BIA Advisory Services is calling for the local ad market to come in at $173.3 billion, an 11.4% improvement over 2021. Once again, traditional media keeps a slight edge at 50.8% of the ad spend, or $88 billion, compared to 49.2%, or $85 billion for digital media. Of that $88 billion traditional budget, $6.4 billion will come from political advertising.
But digital is closing the gap and projected to surpass traditional in 2023. The trend is expected to continue through 2026 as traditional media inches up at a Compound Annual Growth Rate (CAGR) of 0.7% while digital grows 10.0%.
This year, over the air radio will capture 6.6% of the pie while radio’s digital asserts will get an additional 1.8% for a total 8.4% share of wallet. That amounts to $13.54 billion this year, up 5.9% from $12.79 billion in 2021.
During a “Winning Local Media Sales” webinar this week, BIA and SalesFuel looked under the hood of five key categories, offering tactical takeaways for media sellers prospecting in them.
Encompassing everything from auto, property, and life insurance to consumer lending, mortgages, commercial banking and credit cards, this massive vertical is poised to hit $24.7 billion in 2022.More than half ($13.1 billion) will go to digital advertising. Surprisingly, direct mail will get the largest share at 23.8%, while radio will cordon off 9.8%, ahead of TV at 6.5%. The consumer lending and mortgages sub-category alone will account for $3.0 billion in local ad spending in 2022. BIA and SalesFuel see a “major opportunity” here in targeting Millennials, who will make up 32% of the consumer mortgage category in 2022 and almost a third of it by 2025. But there will also be growth in reverse mortgages among older demos.
Local ad spending in this vertical will hit $24.4 billion, making it the second largest ad category behind finance/insurance in 2022. “This is a vertical in which direct mail dominates,” BIA Advisory Services founder and CEO Tom Buono said.Radio (6.4%) and TV (7.8%) “do okay,” he added. And while there is some shift to digital, it’s not nearly as much as with other categories – digital will capture about one fourth of the total. Within the broad retail category, an estimated $1.1 billion will be spent advertising lawn and garden equipment and supplies, with direct mail at 39%, PC/laptop (17%) and mobile (14%). Growth areas for sales reps to target are stand-on and electric mowers, with the latter expected to be up to 50% of the walk-behind rotary mower market by 2026.In good news for radio stations, 17% of outdoor power equipment shoppers plan to attend a home or garden show in the coming year. Among tactical takeaways suggested for this category are to have strong working knowledge of available co-op ad programs as 51% of these power mower dealers spend less than $500 out-of-pocket per month on marketing.“May, June and July are the peak sales months for outdoor power equipment, but ads often start in March,” said SalesFuel founder and CEO C. Lee Smith. “So, it’s time to get the work if you haven't already as far as engaging your outdoor power equipment dealers.”
Spanning travel, fitness, gambling, movies and museums, this category was devastated by COVID.As it continues to recover, marketers will plunk down $14.1 billion in 2022 with PC/laptop getting the biggest slice (17.1%). Within the category, fitness and recreational spending will reach $1.1 billion after taking it on the chin in 2020 and 2021. Many Americans are expected to return to clubs and classes from their at-home equipment and 9.2% of adults plan to switch gyms in the next year. “Franchise owners is your key to generating advertising revenue here,” Lee advised. Media sales reps should focus their pitches on reaching adults 45 and under since they make up 80% of specialty fitness club members in the U.S.
Of the $13.9 billion in 2022 local ad spend earmarked for this still struggling category, TV is poised to take the biggest piece (20.3%), followed by mobile at 18.3%. Radio is projected to get an 8.8% share.Tier 3 new car dealers will make up $4.7 billion of the local spend. Even though automotive manufacturers are steering dealers to digital advertising, Lee said there is still plenty of ad dollars available for traditional media. With new vehicle inventories still low, some brands’ co-op plans now cover the advertising of certified pre-owned vehicles, including Audi, BMW, GM, Mini, Subaru, and Ford.New car inventory levels are expected to improve in the second half of 2022. “There really is pent-up demand,” said Buono, noting that chip shortages and inventory shortages are expected to improve in 2022.
Political advertisers will shell out $8.4 billion in local advertising this year, in line with the 2018 mid-terms.“There's a lot of money that's being raised and there's a lot of excitement and discussion about this upcoming midterm election,” Buono said. TV still dominates the category with a forecasted 44.2% share of wallet, compared to just 5.0% for radio.For both media, frequency is the name of the game.“Experts believe that voters must hear or see a political message at least 12 times before it sinks in,” Lee said.