How a Crazy Question Made Me Rethink Digital Billboards
Our CEO, Sam, and I were having a conversation about Out of Home advertising one afternoon when Sam asked a question that stopped me flat in my tracks...
"If Digital Billboards are 10X More Expensive, Are They 10X More Effective?"
Typically, when we think about the value of something we consider practical value but not intrinsic value. To understand the total value of something though, we have to account for both.
What is Practical value?
Practical Value is the sum of the parts, what the "thing" is worth.
In the case of billboards, it is the audience they reach plus the context of the attention of that audience.
Context can be everything ranging from:
- Shape of the billboard
- Its physical placement/orientation relative to where it is viewed
- Size and overall dimensions
Those sorts of things.
Expressed as an equation, it would look like -
Audience Reached + Context = Practical Value
What is Intrinsic Value?
Intrinsic Value is what makes a Rolls-Royce Phantom more expensive than a BMW 7 Series. BMW owns Rolls-Royce and the 7 Series shares the same platform of the Rolls-Royce Phantom, but where the BMW starts in the $85K range, the Phantom starts at $455K.
Practically, they are the "same" vehicle. Intrinsically, the Rolls-Royce is 5X more expensive.
Intrinsic Value is what accounts for the difference in price. It's the quality of the materials used, the fit and finish of craftsmen assembling every component, the prestige of owning a Rolls-Royce. Everything that comes with it.
It's up to you to create Intrinsic Value.
To define how you create Intrinsic Value, ask yourself "if all things are equal, why should my customers choose me?" Your answer is the Intrinsic Value you create.
The Value Equation
Ultimately, every marketer's goal is to create Total Value. Total Value is...
Practical Value + Intrinsic Value = Total Value
Because when you can create Total Value, you are adding incremental return on investment for your clients by delivering the thing you deliver and simultaneously protect yourself from becoming commoditized.
Warren Buffett has famously said "Price is what you pay, value is what you get" and Grant Cardone is on record as saying "When value exceeds price, price doesn't matter" and if you combine these mindsets, you get The Value Equation.
Price is What You Pay, Value is What You Get and
When Value Exceeds Price, Price Doesn't Matter.
So, are digital billboards really more valuable than their static, traditional counterparts? TBD.
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