While the U.S. Government and the World Health Organization have declared the end of the COVID-19 pandemic, the disruption it triggered for the advertising market is far from over. Some categories have already recovered to their pre-pandemic 2019 levels, while others are struggling under the weight of supply chain delays, rising interest rates, employment issues, tech layoffs, economic concerns, and consumer spending.
According to BIA’s local advertising forecast, 2023 looks promising for two important “super-verticals” – education and retail. Both will experience a significant rebound, surpassing their pre-pandemic levels, the local media research firm says. “We’re expecting growth in [education] this year to come from trade schools and continuing education as people are looking to grow their incomes by advancing their skill sets,” says VP of Forecasting & Analysis Nicole Ovadia.
Helping to drive 2023’s retail recovery is the high-end portion of the sector. “Luxury retail has remained rather strong and continues to perform well as inflation concerns are not affecting spending habits for high income people significantly,” Ovadia notes.
Next year, the 2024 presidential election will dominate the ad market, crowding out other categories and their recovery to 2019 levels, BIA forecasts. The political ad gravy train has already begun in some states. The ad-tracking firm AdImpact said last month that the 2024 federal election cycle was outpacing the 2020 cycle by $200 million, as of May 26.
Restaurants, one of the categories most severely damaged by the pandemic lockdowns and the subsequent Great Resignation, is on track to surpassing its pre-pandemic levels in 2025, BIA forecasts show.
But it is automotive that many radio broadcasters are most anxious to see return to 2019 ad spending levels, following three years of depleted inventories and dramatic ad pullbacks by dealers and dealer associations. BIA forecasts the auto category won’t make a complete recovery until 2027 – or later. However, as several radio CEOs have attested in their recent financial results calls, the category is slowly picking up. “2023 started stronger than expected and the rest of the year should show year-over-year growth, especially from Tier 3 as dealers offer financing deals to drum up demand,” Ovadia explains.
The year 2027 will also witness the gradual recovery of technology and media ad spend.
Real estate, meanwhile, had a strong recovery back to pre-pandemic levels exceedingly early. It is “now suffering from high interest rates which slows real estate demand and advertising spending significantly,” says Ovadia.
Finance and insurance, two cornerstone ad categories for radio, are struggling now and will continue to do so as profitability becomes an issue for many insurers, BIA says.
Says Ovadia, "And even with concerns about inflation, the travel and tourism sector continues to remain strong as people are saving up for big ticket trips.”