Communications guru Marshall McLuhan is probably best known for a single phrase: "The medium is the message." The Canadian scholar wrote those words in his 1964 book "Understanding Media," which has stood as the definitive work on mass communication for decades. Those words have particular meaning for potential business owners interested in sign-making and advertising franchises. In both those fields, the medium often really is the message.

Sign-making and advertising franchises are quite different from each other in many ways, but both have a similar key function at their core. They exist primarily to help other businesses and organizations deliver their messages to a target audience in a way they hope will be meaningful and impactful.

A sign is often the first impression a potential customer gets of a company or store with which he or she is considering doing business. As such, signs are an integral part of a business's marketing communications plan. A good sign can be the deciding factor in a customer's choice whether or not to enter an establishment.

The International Sign Association (ISA) defines an on premise sign as, first and foremost, "the primary advertising and marketing device for a business location." The on-premise sign advertises goods or services offered by businesses on the property where the sign is located. An off-premise sign is essentially a billboard, advertising something not located on the same property as the sign.

On-premise signs constitute a wide variety of types and styles. They vary from signs high atop poles or roofs to ornamental wood-carved signs on historical buildings to neon signs in shop windows to small directional signs in hallways.

In both sign-making and advertising franchises, the medium often really is the message.
 
In its most recent "State of the Industry Report," trade magazine Signs of the Times pegged annual volume in the electric-sign segment of the industry at $4.6 billion. That segment includes companies engaged in the manufacturing, maintenance and repair of electric signs; lighting, erection and installation of signs for other companies; quantity production of electric signs; manufacturing of architectural sign systems and illuminated or back-lit awnings; and related businesses.

Signs of the Times also periodically releases its "CAS/Commercial State of the Industry Report," which tracks the computer-aided sign-making industry, which is the category into which many sign-making franchises fall. It estimates sales in this segment of the industry at $3.6 billion. Companies in this segment generally sell signs, banners, vehicle graphics, window lettering, displays and similar products. Their products are typically made of plastic, wood, synthetic wood or metal.

It should be noted that it has been several years since the last state-of-the-industry surveys were conducted, and it is quite likely that the industry's sales have grown substantially in that time. One trend driving that growth has been the overall growth of franchising itself. As franchise companies open additional units, and more and more independent shops convert to a franchise format, the demand for signs continues to climb.

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REGULATORY ISSUES
Prospective franchisees should be aware that the sign industry and the on-premise segment of the industry in particular-is a highly regulated sector of the economy. There are more than 80,000 communities across the U.S. with laws regulating signage on their books, according to the ISA.

The on-premise industry not only has to abide by a variety of local, state and federal controls, it is also subject to a wide range of regulations drafted by independent bodies that have standards applicable to the sign industry. These include the National Fire Protection Association, National Electric Code, Underwriters Laboratories, Electrical Testing Laboratories, American Planning Association, American National Standards Institute and more.

The emergence of sign-making businesses as an important segment of franchising is a direct result of technological advance. Few sign-making franchises existed prior to the mid 1980s. Before that, sign making was the province of skilled artists and craftsmen who did all their work by hand. Computers changed all that, making it possible for just about anyone to produce quality signs, as long as they had the right equipment and the right training.

Those developments have benefited businesses in all segments of the economy by greatly increasing the signage options now available to them. They can choose among everything from electronic scoreboards and free-form neon designs to vinyl lettering and ornate cloth banners. As the range of choices has increased, so has demand for the products and services offered by sign-making franchises.

One trend driving growth for sign makers has been the growth of franchising itself.
 
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WHAT TO LOOK FOR
Prospective business owners interested in purchasing a sign making franchise should pay close attention to a number of areas during their search, franchise experts advise. These include the company's history and reputation, products and services, training, ongoing marketing support, initial franchise fee, royalties and advertising charges.

"One of the most important factors is to look for a company that treats its franchisees as partners, not subsidiaries," advises one long-time franchisee with a leading sign-making franchise company. "The franchisor has to recognize that its success is intertwined with your success."

A long history of operating success and a relatively large number of established locations is an important criterion mentioned by several industry consultants. "Each franchise business is unique, and its success, ultimately, is the responsibility of the individual franchisee," says one. "However, it makes sense to look for a franchise system with programs and systems that have been tested and proven over time."

That kind of track record gives the franchisor ample opportunity to refine and optimize operating and management systems, the consultant adds. "With that kind of background, the equipment you will be using has been thoroughly tested for durability and performance, and the marketing support program should be well developed," he says.

Computers have made it possible for just about anyone to produce quality signs today.
 

The franchisor should provide substantial assistance in helping new franchisees get their units up and running, including help with the grand opening. Some things to look for include:

Help with choosing a site and securing a lease or completing a build-out.
Access to meaningful market research and demographic information to make sure the location can provide the kind of demand you need to support your business.
Assistance or at least advice to help you identify, recruit, interview and hire your initial staff.
Advertising support.
All the equipment, materials and initial inventory you will need to get your business started.
Access to whatever additional help and support the franchisee might require from the parent company and, whenever possible, peer-to-peer support from existing franchisees.
Training is another important consideration in choosing a sign making franchise. While computer-assisted design and letter-cutting systems have greatly simplified the sign-making process, thorough training is still required to use that equipment effectively. Technical support should be available on an ongoing basis after you have launched your business.

The training program should not be limited to the technical aspects of the business. Good training covers the essentials of running and managing a business, such as sales, marketing, day-to-day accounting, procedural items, business plan, market analysis, budgeting, work-flow management and advertising plans.

Sales and marketing are key components of a successful sign-making franchise business.
 

Some sign-making franchise systems maintain relationships with outside vendors that provide larger, more elaborate signs than franchisees can make in their own shops. Having access to such a broad product base can be an advantage for franchisees, since it allows them to target a wider range of potential customers.

"When you are conducting your franchise search, be sure to ask existing owners whether they have a franchisee association and how effective it is," advises one veteran sign-making franchisee. "Being able to interact with your fellow franchisees and tap their experience can be an extremely valuable tool. No one understands your business as well as another person who is doing the same thing on a day-to-day basis."

While owning an operating a sign-making franchise generally does not require any previous technical experience in the field, it does require some sales and marketing skills. It does not have to be the franchise owner who has those skills, but at least one key employee should be qualified in that area.

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THE AD BIZ
Advertising takes many forms-print, broadcast, premiums, outdoor, online, etc. One of the largest and most effective segments of the advertising industry is direct marketing, and there are several franchise opportunities for prospective business owners in that area.

Direct mail-the practice of sending coupons, ads and special offers to targeted households through the mail-is one of the most widely recognized forms of direct marketing. However, the use of direct marketing actually is broadly integrated throughout all advertising media.

In its comprehensive study, "Economic Impact: U.S. Direct Marketing Today," the Direct Marketing Association (DMA) concludes that direct marketers will continue to enjoy a long stretch of prosperity and growth. "From 2000 to 2005, direct marketing is forecast to become an increasingly efficient advertising medium, with sales projected to grow steadily, compared with continued slower growth in both ad spending and employment," says a DMA spokeswoman.

In the five-year period from 1995 to 2000, direct marketing annual expenditure growth began to fall behind sales growth, while earlier in the `90s, both direct marketing expenditure growth and sales annual growth were similarly reported in the 8% range. Significantly, expenditure growth in the five years from 2000 to 2005 is projected at a slower annual rate of 7.1 %, while revenue is forecast to grow at a more robust 9.6% annual pace.

One of the largest segments of the advertising industry is the direct marketing business.
 

Annual direct marketing employment growth rates, another important direct marketing cost factor, are also slowing. From 1995 to 2000, direct marketing employment grew at a rate of 5.6% a year. Employment growth is forecast to slow to an annual rate of 4.7% through 2005.

So what does that all mean for prospective franchisees eyeing a direct marketing business? "These trends should lead to higher gross profit margins for most direct marketers," says the DMA spokeswoman. "Moreover, in all cases advertising spending, revenue and employment-direct marketing growth outpaces total U.S. economic growth."

Current trends should lead to higher gross profit margins for most direct marketers.
 

Overall media spending for direct marketing initiatives reached almost $192 billion in 2000, up 8.5% from the previous year. Direct marketing advertising expenditures now represent more than half-56.5%-of total U.S. advertising expenditures, which are estimated at almost $340 billion in 2000.

The three biggest segments of the direct marketing business in terms of total expenditures are outbound telephone marketing (telemarketing), direct mail and direct response TV, in that order. There is also a slight but noticeable trend of some direct marketing spending shifting to alternative media categories such as interactive.

Telemarketing ad spending totaled more than $73. billion in 2000, representing more than 38% of all direct marketing expenditures. Direct mail was second, with almost $45 billion in expenditures, slightly less than a quarter of the total. Spending on direct response TV approached $22 billion in 2000, just over 11 % of the industry's expenditures.

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OTHER CHANNELS
Other types of direct marketing include newspaper (distribution of freestanding inserts, for example), $18.4 billion; magazine, $9.8 billion; and radio, $7.7 billion. A catchall category dubbed "other media" in the DMA study accounted for about $16 billion in spending in 2000, 8.4% of total direct marketing expenditures. What's notable about the "other" category is that it includes interactive marketing, which is done primarily via the Internet.

The DMA also forecasts that annual growth rates for direct marketing expenditures through 2005 will be highest for the "other" category, illustrating the nascent potential of the online channel as an advertising tool. Spending in that segment is expected to increase at a rate of 11.6% a year.

Consumer direct marketing sales approached $940 billion in 2000, an increase of more than 9% over the previous year. For the period 1995-2000, consumer direct marketing sales grew at an annual rate of 9.1 %, but that pace is expected to moderate to about 8.3% per year through 2005. Still, that means this segment of direct marketing should reach some $1.4 trillion a year at the midpoint of the current decade.

Even though consumer direct marketing sales are growing at a slightly slower pace now than they were in the second half of the '90s, they are still outperforming overall consumer sales growth by almost double. Total U.S. consumer sales are projected to grow at a rate of just 4.1 % a year through 2005.

Business-to-business (B2B) direct marketing sales are growing at an even faster pace than the consumer segment, up 10.6% to $792.8 billion in 2000. They grew at an average annual rate of 11.9% from 1995 to 2000, and they are projected to grow 11.1 yearly through 2005. Direct mail accounts for more than a quarter of B2B direct marketing sales, about $202 billion in 2000.

The future outlook for both sign-making and advertising franchises is positive.
 

The future outlook for both sign making and advertising franchises is positive, because both types of business play a critical role in helping companies and organizations deliver their message to their target markets. "Advertisements can stick in people's memories for years, and it is this kind of recognition that businesses seek to achieve," says advertising and marketing consultant Bryn Williams.

No matter how the economy changes, there is always a need for signs and advertising. "No matter what the area, demographics are constantly changing, and it's important to advertise in a way that means new people will understand what your business is about," Williams notes.

Author: Michael J. McDermott