Borrell forecasts uneven bounceback for local advertising in 2022

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

Overall, Borrell forecasts that local businesses will increase spending yet again in 2022, by 6.4%, to $138.9 billion. The growth rate is nearly two points higher than the Compound Annual Growth Rate (CAGR) for local advertising over the past five years and comes on the heels of a projected 9.9% increase this year.

“Because COVID recovery varies by state and by locality, not every market will participate in the bliss,” said Corey Elliott, Borrell’s EVP of market intelligence and key forecaster. “Some markets have been devastated by business closings, which depresses advertising. Other markets have rolled along without much of a hiccup and have even seen some significant growth in new business creation.”

Moreover, Elliott said, a market’s rate of bounce-back in this year will dictate the level of “normalcy” it may experience next year. “Simply put,” he added, “some areas came back faster in 2021 and thus will see modest growth in 2022, while others are still recovering this year and won’t see more explosive growth until 2022.”

In addition to business closings and restrictions on customers, other local factors such as unemployment or natural disasters also drive fluctuations. For instance, Elliott said, Las Vegas is forecast to see local TV advertising expenditures rise at nearly three times the nationwide average of 12.6% next year, while Lake Placid, New York, is likely to see a 3.5% decline. In Biloxi, spending on streaming video/OTT is forecast to rise 38% next year, while other markets may see low single-digit increases in video spending.

Overall, local advertising continues to be a very healthy sector. Money spent on advertising and marketing by the nation’s estimated 18 million local businesses has swollen, especially for digital media.

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

“SMBs were spending an average of 57% of their budgets on digital advertising prior to the pandemic,” he said. “They hunkered down in 2020 and 2021 and put a lot more into bottom-of-the-funnel marketing to drive business. As a result, we’re now seeing 65% of their budgets going to digital media and forecasting that it will reach 67% next year.”

Summary of 2022 forecast:

  • Local advertising remains very healthy. After a projected 9.9% increase in 2021 — the strongest since the recovery period after the Great Recession — Borrell is forecasting that local advertising will rise an additional 6.4% in 2022, to $138 billion. The 2022 growth forecast is nearly two points higher than the CAGR that local advertising has experienced over the past decade. (2010 to 2020).
  •  The biggest growth in 2022 is forecast for streaming video/OTT (18.5%), streaming audio/podcasting (17.8%), targeted banner advertising (12.6%) and broadcast TV (12.3%).
  • Streaming video/OTT is forecast to grow to $21.3 billion in 2022, more than twice as much as what’s forecast to be spent on broadcast TV advertising.
  • Four types of media are forecast to see declines in 2022: radio (-4.6%), print directories (-11.4%), newspapers (-6.0%), magazines and other print (-7.5%), and untargeted banner advertising (-4.6%).
  • Despite strong increases in 2021, nine of 17 different types of media advertising will not climb back to the level of spending seen in 2019: Cable TV, outdoor and cinema, all forms of print media, radio and untargeted banner advertising. Local TV is the only traditional medium that will see 2022 spending levels exceed that of 2019.
  • The good news for newspapers is that the year-over-year decline in local advertising expenditures will drop to single digits, -6%, in 2022. The industry hasn’t seen single-digit declines for seven years.
  • Individual market forecasts can vary widely from national averages due to severity of COVID-19 impacts, business closings, state or local regulations, unemployment rates, natural disasters, etc. For instance, in 2022:
    • Local TV advertising in Las Vegas is forecast to increase 33.4%, nearly three times the national average, while in Lake Placid, New York, it is forecast to decline -3.5%.
    • National Spot TV in Oakland, California, is forecast to decline -2.9%, while in Springfield, Missouri, it is forecast to rise 26.3%.
    • Cinema advertising in Blacksburg, Virginia, is forecast to decline -9.3%, while in Victoria, Texas, it is forecast to increase 20.3%.
    • Cable advertising in Lincoln, Nebraska, is forecast to drop -9.7%, while in Corpus Christi, Texas, it is forecast to rise 29.3%.
    • Newspaper advertising in San Francisco is forecast to drop -14.8%, while in Shreveport, Louisiana, it’s forecast to rise 12.8%.

KEY FACTS

  • Borrell’s forecast focuses on local advertising expenditures
    • 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
    • 2022 forecast: $138.9 billion, up 6.4% from 2021
  • Borrell’s data is different than other forecasters’ because it is derived from expenditures by local businesses, not revenue from media companies.
  • Data comes from business activity in all U.S. markets
    • Covering all 3,145 counties, parishes, boroughs and independent cities
    • Derived from business openings, closings, size of businesses, types of businesses
    • COVID-19 data (infection rates, death rates, business restrictions, etc.)
    • U.S. Bureau of Labor Statistics (BLS) employment data and trends
    • Borrell’s ongoing surveys of thousands of local advertisers and local ad agencies
    • SEC and other financial documents (10Q, 10K, company statements, presentations, etc.)

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