The Functions of the On-Premise Sign

For an ‘on premise’ sign to be effective, it must be (above all else) VISIBLE!

Correct placement and resulting visibility to patrons, will ensure that…..

  1. It develops a memory for a location and the products or services available at the location.
  2. It reinforces a memory and extends recall of other advertising efforts.
  3. It attracts new customers by prompting first-time or impulse visits or purchases.
  4. It modifies customary purchase decisions or habits.

Changeable copy and temporary window signs are especially effective in encouraging variation from accustomed consumption patterns.

The ultimate function of the On- Premise sign is to generate spontaneous sales that equate to added shop turnover and profits.

Gigantic Signs won international acclaim winning the prestigious POPAI ‘Permanent Display of The Year’ for its Wild Turkey display. This display increased on premise sales by an astounding 221

Branding a Site

One measure of how effective or valuable an on-premise sign is to its site is demonstrated by how well it helps to brand the site. A sign “brands” a location, just as a product label brands the product. If an attractive image is not communicated by the business’ sign, the business will rarely convey its true message, or get the clientele it seeks.

Every site development and sign program strategy will benefit if the on-premise sign is made the focal point of the site. If a site is “signcentric”, it means that the sign catches the customer’s attention and leads him to the target business. A measurable positive effect on gross revenues should immediately result from ‘signcentric’ site development.

Developing and Measuring Readership

Q. How do you know if your sign is (or is not) branding your site for future reference by potential customers?

A. You determine readership. Readership advertising effectiveness tests whether a message is effectively speaking to the intended audience. Two of the most commonly used research techniques are the recognition and recall tests discussed above. Rating services conduct the tests and tabulate the results for all major-media advertisers (i.e., television and newspaper advertisers rely on Nielsen Ratings Services). Small business owners not engaged in franchised or chain business operations, however, usually do not have access to national rating service readership tabulations; these independent small business owners may require the services of a local market researcher to obtain readership measures. Often, on-premise sign companies and trade associations will assist in compiling data

Q. Why do you want to measure readership?

A. Without knowing the effectiveness of your signage, you won’t know how well you are doing. How do you know if your sign is promoting sales / turnover? For your greatest success -with a sign and therefore with your business -measuring readership is a diagnostic tool so you can fix whatever is not working, and increase what is working.

The following figures come from extensive surveys and can be used as a ‘rule of thumb’.

  1. On average, one additional on-premise sign resulted in an increase in annual sales revenues of 4.75%. This translates to a $23,750 increase in average sales revenues for a typical store in the study group with annual sales of $500,000.
  2. On average, one additional on-premise sign increased the annual number of transactions by 3.93%. This translates into more than 3,900 additional transactions for a store with an annual average of 100,000 transactions.

Size of sign and competition in-store can vary these results. Generally anything over 1.5% increase is deemed worthwhile.

a. The addition of new signage to previously unsigned buildings, and the replacement of existing signage (generally, with larger signs) resulted in an average revenue increase of 5%.
b. The addition of a pole sign, or a plaza identity sign including the store’s name, resulted in an average increase in weekly sales of 5-10%. The increase was attributed by the researchers to the new signs’ enhancement of site visibility to passing traffic.

c. The addition of small directional signs indicating entrance and exit routes resulted in weekly sales increases ranging from 4-12%. The increases were attributed to the signs’ ability to guide a site-bound shopper more than any specific advertising effect.

These increases in revenues, as a result of signage, demonstrate the positive effect on profitability at a specific site, especially given that normal profits in the retail industry are approximately 1-2%.

Modifying Customary Purchase Habits

One of the primary goals of advertising is to change purchase behaviors. Effective advertising can increase purchases within discrete segments of the market by introducing “intervening opportunities” along customary travel paths. This is especially so in highly discretionary areas, such as quick service foods and economy lodging, yet it holds true, also, for the business with more specialized products or services to offer.

Gigantic Signs believes a business’ fixed and variable costs should be covered from a stable consumer pool, with profits coming in from unexpected sources. The right sign often prompts an unplanned stop, or changes the customer’s mind once he is on the premises. Changeable copy and temporary window signs are especially effective in encouraging variation from accustomed consumption patterns. Because temporary or variable message signage is relatively inexpensive, the dollars generated by such signage usually represent pure profit. Gigantic Signs has a range of variable message signs for both sale and rental opportunities.

It is estimated that 35-50% of the consumer population today shops outside their local area. Gigantic Signs also acknowledges the growing impact and frequency of online sales where retailers with none of the ‘usual’ retail overheads can reduce sale prices for equal or better profit margins to those of ‘land based’ retailers. Competition is getting tougher!

Legible, conspicuous on-premise signage will assist in attracting a large percentage of these non-local and newcomer consumers. Further, an effective on-premise sign provides 24-hour exposure of its message to a large pool of potential customers at a fraction of the cost (when depreciated over several years) of other media. The lower the cost to obtain customer memory or top-of-mind awareness, the higher the return on advertising dollars.

The Signage Appraisal Process

Like real estate, signage has a value that can actually be measured or appraised. The visibility component to a real estate site typically encompasses more than the traditional sign out front. How is an appraisal of a sign done? The three traditional approaches are:

  1. Cost of Replacement (or Substitution). The signage appraisal method applies a cost replacement approach to determine the cost of replacing a sign’s commercial communication or advertising value with other forms of advertising, such as newspaper, television, radio and ‘online’ (internet & mobile phone) advertisements. It is not used to measure the cost of replacing the physical structure of the sign, as is the common measure of value in building or home appraisals.
  2. Market Comparison. Generally speaking, the market recognizes premium prices for those commercial properties with the best visibility. Outdoor advertising structures such as billboards or bus shelters have recognized buying, selling, and leasing markets. The market sales comparison approach as applied to the visual communication component of signage in its many forms may measure the differentials of rents in the market. Customer surveys also may be developed, tested and analyzed. The sales per square foot (metre) of similarly situated sites with varying levels of signage or varying ability to be seen via the passing traffic may also be analyzed.
  3. Income Flow or Capitalization. This approach is used to ascertain the present value of the anticipated future income to be generated by a property over its remaining useful life. For the purposes of signage appraisal, this method focuses on income generated by customers who are prompted to stop solely by the sign. The retailer’s gross retail margins are analyzed and then capitalized. This analysis is complicated by alternative signage forms such as business form or product franchising or chains where the system is integrated into networks of retail sites supported by national advertising (media) programs. The fundamentals of valuation and evaluation start with understanding that signs are commercial speech. Additionally signs are relied upon and used by consumers to make and influence their shopping and purchasing decisions.