Here's a company that shows all the signs of being a successful outdoor advertising business. Lamar Advertising is one of the top billboard operators in the US, along with CBS Outdoor and Clear Channel Outdoor. The company maintains more than 143,000 billboards in about 45 states, plus Canada and Puerto Rico. It also sells advertising space on almost 30,000 signs placed on buses and at bus stops in more than 15 states, and it maintains more than 112,000 logo signs (highway exit signs with logos of nearby hotels and restaurants) along interstates in about 20 states and Canada. Chairman Kevin Reilly Jr., together with members of his family, controls a 75% voting stake in the company.
By their nature, billboards reach local audiences, and advertising from local businesses accounts for about 80% of Lamar's revenue. The company maintains an extensive network of local account executives. Top customers include restaurants and retailers (typically accounting for about 20% of billboard revenue each year), as well as health care companies.
The recession significantly reduced Lamar's revenues and profits, but in recent fiscal years top line revenue has increased. One executive that has helped steer the company through the economic turmoil was Sean Reilly, the former COO of its Outdoor Division. In early 2011, the company promoted Reilly to CEO in order to help guide it back to prosperity.
As digital marketing becomes more vital to the advertising industry, another critical part of Lamar's growth plan entails expanding its network of digital billboards. Throughout 2012, the company plans to invest in digital technology. Lamar also hopes to grow organically, in part by working to improve display occupancy rates. In addition, the company is investing in its traditional outdoor advertising infrastructure and will continue to bid on logo sign contracts, which are awarded state-by-state.
Lamar's growth strategy over the years has focused on buying outdoor advertising assets in small and midsized markets. From 2004 to 2008, Lamar spent about $820 million on some 300 acquisitions. However, due to the cutback in advertising spending as a result of the global recession, the company reduced its acquisition activity in more recent years.