Borrell predicts patchy rebound for local advertising in 2022


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Press release | Borrell Partners

Borrell today released its 2022 market-level local advertising forecast for hundreds of U.S. markets, predicting another healthy increase in ad spend for local businesses. But spending levels will be uneven across markets, according to Borrell. A webinar will be held on Tuesday, October 12 at 11 a.m. EDT with analysts at Borrell to review his latest forecast. To register, go to https://bit.ly/2022Forecast

Overall, Borrell predicts that local businesses will increase spending again in 2022, by 6.4%, to $ 138.9 billion. The growth rate is nearly two percentage points higher than the compound annual growth rate (CAGR) of local advertising over the past five years and follows an expected increase of 9.9% this year.

“Because COVID recovery varies by state and locality, not all markets will participate in happiness,” said Corey Elliott, Borrell’s executive vice president of market intelligence and key forecaster. “Some markets have been devastated by business closures, which depresses the publicity. Other markets went smoothly and even saw significant growth in the creation of new businesses. “

Plus, Elliott said, a market’s rate of rebound this year will dictate how much “normal” it might experience next year. “Put simply,” he added, “some regions have returned faster in 2021 and will therefore experience modest growth in 2022, while others are still recovering this year and will not experience more explosive growth until. 2022 “.

Besides business closures and restrictions on customers, other local factors such as unemployment or natural disasters also cause fluctuations. For example, Elliott said, Las Vegas is expected to see local TV ad spending increase almost three times the national average of 12.6% next year, while Lake Placid, New York, is expected to see a decline of. 3.5%. In Biloxi, video streaming / OTT spending is expected to increase 38% next year, while other markets may see small single-digit increases in video spending.

Overall, local advertising continues to be a very healthy industry. Money spent on advertising and marketing by the country’s roughly 18 million local businesses has swelled, especially on digital media.

Elliott said the pandemic has fueled a new spending trajectory for things like paid search, social media and streaming video.

“SMEs were spending an average of 57% of their budgets on digital advertising before the pandemic,” he said. “They looked into 2020 and 2021 and invested a lot more in bottom-of-the-funnel marketing to drive business. As a result, we now see 65% of their budgets spent on digital media and we expect it to reach 67% next year.

Summary of 2022 forecasts:

  • Local advertising remains very healthy. After an expected increase of 9.9% in 2021 – the largest since the period of recovery after the Great Recession – Borrell predicts that local advertising will increase by an additional 6.4% in 2022, to reach $ 138 billion. The growth forecast for 2022 is nearly two points higher than the CAGR that local advertising has experienced over the past decade. (2010 to 2020).
  • The strongest growth in 2022 is forecast for video streaming / OTT (18.5%), audio streaming / podcasting (17.8%), targeted banner ads (12.6%) and TV broadcasting (12.6%). 3%).
  • Video / OTT streaming is expected to reach $ 21.3 billion in 2022, more than double what is expected to be spent on TV advertising.
  • Four types of media are expected to decline in 2022: radio (-4.6%), printed directories (-11.4%), newspapers (-6.0%), magazines and other printed materials (-7 , 5%) and untargeted banner ads (- 4.6%).
  • Despite large increases in 2021, nine of the 17 different types of media advertising will not recover to the level of spending seen in 2019: cable TV, outdoor and cinema, all forms of print media, radio and untargeted banner ads. Local television is the only traditional medium whose spending levels in 2022 will exceed those of 2019.
  • The good news for newspapers is that the year-over-year decline in local ad spend will drop to single digits, -6%, in 2022. The industry has not seen a single digit decline for seven years .
  • Individual market forecasts can vary widely from national averages due to the severity of impacts from COVID-19, business closures, state or local regulations, unemployment rates, natural disasters, etc. For example, in 2022:
    • Local TV advertising in Las Vegas is expected to increase 33.4%, nearly three times the national average, while in Lake Placid, New York, it is expected to decline -3.5%.
    • National Spot TV in Oakland, Calif., Is expected to drop -2.9%, while in Springfield, Missouri, it is expected to rise 26.3%.
    • Film advertising in Blacksburg, Virginia is expected to decline -9.3%, while in Victoria, Texas, it is expected to increase 20.3%.
    • Cable advertising in Lincoln, Nebraska is expected to fall -9.7%, while in Corpus Christi, Texas, it is expected to increase 29.3%.
    • Newspaper advertising in San Francisco is expected to fall -14.8%, while in Shreveport, Louisiana, it is expected to increase 12.8%.

HIGHLIGHTS

  • Borrell’s forecast focuses on local ad spend
    • 2019 spending: $ 128.0 billion
    • 2020 spending: $ 118.7 billion, down -7.3% from 2019
    • 2021 projection: $ 130.5 billion, up 9.9% from 2020
    • Forecast 2022: $ 138.9 billion, up 6.4% from 2021
  • Borrell’s data is different from other forecasters because it is derived from local business spending, not media business revenue.
  • Data comes from business activity in all US markets
    • Covering the 3,145 counties, parishes, districts and independent towns
    • Derived from business openings, closures, business size, business types
    • COVID-19 data (infection rate, death rate, trade restrictions, etc.)
    • US Bureau of Labor Statistics (BLS) employment data and trends
    • Borrell’s ongoing surveys of thousands of local advertisers and local advertising agencies
    • SEC and other financial documents (10Q, 10K, company statements, presentations, etc.)

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