It's going to be a rough year for local advertising in 2023. Borrell is forecasting that growth will be at a near-standstill, held back by a combination of economic pressures and a dramatic reshaping of the type of businesses now operating in each market.
In forecasts to be released Nov. 17, Borrell's analysts are projecting that local advertising will grow from $120.7 billion this year to $121.5 billion in 2023, a pallid 0.6% growth rate.
Borrell will unveil its forecasts and describe the change in business composition during a 45-minute webinar at 11 a.m. Eastern on Thursday, Nov. 17. The webinar is free. Register here, or visit http://www.borrellassociates.com for more information.
Individual markets will see significant variances, with some showing double the average growth and many declining. Digital forms of ad spending are forecast to grow 5.2% next year, while traditional forms of print, broadcast, outdoor and cable are collectively forecast to drop 6.5%. Broadcast TV will suffer the largest drop, declining by double digits.
Newspapers are forecast to see single-digit declines in print ad buying next year. The cuts appear to be more trimming than elimination. In a survey of 1,920 ad buyers earlier this year, Borrell found that both newspaper buyers and non-buyers overwhelmingly (between 78% and 84%) felt that losing their local newspaper would have a negative impact on their communities. Moreover, the 917 newspaper buyers in the survey gave a clue as to why they might continue to buy print ads while cheaper alternatives, particularly in digital media, exist. Three-fourths of them said their print ads were effective in driving awareness that their business supports the community, contrasted with 56% saying newspaper ads were effective in driving action.
The biggest catalyst driving ad-buying actions next year, Borrell believes, may be the dramatic re-shaping of the local business landscape.
“The source of local advertising is local business,” said Corey Elliott, EVP of Local Market Intelligence for Borrell, “and we’re seeing a dramatically different profile caused by businesses that collapsed or shrank, and by a record influx of new businesses that replaced them. Anybody trying to forecast 2023 based solely on past trends is going to have a tough time.”
Elliott said the new forecast is fueled not only by the collapse of millions of businesses due to the pandemic and by this year’s economic challenges, but also to the creation of twice as many new, smaller businesses that are quite different than the ones they replaced. In preparing its forecasts, Borrell found the number of U.S. businesses with fewer than 10 employees nearly doubled, while the number of businesses with 25 or more employees declined since March 2020. Moreover, Borrell found that 6.2 million “high-propensity businesses” — or those designated to be more likely to succeed and grow — have been formed since 2019.
“Because bigger businesses spend more on advertising and smaller ones spend less, this poses challenges to media companies, Elliott said. “It also creates a situation where many of these new entrants are invisible because, as they begin operations, they tend to not spend much money on advertising, or spend most of it on things like search advertising or other forms of digital advertising."
To register for the free webinar, visit http://www.borrellassociates.com.
Comments
No comments on this item Please log in to comment by clicking here