Ad Inventory

Creating your Ad Inventory & Rates.


Are you thinking about getting an AdHitch to start your own business? Hopefully, you read our article for the 5 steps to start a mobile billboard business and now you are probably wondering how you can price your ad space and how much ad space you can sell. 

First, you learn the lingo!
  • Connector.

    Loop Duration

    The total duration of all the ad slots

  • Connector.

    Campaign Duration

    The amount of time your vehicle will be displaying advertising each day

  • Connector.

    Ad Duration

    The amount of time each ad slot will be displayed on the loop

Now, you start to plan!

You should already have an idea of your mobile billboard route, hours of operation, and demographics. For this example, Our mobile billboard company “ABC Mobile” plans to operate 12 hours a day, 5 days a week, driving a route that is 150 miles per day.

The next step is to figure out exactly how many advertisements you can sell. The math formula looks like this:

(Loop duration (minutes) * 60 seconds)/AD duration =
# of inventory advertising slots.

In order to figure out Loop Duration & Ad Duration, you must keep in mind to balance the amount of clients you can sell ad slots to and the amount of times their ad is played each day.
The loop duration can be any amount of time you wish. For this example, ABC Mobile, decided the Loop Duration will be 5 minutes, and each Ad Duration will be 10 seconds.

((LD 5 minutes) * 60 sec.)/(AD 10 sec)
=30 slots.

ABC Mobile digital inventory is 30 slots.
(Remember this is completely customizable to your business)

“Well, how many ads do I get each day?”Every Client Ever

After you have figured out your Loop Duration and Campaign Duration, you can use this formula to get the amount of times each ad slot will play per day.

(Campaign Duration in hours * 60 minutes in an hour) / Loop Duration = # of times loop will play during campaign.

Please keep in mind that if each client only buys one advertising slot on the loop then:

# of loops played during campaign duration = # of Advertisements EACH client will receive in that campaign.

Example:
12 hour campaign duration * 60 minutes in an hour= 720 minutes/ 5 minute loop duration = 120 times the loop will be repeated within that 12 hour campaign.
~ This means if a client buys ONE of your ad slots, they will receive 144 advertisements during those 12 hours.
Now, if you know how many ads you will receive in one day, simply multiply that number by the amount of days you will be advertising in the month to get the total # of ads.

0
Ads per month

Next, lets discuss

Operating Expenses

In this example we will use various numbers in these formulas that are only meant for the purposes of these formulas. You can fill in with your own numbers.

Example:

Labor costs
12 hours day * $15 per hour = $180 day
Average miles driven per day = 150
Average MPG = 10 mpg. With 18 gallon tank = 180 miles per tank Average cost of gas = $4.00 per gallon * 18 gallon tank = $72.00 per fill. 5 days per week with 1 full tank per day = $72*5 days = $360 per week Labor cost per week = $180 * 5 days = $900 week

Gas cost per week = $360 week
Total average cost per week (labor + gas) = $1260 * 4 weeks = $5,040 Total average operating costs per month = roughly $5,040

*keep in mind, its always better to over estimate your operating expenses when writing a business plan.


Break-Even Point

Now, that you know how much it will cost you to operate each month, you can now start to figure out your pricing per ad slot. (keep in mind this example does not factor initial start-up costs.)

 

Break-Even = Operating Expenses / Ad Inventory
$5,040/ 30 ad slots = $168 per slot. 

ABC Mobile now knows the bare minimum they can sell each ad slot for, each month, to cover their operating expenses.


Pricing • Profit Margin • ROI

Knowing your break even points makes it easy to design your base rates. Its simply deciding what % of profit margin you need to reach your specific ROI goals each year. Other factors in developing prices, is your target market and the demographics your driving in.

Examples:

Potential Selling Price = $350
$350 per ad slot * 30 advertising slots = $10,500 gross revenue
$10,500 monthly gross revenue – $5,040 monthly operating expense = $5,460 net profit. 52% profit margin
Price Breakdown for clients:

$350 month/ 4 weeks = $87.50 per week.
$350 month / 20 days = $17.50 per day
$350 per monthly ad slot / 2880 ads per month = .1215 = $0.12 per ad for your clients!

Potential Selling Price = $450
$450 per ad slot * 30 advertising slots = $13,500 gross revenue
$13,500 monthly gross revenue – $5,040 monthly operating expense = $8,460 net profit. 62.6% profit margin.
Price Breakdown for clients:

$450 month/ 4 weeks = $112.50 per week.
$450 month / 20 days = $22.50 per day
$450 per monthly ad slot / 2880 ads per month = .1562 = $0.16 per ad for your clients!


A proven strategy with Block Campaigns

Block campaigning is a strategy that is proven to work. Instead of selling and operating on month to month basis, you would break the year into 3 month quarters. 

                      A 3-month package with 5-day week operating time.
By doing a 3-month package deal will help solidify a client base to start, initiate a cash flow, and guarantee your operating expenses are covered for 3 months. By only doing this 5 days out of the week you allow time for business to do event rental or exclusives during the weekend (This is another topic we discuss in detail, Click Here!). Also, a business will see better results with their ads the longer they advertise on your screen. Selling ads per week = a lot of time & money spent trying to get sales each week.

Total month operating expenses = roughly $5,040 * 3 months = $15,120 total operating expenses.

Break-even point = $15,120 operating expenses / 30 slots of inventory = $504 retail price per ad. This is the bare minimum you can sell the packaged ad slots.

Selling Price of $899 * 30 slots of inventory = $26,970 gross revenue
$26,970 gross revenue – $15,120 operating expenses = $11,850 profit in 3 months.

$899 as a sales price breaks down for each client into this:
$899/3 months = $299.67 price per month

$299.67/ 4 weeks = $74.92 per week.
$74.92 / 5 days per week = $14.98 per day

$14.98 / 12 hours per day = $1.25 per hour
$1.25 per hour / 12 ads per hour = $0.104 = 10.4¢ per ad! Offering your potential clients ads at pennies on the dollar make it very appealing and easy to close the sale.


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You can receive $1,000.00 off your purchase

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