Ads on Traffic Signs?

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Politicians are trying again to punch holes in the rules prohibiting advertising on traffic signs. It might seem like a silly idea, but it pops up as a way to fund transportation other than taxes.

Highway land — owned by the public, known as “right of way” — is a last frontier for advertising.  Politicians’ lust to allow ads on traffic signs is fueled by an economic dynamic unlikely to change: not enough money to pay for aging roads and bridges.

What does this battle mean for the out of home (OOH) advertising?

The industry is split.

Some see advertising on the right of way as opportunity, to go where no ad has gone before, reach more eyeballs, and partner with government.

Most outdoor-advertising companies hate the idea; they see shrinking margins as government-sponsored monopolies compete with the private sector.

Expect to see more pressure to monetize highways, not less.

The gas tax is sputtering, even with more miles driven, because engines are more efficient and increasingly run on alternate power.

The fight to put ads on traffic signs creates odd alliances.

When California’s Department of Transportation (Caltrans) tried to venture into the outdoor advertising business, an unlikely but powerful coalition stood in the way. Opponents included cities and counties that covet local control, outdoor companies worried about government competition, and anti-billboard activists who don’t like signs anywhere.

While previous efforts failed in other states, California is a bellwether.  If ads are allowed on traffic signs in the Golden State, that could erode barriers elsewhere.

In the spring of 2018, Caltrans circulated a thick report promoting the notion of billboards on its highways, inside the fence line.  This report showed a large digital sign — close to cars and drivers — displaying cluttered, competing messages:

Advertising revenue from 35 digital faces, the Caltrans’ report gushed, would net the state $8 to $10 million annually.  Veteran outdoor advertising operator Jim Moravec in Chico, CA, commented: “To me and many others in the billboard business, these projections seem exaggerated.”

And he is right.

It should be noted that Caltrans currently operates 904 changeable message signs (CMS), out of 1,185 planned. Eighty-two have been installed since 2014. The CMS program, which began in 1975, costs Caltrans approximately $5 million a year to operate.

Some years ago, Caltrans also dipped its toe in the water with landscape advertising on the public right of way.  That was a wasteful folly, too.

Uniformity as a virtue

The longstanding government policy that advertising does not belong on highways rests on the premise that public funds bought the property for a public purpose (transportation).  Traffic signs installed on this public asset are purposefully uniform for quick, easy processing.  A federal Manual instructs size and graphics for the sake of uniformity, across all states.

Changeable ad messages on LED billboards on highways would violate the uniform sign Manual.  Proponents of the digital-billboard pilot project in California, anticipating this argument, said their digitals wouldn’t really be traffic signs.

The official California Legislature analysis of the legislative proposal explains:

“Rather than adding advertising to a (changeable message traffic sign) the supporters would instead offer a stand-alone digital billboard which provided traffic information infrequently. That would theoretically reduce driver distraction because it would be separate from the traffic information provided on the CMS (changeable message traffic signs).  And because the (advertising) sign would rarely offer traffic information it would theoretically not be subject to the (federal sign Manual).”

Don’t the California Legislature and Caltrans have more pressings issues to consider?  The bill’s sponsor couldn’t get his bill out of a Senate committee in June, so he threw in the towel for this year.

Sponsorships

Advertising isn’t allowed on traffic signs, but sponsorships are legal and even encouraged.

The ubiquitous Adopt-a-Highway anti-litter effort recognizes sponsors on official signs.  The government insists that sponsorship is not advertising.  Colorado’s promo for anti-litter sponsorships – with advertising-related acronyms ADT and CPM — sure seems like an ad pitch:

Colorado Average Daily Traffic counts (ADTs) reach up to 261,000 cars every day on some of Colorado’s busiest roadways. With the average vehicle carrying 1.8 passengers, businesses that purchase a sponsorship in these areas are likely to receive upwards of 470,000 impressions every single day. That’s the lowest cost per thousand (CPM) of any other outdoor media!

Colorado has sold half of its Adopt-a-Highway sponsorships to cannabis businesses looking for ad space because they are prohibited from advertising on billboards.

If the line between sponsorship and advertising seems blurry, that certainly was the case in Texas.  It’s Department of Transportation wanted to sell sponsorships of official traffic signs.  Sponsors would get one-third of the space on electronic changeable-message signs overhanging highways, to display corporate logos.

The Federal Highway Administration (FHWA), in 2017, said no.

Texas Congressman Ted Poe, an opponent, said these sponsorships amounted to advertising.  A former judge, Poe also pointed out that “hate groups” (Ku Klux Klan) had invoked the First Amendment to litigate their way onto Adopt-a-Highway signs.  “Expansion of the acknowledgement program would create an un-intended burden for Texas’ DOT, to referee ‘speech’ issues,” Poe warned.

California, tantalized by the prospect of advertising revenue from highway signs since the era when Arnold Schwarzenegger was governor, had heard the naysayer arguments, including the Klan-might-sue-you. Undaunted, proponents keep pushing.  In 2016, a California proposal for ads on traffic signs lost by only two votes in the California Senate.

Like Arnold, the idea may fade for a bit, but It Will Be Back.

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