When it comes to local advertising growth in 2024, here’s the good news: it is increasing at a “healthy” clip, says Borrell Associates.
Here’s the not-so-good news: Borrell has updated its data for the year, and concludes local advertising “isn’t quite shaping up as the bountiful year that many had hoped for.”
The new growth rate for 2024 is 3.2%.
Borrell’s initial forecast for 2024, issued in November 2023, was 1.2 points higher.
The downward adjustment was triggered by new information from Borrell’s principal sources, including the U.S. Bureau of Labor Statistics, Woods & Pool, D&B, IBIS World, and Borrell’s quarterly SMB Business Barometer.
“For the past three quarters, we haven’t seen a lot of variation in SMBs’ attitudes about the economy and their plans to invest in advertising,” said EVP of Local Market Intelligence Corey Elliott, Borrell’s chief forecaster. “They’re mostly neutral and slightly positive about the economy, but we’re still not seeing anything that would signal the bigger spring-back that many are hoping for.”
Since the third quarter of 2023 and continuing through the second quarter of 2024, Borrell’s barometer survey has shown that a consistent 50% of SMBs consider it to be harder to sustain a small business than it was six months prior.
In particular, local advertising is forecast to reach $148.9 billion, up 3.9% from 2023.
The largest growth is forecast for online listings, which encompasses sites for cars, jobs, merchandise, real estate, and services.
Local ad spending is forecast to grow 8.1%, topping $20.4 billion.
What about the local radio story?
Spending on streaming audio commercials — including podcasting and spots on radio station websites, apps, and smart speakers — is pegged for the second highest growth at 7.8%. It is forecast to hit $1.2 billion.
Targeted display advertising, driven by social media, is forecast to grow 6.2%, reaching $27.2 billion.
Meanwhile, local broadcast TV advertising is forecast to grow 5.9%, hitting $9.9 billion.
The steepest declines are pegged for yellow pages (-14.3%), untargeted banner advertising (-8.4%), print newspapers (-6.7%) and cable TV (-6.0%).
A SURPRISE STREAMING SLOWDOWN FOR AD GROWTH
Streaming video advertising (OTT/Connected TV) among local buyers is growing far slower than initially predicted.
The forecast calls for 3.9% growth this year, topping $23.3 billion.
The scale-back in growth for streaming video held the biggest surprise for Elliott.
“While there’s a lot of passion around digital video, it presents a bit of a challenge for local businesses,” he said. “They’ve been telling us in surveys that they don’t know how to purchase it or how it fits into their marketing plan. They aren’t even aware that it’s cheaper than broadcast TV. That all points to a more subdued ramp-up for OTT spending.”
That being said, “the OTT jackrabbit is still outpacing everything else,” Elliott said. “It’s the fastest growing form of advertising and is already the fourth largest among the 18 different formats we track.”
Borrell’s latest release includes new forecasts for all U.S. markets, where shifts in the composition of local businesses have translated to significant differences from U.S. average growth rates. For instance, in Little Rock Radio spending is forecast to grow 7.3%, but decline by 7% in Baltimore.
In addition to the 2024 forecasts, Borrell extended its’ long-range outlook to 2028.
By then, Borrell’s forecast engine puts total local advertising at $161.2 billion, or 11.8% more than it was in 2023. Five years from now, the three advertising formats will all be basically tied for first place: General Paid Search ($32 billion), Targeted Online Display ads ($30.3 billion), and Streaming Video/OTT/CTV ($30.0 billion).
Broadcast TV clocks in as the fourth-largest at $9.1 billion.
