Local advertiser spending on online audio is on track to grow 18.7% in 2021 according to a new forecast from Borrell Associates, which says only online video will grow at a faster rate this year. The double-digit growth rate for online audio compares to a one percent growth rate in online audio ad spending estimated by Borrell for 2020 and a 19.9% increase recorded in 2019.
Borrell is forecasting overall local advertising spending to increase 7.3% this year coming off a year when the pandemic took the wind out of many local businesses’ sails.
“There could still be a storm, but it could be a different kind of storm, and it could be a downpour of money into markets,” said Corey Elliott, Executive VP of Local Market Intelligence at Borrell.
Borrell said the local advertising categories that it sees strongest for online audio include reopened movie theaters, with it projecting spending in that category could be up by as much as 58% compared to last year. It also forecasts ad gains from hotels/motels (+34%), live entertainment (+25%), credit and mortgage services (+21%), and apparel and accessories retailers (+21%).
One reason for the optimism in the return to growth is that 22% of local advertisers surveyed said they expect to spend more on advertising in the next six months compared to the past six months. Another 61% said budgets are holding flat. Just 15% expect to spend less. “That is back to where it was pre-pandemic,” Elliott said Wednesday on a webinar.
Elliott said 2020 was a time machine of sorts, allowing digital’s share of local advertising to grow at a faster rate. “Non-digital advertising has been trending down at a regular clip, but then 2020 hit,” he said. In 2019, digital captured 57% of the local ad market. But last year it increased to 63% as a lot of non-digital media contracted. “It gave a little adrenaline boost to all things digital,” said Elliott. And now Borrell is foresting it will hit 66% this year. “In 2021, two out of three dollars that are spent locally are going to be somewhere online,” he said. Elliott said Borrell expects an eventual “flattening” of digital’s growth rate beginning in 2025.
Broadcast radio is forecast to grow at a much slower rate that online audio. Borrell estimates local ad spending on radio will increase 6.9% this year. But that will not make up for a 27.1% drop last year. Faced with a gap Borrell Associates President Gordon Borrell says he suggests radio stations embrace all things digital.