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Borrell Forecast Shows Big Variances In Ad Growth Rates For 2022.

Local advertising is forecast to increase 7.6% year-over-year in 2022 as the ad industry settles into something like normalcy following two years of massive disruptions caused by the pandemic. This marks an elevated growth rate compared to both years that preceded the pandemic (+5.3% in 2018, +1.3% in 2019) but falls short of the +10.1% ad rebound experienced in 2021.

The new forecast, presented Tuesday by Borrell Associates, show every medium has its own variance. For example, four types of advertising will decrease in 2022: directories (-11.4%), newspaper (-5.9%), other print (-4.3%) and untargeted banner ads (-0.6%). In the audio space, AM/FM radio is poised to grow 5.4% this year and streaming audio is on track to jump 17.8% over 2021 levels. Streaming video and audio are the year’s big gainers with streaming video/over the top advertising projected to rise 27.2% year over year.

Seven of the eight types of advertising that will surpass their 2019 levels this year are digital media. Local TV is the only traditional channel expected to exceed its 2019 local ad revenues in 2022. In fact, digital media’s share of local ad expenditures rose ten points since the pandemic, vaulting from 57% in 2019 to 67% in 2022. That means two of every three ad dollars spent locally this year will go to digital media, leaving one third of the pie for traditional media to carve up.

Advertising’s ‘Changing Face’

If there’s one certainty about the return to “normal” in 2022 it’s that advertising recovery rates will be different from market to market and from one type of business to another. Geographical variances are forecast to be huge. Baton Rouge, which is just now starting to recover, will see 29% year-over-year growth in local ad sales while San Jose will decline 5%. And compared to 2019, Cape Corral, FL is expected to soar 22% while New Orleans, which is still crawling back from COVID disruptions, drops 7.6%.

“It's not just geography, but it's the businesses inside that geography,” said Corey Elliott, Borrell’s Executive VP, Local Market Intelligence. Recovery rates will also vary significantly by business category. Casinos will throttle their ad spend up 15.4% while fuel oil dealers will increase by a more modest 5.0% and employment services will rise 2.8%. But categories trending up in 2022 may look different four years from now. Local ad spending in the automotive category is forecast to rise 8.9% in 2022 but only by 2.4% average annual growth from 2022-2026. And those casinos opening their wallets wide to lure back gamblers in 2022 will pull back to 3.4% annual growth from 2022-2016.

“Every kind of business is different and has their own different trajectory,” Elliott added. “And that's going to have some bearing on advertising in a local market and what they're doing there.” Added CEO Gordon Borrell, “The data that we're seeing shows that there's a changing face in local markets of advertisers. They're not the same ones that we saw seven or ten years ago.”

Swing In Advertiser Attitudes

With concerns about record high inflation, the war in Ukraine, and high interest rates hanging over their heads, the mood of local advertisers has taken a big swing. Last year 19% said economic conditions for sustaining a small business will get worse over the next six months. That jumped to 51% in May 2022. Similarly, one year ago, 47% said economic conditions will get better over the next six months. That fell to 7% last year. That’s having an impact on their ad budgets. In May 2022, two in ten local advertisers said they will spend less on advertising, two in ten said more and 54% said about the same. That compares to May 2021, when 11% said less, 31% indicated more and 56% the same.

“They're not putting the brakes on totally like they did back in March of 2020,” Elliott said.

Digital/streaming video/OTT tops the growth checklist for local ad agencies with three in four reporting high demand for the channel in 2022, followed by social media (68%), search engine marketing (64%) and broadcast TV (53%). On the audio side, nearly half of agencies (47%) report high demand for streaming audio and 39% for broadcast radio.

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