Ever wondered who owns and operates the advertising billboards plastered across American highways? There are three key players that control most of the industry. And after years of modest organic sales gains, digital billboards could inject the space with big-time growth opportunities.

The pure-play operator is Lamar Advertising (NASDAQ:LAMR), and it appears to be taking a measured pace. During its first-quarter earnings release last Thursday, the company reported total sales growth of 8.6% and a sizeable earnings increase, after taking into account a gain from the sale of a private-company interest. Analysts are calling for an almost 17% earnings increase for the full year, but going forward, digital has the most potential to boost results.

Lamar reported "428 digital displays in 107 markets." That's clearly a small percentage of its total billboards, but demonstrates the extent to which digital could end up altering the competitive landscape. Digital could boost sales and profitability metrics for all players in the industry, but Lamar might soon be the only pure-play option for investors to capitalize on the new technology.

The other two key players are Clear Channel Outdoor (NYSE:CCO) and CBS Outdoor, a division of CBS (NYSE:CBS). Together they control an estimated 85% of the billboards in the United States, according to Value Investor Insight. All are similar in size, but Lamar mostly concentrates its 150,000 billboards in smaller, more regional markets. Clear Channel and CBS, on the other hand, chase larger, national advertisers to pursue synergies with their radio and other advertising platforms.

Digital billboards are slowly starting to replace traditional billboards, and could revolutionize the industry. If ads could be updated quickly and cost-effectively by electronic means, billboard operators could rotate ads throughout the day with multiple advertisers per unit.

Digital currently has appealing economics, with five to 10 times higher revenue per unit based on my calculations. Of course, installing these digital billboards can be costly, so build-out expenses may be substantial as well. But with the company looking to reach more than 600 units by the end of this year, clearly it is placing its dollars on digital and not looking back.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.

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