BIA Advisory

BIA Advisory Services is the latest financial firm out with a 2021 ad spending forecast and it’s calling for a little growth next year – even without the political windfall that helped media companies weather the COVID storm of 2020. BIA’s U.S. Local Advertising Forecast 2021 predicts total local ad revenue across all media will reach $137.5 billion in 2021. That marks a 2.5 percent year-over-year increase from the firm’s final post-COVID estimate for 2020 of $134.1 billion and it reflects businesses starting to adapt and rebound from the pandemic lows.

As the expected distribution of vaccines helps accelerate the ongoing economic rebound, the modest ad spending increase is forecast to be spread across 2021 even without the boost of significant political advertising.

BIA’s forecast is restricted to just local ad dollars. By comparison, GroupM’s U.S. ad forecast released Tuesday calls for total U.S. ad spending to hit $240.0 billion.

Once again, traditional media will cordon off the biggest share of local ad dollars – 55.3 percent or $76.1 billion, a slight decline from 2020 levels. Digital media revenue will grow to $61.5 billion in 2021 to capture 44.7 percent of total local media revenue, a share increase of 3.7 percent from 2020.

“Although we are estimating an overall increase in total local advertising next year, we do not expect spending to recover to pre-COVID (2019) levels until 2022,” said Mark Fratrik, Chief Economist and Senior VP at BIA Advisory Services. “The availability of a vaccine early in the new year will be a key factor to a much stronger year for almost all vertical advertising as the economy rebounds and consumers start moving around more freely and even going back into the office.”

Here’s how the top five media stack up by dollar spend and percentage share for 2021:

Local television and local radio will maintain their position in the top 5 media for 2021 in terms of ad spend and percentage. At No. 4 in the local hierarchy, BIA estimates local television will pull in $15.7 billion and local radio, the fifth leading media, will get $12.6 billion. “Even with the onslaught of new digital competitors, these traditional media still retain sizable audiences that many national and local advertisers want to reach,” BIA says in the forecast.

Local mobile advertising will continue to get a bigger slice of the local ad pie. In 2020, $19.8 billion will have been spent on mobile and that will leap-frog to $23.4 billion next year. Collectively, local mobile and online will bag more than one-third of all local advertising.

With its strong showing for 2020, over-the-top (OTT) locally activated advertising will continue to grow in 2021 as local marketers are drawn to its targeted advertising capabilities with quality video programming. BIA estimates this ad platform will grow from $1.0 billion in 2020 to $1.2 billion in 2021. OTT refers to streaming programming that bypasses cable, broadcast, and satellite television gatekeepers to deliver video content directly to viewers via the internet.

“The OTT TV and the Connected TV segment are game changers for the broadcast industry because it is now very easy to purchase fragmented inventory and do audience targeting. These improvements will help sellers better justify local OTT buying, and we expect local audience share gained in Q2 and Q3 of 2020 will be maintained and expanded going forward, presenting a tremendous opportunity for the industry,” said Rick Ducey, BIA Advisory Services managing director.