The local media industry’s digital sales revenue grew 25.1% last year, twice the rate seen in 2021, to $13.3 billion. If lumped into a single category, “locally based digital media” would have more revenue than that of any other type of local media, including TV, radio, outdoor, newspapers, or direct mail. That’s one of the top takeaways from “2023 Benchmarking Local Media’s Digital Revenues,” a new report from Borrell Associates.
All in, local digital advertising hit $95.4 billion in 2022, up 8.6% from last year, accounting for 67% of the $142.7 billion spent on local advertising. While Google, Facebook, and other big pureplays take the lion’s share of that spending out of local markets, the report says “a re-energized local media industry has begun clawing back some of those billions of digital dollars.”
The COVID-19 pandemic accelerated the digital transformation of local media companies. Also in 2022, digital sales became the biggest driver of top-line revenue growth for many media companies. This was especially true for radio and newspaper companies. Digital sales drove all or nearly all growth for Cumulus Media, Entravision Communications and Townsquare Media, Borrell says.
In fact, Entravision, which has spent millions during the past few years to stretch its digital business into new global territories, led the U.S. and Canada in the percentage of its 2022 gross ad revenues derived from digital advertising and marketing services, clocking in at 78.1% of 2022 revenue. Saga Communications came in last at 7.4%. Townsquare (49.1%), Salem Communications’ radio division (31.7%), iHeartMedia (28.2%) and Audacy (22.1%) all outperformed the radio industry average.
In 2022, radio’s digital sales clocked in at $1.8 billion for a 21.1% year-over-year increase. Digital made up 19.1% of local radio revenue last year.
While growing at a feverish pace, radio has the lowest share of local revenue coming from digital, trailing cable TV (22.6%), broadcast TV (23.9%), Yellow Pages (34.1%), and newspapers (41.6%).
But the digital bounty isn’t plentiful for everyone. While the average local newspaper, radio, cable, or TV operator made between $25,000 and $2.6 million in digital sales last year, those deemed to be best-practice operators by Borrell started in the millions of dollars and went into the tens of millions. “These emerging ‘successor’ companies have one commonality,” the report says. “They are focused on developing their digital assets into a unique business venture rather than an extension of their core product.”
The enduring trend of more dollars flowing to digital shows no sign of ebbing. Local advertisers continue earmarking more dollars for digital media. Social media, banner ads, and search are the top three forms of advertising that local businesses are planning to increase this year, Borrell says. The good news: Two-thirds of local businesses buy at least some of their digital advertising from a local media company, including 27% who buy digital products and services from radio. The competition among local media companies to tap some of the $13.3 billion in “obtainable” digital revenue that remains in their markets has become fiercely competitive with digital advertising products now being sold by virtually all media companies as well as pureplay Internet companies.
Borrell’s 63-page report documents trends in digital advertising and offers benchmarks for companies attempting to get their share. A 30-minute webinar summarizing the findings will be presented Tuesday, April 18.