A horizon of signs
At times we hear or read some remarkable origin stories of companies; it’s sometimes chance or misfortune that plays an important role in the direction these companies will take, but when I first read about the history of Lamar Advertising (NASDAQ: LAMR), I was really surprised. This company which dedicated itself to signs and outdoor advertising was founded in 1902 by Charles Lamar and JM Coe, both owners of the Pensacola Opera House in Florida. It was born from the need to create signs to promote the shows that would take place at the Opera without having to depend on an outside company to do the job.
Years later, the relationship between Lamar and Coe began to have friction, so they decided to end the partnership and split their assets. The decision was a difficult one since they did not want to have a percentage of both assets but to keep the totality of one of them. The Opera was definitely a much more lucrative business than the advertising company that was just starting to take off, so when they could not reach an agreement, they decided to flip a coin and let chance decide for them. JM Coe benefits and gets the Opera, while Lamar gets the advertising company. What no one imagined at the time was that less than a decade later, a hurricane would destroy the Opera, leading Coe to ruin, while Lamar Advertising (NASDAQ: LAMR) would begin a marathon run that would make it one of the largest companies in its field.
The strategy of Lamar Advertising (NASDAQ: LAMR) from its beginnings consisted of absorbing small companies in the industry at a regional level to gain control of an increasingly larger territory, always under the basis of a family business. It even had long periods in which it did not generate net profits since it reinvested all the capital generated in the acquisition of small companies. The explosion of the business would come, thanks to what was happening in Michigan. There, Henry Ford (NYSE: F) would change things forever by making the legendary Ford T affordable for the middle class, thus starting the automotive industry on a massive scale. And what does this have to do with a company that manufactures signs? Absolutely everything. The advancement of the automotive industry led to the creation of ever longer and more complex roads, and this opened up a whole new world for outdoor advertising companies. So Lamar Advertising (NASDAQ: LAMR) made roadside advertising its core business.
But it wasn’t all that easy, as the industry had to navigate decade after decade of problems arising from socio-culturally imposed regulations. In the 1950s, there were already a large number of signs on highways, which overshadowed the beauty of natural landscapes and, at the same time, according to some studies, generated distractions that led to accidents. As a result, regulations arose that limited the size of signs as well as their location and the minimum distance between one sign and another, which led to a re-planning of the company’s strategies. Lamar Advertising (NASDAQ: LAMR) saw a momentary decline in revenues, but the astuteness of the Lamar family managed to redirect the company’s direction towards the creation of road signs, winning bidding contracts in several states to sign much of the interstate highways under construction.
Years later, more problems would arise, such as the banning of tobacco industry advertisements, one of the main advertisers on outdoor billboards. On the other hand, environmental concerns focused on large billboards since, at the height of the digital printing boom, inks with polluting solvents began to be used on vinyl substrates with a low level of biodegradation. This led HP (NYSE: HPQ) to develop Latex ink technology, which is more environmentally friendly because it is water-based. While companies such as 3M (NYSE: MMM) developed a series of fibre-based substrates that allow for easy biodegradation.
Little by little, advertising signs stopped generating an impact on consumers, becoming “part of the landscape.” But a new technological disruption brought us modular LED screens, which can be assembled in parts to achieve different sizes that adapt to different needs. In this way, static ads become interactive, and in some cases, they take advantage of advances in augmented reality. Today it is estimated that Lamar Advertising (NASDAQ: LAMR) owns around 350,000 locations in the US and Canada, including billboards, signage and screens. That company, which just over 100 years ago was represented by the losing side of a coin, became one of the largest in its field, but chance had little to do with it, but rather hard work, perseverance and innovation.