Local businesses will boost their ad spending by 7.3% to $127.3 billion in 2021 with radio right in line with a forecasted 6.9% year-over-year increase. But the latest outlook from Borrell Associates points to “new trajectories” for local advertising this year with some ad categories upping their spend with radio far more than others.
During a webinar Wednesday, Borrell Executive VP of Local Market Intelligence Corey Elliott identified five ad categories poised to lift their radio outlay the most in 2021. Topping the list is retail sporting goods, on track to increase its radio expenditure by 8.6%, compared to 2020. RV dealers are right behind, with an average 8.5% increase, followed by retail tires with a 7.6% boost. In addition, retail home improvement will allocate 7.5% more to AM/FM than they did in 2020 and general merchandise stores will up their radio spend by 7.5%.
While local ad spending on radio is forecast to rise 6.9% year-over-year in 2021, that won’t get the market back to where it was in 2029. That’s because radio’s local ad billings declined 27.1% in 2020, Borrell says, due to massive ad pullbacks caused by COVID-19 restrictions. But it’s not a one-size-fits-all proposition. Some markets will see significantly larger double-digit gains.
These percentages only reflect local over-the-air radio ad sales. The industry’s digital assets are on a much faster growth trajectory. Local advertiser spending on online audio, for example, is on track to grow 18.7% in 2021. Across the entire local ad marketplace, local non-digital ad revenue declined 19.7% in 2020 while digital gained 1.9%.
According to the new forecast, all traditional media channels won’t fully recover in 2021 and some will continue to slide this year including newspapers and other print. “Things are bouncing back but a lot of them aren’t bouncing back enough to cover those losses in 2020,” Elliot explained.
Almost all media channels in 2021 are tracking below 2019 levels. The outlier is online video which Borrell predicts will upshift spending by a stunning 42.1% over 2019 to become the third largest local ad channel. Online video, which encompasses far more than just over the top streaming services, will account for 14% of the $127 billion spent on local advertising in the U.S. in 2021. By 2025 online video, which encompasses any video you see digitally, will become tied for the largest spending category with targeted banners/social media, surpassing spending on paid search.
The Borrell forecast calls for local ad spend to continue an upward trajectory over the next few years rising 5.2% in 2022, then up another 2.6% in 2023 followed by a 4.1% increase in 2024.
The new report shows growing optimism among local business operators. Half of those surveyed one year ago said they would spend less on advertising and marketing over the next six months. As of February 20121, that fell to 15% while 61% plan to spend the same and 22% will spend more.
CEO Gordon Borrell offered three tips for radio to grab a larger share of the local ad dollars spent online that don’t go to tech titans like Google and Facebook, also known as “the addressable market.”
- Make digital the lead in your pitch. This will draw in new-to-radio customers in addition to serving existing radio customers. “What most people forget is the biggest opportunity is with non-customers,” Borrell said. “Once you start that conversation, then you can convince them, if you’re doing well by them with digital, to buy radio.”
- Use digital to upsell and retain your current radio customer base.
- Embrace online video. Radio advertisers are the most likely to buy video advertising, Borrell data shows. “Use video to retain your current radio customers and also reach the others that aren’t buying radio to convince them to buy.”