Signage – Investment or Expense?

Outdoor Illuminated Commercial Signs

“My customers already know where I am.” “I already have a sign – what’s the point of a new one?” “Can a sign really impact my business revenue?” These are some responses we hear when we propose business owners with the idea of a new exterior sign.  Signs are so widespread in our society that we can take their importance for granted. Why exactly is signage so important for businesses?  And is there any data out there to prove on-premise signage can be a profitable investment?

Let’s take a look at a few studies.

Drivers & Impulse Stops

WA drivers drove over 5.6 billion miles in August 2018 alone (in over 2.93 million registered vehicles).  Reliance on vehicles is continuing to grow. Around 35 to 50% of consumers shop more than five to ten miles outside their residential zone [1]. A few years ago, researchers at the University of California at Berkeley ran a consumer study. They analyzed 4,200 customers and 30,000 purchases in 14 different cities.  The results? 68% of purchases were unplanned during major shopping trips. 54% were unplanned on smaller shopping trips [2]. Similarly,  the Institute of Transportation Engineers (ITE) spend a great deal of time analyzing traffic habits.  One of their studies estimates how motorists’ ‘impulse stops’ affect different types of businesses [3].  Here are their findings:

Impulse Stop Percentages

Business Type Impulse Stop %
Shopping Center (100,000-400,000 sq. ft) 25%
Convenience Market 40%
Discount Club/Warehouse Store 20%
Fast Food Restaurant 40%
Sit Down Restaurant 15%
Service Station 45%
Supermarket 20%

As the table shows, impulse shoppers make up a sizable share of total purchases. So what can we take away from these three studies? First, the number of drivers and miles they travel continue to grow.  Second, nearly half of the consumer population shops more than 5 to 10 miles away from their home.  Third, the majority of purchases made by customers are impulse purchases. Many drivers – on any given day – visit a business for the first, and sometimes only, time.  To attract this large group of potential customers, your business must get noticed. An exterior sign does exactly that.  An effective exterior sign announces your presence. Especially to those who are new to an area and are looking for your business’s product or service. But how does signage compare to other marketing/advertising options?

Cost Effectiveness of Signs

Your marketing & advertising strategy may include: TV and radio spots, newspaper ads, magazine ads, a Web site, social media advertising, and so on. Consider on-premise signage a part of your overall strategy.  Like other mediums, you should measure the value of a sign by how well it reaches and influences potential customers to visit your business.

In 2003, Signtronix (located in California) conducted a survey with 488 independent small businesses. The goal was to help measure the effectiveness of money spent on various advertising mediums.  Each of the businesses surveyed 15 to 30 first-time customers to determine what prompted their visit [4].  In all, the businesses surveyed 7,203 first-time customers, each within 30 to 45 days after the installation of a new sign.  One of the survey questions was, “How did you learn about us?”  These were the results:

Signtronix Survey (2003)
Your sign: 46% (3311)
Word of mouth: 38% (2708)
Newspaper ad: 7% (511)
Yellow pages: 6% (450)
Radio commercial: 2% (133)
Television commercial: 1% (90)

These results clearly show that signs were the most effective form of advertising for these small independent businesses. We’ll cover what makes a sign an effective sign in another article.  For now, let’s take a closer look at costs.

Here’s a cost comparison between different advertising options [5]:

Cost Per 1000 Consumer Exposures

Assumptions Television Newspaper Outdoor Advertising On-Premise Sign
Trade Area 40,000 households Circulation of 40,000 households 333,350 cars per day 30,000 cars per day
Consumer Exposures (over a 30-day period) 1.25 million 4.75 million 10 million 900,000
Consumer Exposures in Thousands 1,250 4,750 10,000 900
Cost per Month $16,500 $16,500 $16,500 $115
Formula Media Cost / Consumer Exposures
Calculations $16,500 / 1,250 $16,500 / 4,750 $16,500 / 10,000 $115 / 900
Cost per 1000 Exposures $6.60 $1.56 $0.82 $0.13


  • “Trade Area” for Outdoor Advertising and On-Premise Sign is measured by viewers present in motor traffic.  30,000 is typical of a four-lane road that passes through a commercial business district in a mid-sized American city.
  • The average life-span of on-premise signs is estimated to be 12 years, or 144 months.  It’s cost per month, then, is the cost ($16,500) divided by the life of the sign (144 months).
  • The actual cost of your on-premise sign will vary depending on size, materials, design, installation, etc.  The $16,500 figure is for demonstration purposes.

Let’s examine the cost comparison results. We can see that on-premise signage is 50 times cheaper than television, 12 times cheaper than newspaper, and 6 times cheaper than outdoor advertising. Here’s how you can calculate a cost per thousand exposures for your own sign:

  1. How much do you plan to spend for your sign?
  2. Presume the life of your sign is 12 years, or 144 months.
  3. Take the answer from #1 and divide it by 144.  This shows your sign’s cost per month.
  4. How many cars pass by your trade area daily?  (You can see traffic counts for WA can at OR 30,000 is a reasonable average)
  5. Multiply the answer from #4 times 30 to get a monthly estimate of cars passing by your trade area
  6. Divide the answer from #5 by 1000.  This provides your monthly customer impressions in thousands
  7. Divide #3 by #6 to get your cost per thousand exposures.

Look at your cost per thousand exposures.  Is there a more affordable advertising option for your business than on-premise signage?


We’ve seen data on the huge, growing number of drivers. And the importance of “impulse stops” for businesses’ bottom lines. We’ve seen survey results showing signage is the most effective form of advertising for small businesses. We’ve covered cost comparisons between on-premise signage and other advertising mediums. In conclusion, I hope you’ve gained some useful insights, and see that effective signage can be a smart investment rather than an expense!

Works Cited:
[2]: Millner, Ian. “Burying the Myth of Impulse Buying.” Brand Strategy, Sept. 2002, p. 38.
[3]: Claus, R. James and Susan L. Claus. Marketing Aid MT-12, Signs: Showcasing Your Business on the Street. Washington, DC: U.S. Small Business Administration, July 2001, p. 9.
[4]: Signtronix. Internal survey, 2003.
[5]: New York State Small Business Development Center.  “What’s Your Signage?”  2004, p. 14.