A mixed start to the economy this year and slower growth in digital advertising have BIA Advisory Services lowering its local ad forecast for 2023. While BIA has reduced its outlook for local digital ad spend, it has kept its total ad forecast for traditional media largely intact.
First the big picture: BIA has decreased its U.S. Local Advertising Forecast estimate to $161.7 billion for 2023, from its original estimate of $165.7 billion. The total forecast for traditional media remains unchanged at $84 billion, with digital revenue reduced from an original estimate of $81 billion to $78 billion.
Over the air radio is expected to produce $10.4 billion in revenue. Radio digital is on track to grow 4.1% to $2.8 billion for total radio revs topping out at $13.2 billion. That’s down from the political advertising-boosted $14.0 billion estimate for 2022 and off from 2023’s earlier radio forecast of $13.5 billion. Over the air TV is forecast to inch up fractionally to $16.0 million while TV digital will increase 4.9% to $1.8 billion for a TV total of $17.8 billion.
BIA defines TV digital to include all digital advertising sold by local broadcast stations, excluding Connected TV/Over-the-Top (CTV/OTT). This includes mobile apps, search, social, owned & operated inventory, banner ads, etc.
“After Meta, Alphabet and others lowered expectations for 2023, we examined local digital advertising spending revenues over the first six months of the year and determined a reduction was necessary,” said Nicole Ovadia, VP Forecasting and Analysis, BIA Advisory Services. “After years of double-digit growth, we are seeing some headwinds that will have a significant impact on digital local advertising. For traditional media, while we’ve made changes to certain media and categories throughout our forecast, the total ad forecast for this segment remains consistent with our original expectations.”
When political is factored out of the numbers, BIA says the top three paid media channels for 2023 will be direct mail ($37 billion), mobile ($32 billion), and PC/laptop ($28 billion). Connected TV/OTT is still slated to be the fastest-growing channel with an 18.5% expansion this year to $2.4 billion in revenue.
“Both linear TV and digital budgets are fueling the growth of CTV/OTT, as well as new dollars from publishers and aggregators that are using the channel to extend their programmatic platform to long tail businesses,” said BIA’s Managing Director, Rick Ducey.
Auto Growth Coming Later In 2023
Drilling down into the top spending sub-verticals, BIA says growth is expected in auto later in the year and the company is raising expectations for Tier 3 - new car dealers, and automotive repair services.
Other important categories for local advertising where BIA is raising expectations include savings/credit institutions and other loan services, plumbers and HVAC, and realtors. Although political will be a huge advertising category in 2024, BIA says it anticipates some spending to begin later in 2023.
Meanwhile, the updated local advertising forecast for 2023 lowers estimates for online gambling, office supplies and stationery stores, auto & direct property insurance, health & personal care stores.
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