infrequent passerby or viewers who may see the sign, but are not potential consumers of the good, product or service advertised.

3. Readership. This measurement addresses whether a message is effectively speaking to and subsequently remembered by the intended recipient. Several research techniques are used to determine this factor; two of the most commonly used are recall and recognition tests.Rating services provide these tests and results for all major-media advertisers; for example, television and newspaper advertisers rely on Nielsen Ratings Services. Small business owners not engaged in franchised business operations usually do not have access to national rating service readership tabulations, because such data is generally protected as trade secret information by the parent franchiser company. For such independent or non-affiliated small business owners, the services of a local market researcher may be required to obtain readership measures.

4. Cost per thousand exposures. This measurement addresses the cost for "exposure" of the advertiser's message, and is the one common denominator among all commercial communication mediums, whether radio, television, print, direct mail, outdoor advertising (billboards) or on-premise signage. To arrive at this measurement, one uses frequency data, and then divides the cost of the communication method or device by the number of exposures occurring during a defined time period. For example:

Cost/1000 Exposures - Local Television
	Assumptions: Trading area: 80,000 households Audience: (15% of 80,000) = 12,000 households Cost: $120 (one - 15 second spot at 9:00 p.m. weekday)
	Formula:
	Cost/1000 Exposures	Media Cost Audience
	Calculation	$120 12,000 Households
	Cost/1000 Household Exposures =	$10.00

Newspaper cost per thousand exposures is easiest to determine; for example:

Cost/1000 Exposures - Local Newspaper
	Assumptions: Circulation: 40,000 Trading Area Households Line Rate: Sunday $.40 Advertisement: 300 lines; Sunday (approximately 3" x 7" column)
	Formula:
	Cost/1000 Household Exposures Household Circulation	Monthly Cost Audience
	Calculation	.40 X 300 Lines = $120 40,000 Households
	Cost/1000 Household Exposures =	$3.00

The on-premise sign cost analysis is one of the more complicated evaluations, based on original costs (design/production and construction /placement), plus maintenance expenses and depreciation. For example:

Cost/1000 Exposures - Sign
	Assumptions: Initial Cost of Design, Production and Installation: $7,500 (for two faces) Amortization Period: 5 years at 10% Cost/Month: $125.00 Estimated traffic count after adjustments: 30,000 cars/day
	Formula:
	Cost/1000 Vehicle Exposures	Monthly Cost Monthly Exposures
	Calculation	$125.00 900,000 Exposures/Month
	Cost/1000 Household Exposures =	14 cents

Based upon cost per thousand exposures, one quickly notes that the cost to REPLACE a sign's exposures with other mediums may be cost prohibitive in many cases, particularly for small business owners.^[36] This is why "amortization" (based solely on manufacture, installation and maintenance costs) as compensation for retroactive restrictive regulations may be damaging to the business community, and ultimately, local government tax base.

All advertising and marketing sources can produce estimated cost-per- thousand-exposures data. For the newcomer to signage valuation, however, there is no better source of information concerning the value of street exposures than the local outdoor advertising or billboard plant. Outdoor advertisers rely on "rate cards" as accurate indicators of monthly lease or sales costs throughout the United States. From these rates, cost-per-thousand exposures can be determined.