Lamar Advertising Co. (Nasdaq: LAMR), founded in 1902, is both a pioneer and powerhouse in the outdoor advertising industry. The Baton Rouge, Louisiana-based company’s approach to growth is straightforward: construct more billboards; convert static, or traditional, billboards to digital; and acquire the competition. That strategy is working.
Next year marks Lamar’s 20th year operating as a REIT. Lamar is a modern economy REIT that generates revenues by leasing advertising space on billboards, buses, shelters, benches, logo plates, and in airport terminals.
Lamar has grown to become one of the largest out of home (OOH) advertising companies in the world, with more than 360,000 displays across the United States and Canada. The OOH industry refers to any paid media reaching people outside of their homes. The OOH industry’s revenue surpassed $9 billion in 2024, the highest volume to date, according to the Out of Home Advertising Association of America (OAAA).
Lamar says it owns about 25% of the OOH market and boasts a diversified base of advertisers in the services, health care, restaurant, retail, automotive, insurance, and gaming categories.
Lamar’s largest revenue driver by far are its towering roadside billboards, strategically located along high-traffic expressways, highways, interstates, and primary arteries. These billboards account for around 88% of the company’s revenues. Smaller portions come from interstate logo advertising (4% to 6%) and transit advertising (7%).
Lamar purchases or leases the real estate beneath its roadside billboards. It has nearly 60,000 landowner partners across the country and thousands of billboard permits.
Keeping it local
Also setting Lamar apart is its strong concentration of billboards in small and mid-size U.S. markets.
“When you talk about ad spend, 80% of our tenant base is local businesses,” says Sean Reilly, president and CEO of Lamar, which was founded by his maternal great-grandfather.
Local media, Reilly notes, is increasingly fragmented, and audiences are shrinking for newspapers, TV, and radio. “A lot of local customers that used to use those media forms are coming to us because our audience, being the driving public, is actually growing,” he says.
Jason Bazinet, managing director at Citi Research, points out that Lamar generally stays outside of the top 20 markets. “Its sweet spots are areas like Austin, Texas; Tallahassee, Florida; and Chattanooga, Tennessee,” he says.
“Lamar has much lower operating costs, because they’re not concentrated in big cities like New York or Los Angeles where labor is expensive, insurance is expensive, electricity is expensive. Even the lease payment you pay to the dirt owner will be more muted if you’re in a sprawling suburb of Tallahassee versus buying billboard space over the Lincoln Tunnel,” Bazinet adds.
Lamar is targeting $150 million in acquisitions in 2025, focusing on smaller, high-quality deals. “It looks to me like we’ll exceed that pretty easily,” Reilly says. “There’s a lot of activity.” Lamar has a history of acquiring other outdoor ad companies to expand its reach and market share. “It’s in our DNA to expand through M&A deals,” he says.
Reilly says the company’s M&A activity is primarily funded through free cash flow. Typically, Lamar has around $150 million available annually after interest payments, capital expenditures, and distributions to expand its footprint through M&A.
Expanding its digital footprint
Reilly points out that the fastest-growing segment of the business is the digital platform.
With advanced technology, the transformation from static to digital billboard advertising is revolutionizing the industry, with the ability to update content in real-time and display bright, colorful, eye-catching graphics. Digital billboards also provide enhanced targeting and interactive, engaging features.
Unlike static billboards, digital billboards display advertising messages that rotate every six to eight seconds like a slideshow, with typically six to eight advertisers sharing the same billboard at any given time.
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