The old rhyme says April showers bring May flowers, but what the economy will spring in the months to come remains “cloudy,” according to BIA Advisory services. It recently lowered its outlook for local advertising growth this year to a still-strong 9.3% estimated growth rate. That was a slight two-point lowering of its growth outlook compared to the forecast released by BIA in October. Nicole Ovadia, VP of Forecasting and Analysis at BIA, says there is a new data point that she is watching closely as 2024 rolls on.
“Consumers are slowing their spending,” Ovadia says. “While they remain optimistic about the economy overall, we are seeing changes in behaviors, which is an opportunity for savvy marketers.”
The Quick Service Restaurants (QSR) category is a great example of how this is playing out. As anyone who has gone through a drive through lately can attest, prices have climbed higher. That is putting consumer loyalty to their favorite fast-food restaurant to the test as their wallets feel the pinch. But rather than look at it as a sector in “bad shape,” Ovadia says it is instead upending the reliability of some Americans that the burger chains have long counted on.
“This situation creates a massive opportunity, and we are seeing a large increase in QSR advertising related to deals and savings looking to bring in new customers previously unwilling to even consider making a change in brand,” Ovadia says in a blog post. Consumer willingness to change their affiliation means that marketers should be working to keep their best customers while also attracting their rival’s dissatisfied customers. “For the first time in a long time there is a path to significantly growing a restaurants’ clientele right now and I believe local media is poised to help accomplish these small business growth goals,” Ovadia says.
One fast food chain seems to have already gotten the message. Media Monitors says Wendy’s ran nearly 40,000 radio commercials on stations it tracks last week, making the burger chain the fourth biggest national advertiser on radio.
In its updated outlook released last month, BIA said it still anticipates 2024 to be better for local advertising than 2023. BIA forecasts local over-the-air radio ad sales will total $10.78 billion with another $2.98 billion from online sales. That is a mixed outlook compared to its last update released in October. BIA thinks radio’s digital radio will grow a half percent more than it did in the fall, but it also estimates over-the-air local ad sales will be four-tenths of a point less than before.
BIA’s 2024 local advertising forecast update shows a small increase in expectations for local political advertising. It now estimates $11.1 billion in spending this year, up $100 million from its last forecast, and up 15.5% when compared to the 2020 election.
Beyond what is happening in political advertising, BIA says some other local ad verticals are also showing promise this year. It forecasts real estate spending will climb 12.5% and leisure and recreation spending will grow 4.7% compared to a year ago.