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Retail Is Rebounding. But The Way Retailers Advertise Is Changing.

Retail, one of radio’s biggest ad categories, has begun to slowly rebound from the pandemic with July sales up 1.2% over June and up 2.7% over July 2019. While the $24 billion that retailers are expected to spend on local advertising this year is 13.2% less than last year, BIA Advisory Services forecasts the umbrella category will increase ad spending on both traditional and digital media in 2021, including over-the-air and digital radio.

Traditional media will get two of every three ad dollars spent by retailers this year. And the category as a whole will allocate $1.12 billion more to advertising in 2021, compared to  2020, for a 6.8% increase, making up more than half of the COVID-caused 2020 decline.  Over the air radio will see a 4.3% increase or $84.2 million more than in 2020. Among traditional channels, only out of home (+26.7%) and over the air TV (+8.8%) will enjoy larger percentage increases, while spending on directories and print magazines will sink lower next year than during COVID-battered 2020. 

Online radio will reap a significantly larger increase of 20.9% in 2021, compared to 2020, for a gain of $46.5 billion. Among digital channels, only red-hot over-the-top video streaming (+25.2%) and email (+24.1%) will enjoy larger percentage gains.

All told, digital, which booked one-third of retail ad dollars this year, will pocket $995 million more from retail advertisers in 2021, compared to 2020, for a 12.8% gain.  

With more than $2 billion in additional retail ad spend up for grabs next year (almost evenly split between traditional and digital channels), Tom Buono, CEO & founder of BIA Advisory Services, says ad sellers should home in on the retail subcategories most primed for growth in their specific markets.  “Develop your sales campaign based on those categories where the opportunity is,” he told webinar attendees this week.

Indeed the massive retail category encompasses 28 different sub-categories, such as home centers, clothing stores, electronics stores, and warehouse clubs. “There are great variances for each one of these in terms of how they weathered the storm and how they’re performing today,” Buono said during the webinar, which focused on fourth-quarter advertising trends. “We are seeing gains in clothing, electronics, furniture, sporting goods – they all seem to be bouncing back.”

And while traditional media like the circular in the Sunday newspaper or broadcast radio ads may seem old school to some, such tactics continue to drive traffic and consumer interest, C. Lee Smith, President and CEO of SalesFuel, a media sales consultancy, said. “We have to focus not just on the shiny new toy but traditional media in all its forms when it comes to retail. A lot of it still works and works very well,” Smith said during the webinar “Accelerating 4th Quarter Revenue: Planning For 2021,” presented by BIA Advisory Services and SalesFuel.

To grow dollars, Buono suggested sales teams offer cross-platform campaigns using “a combination of traditional media to create awareness and digital or mobile to help drive things home.”

As BIA does the math for this massive vertical, Buono says it takes into account store closings. After 9,800 stores shut their doors in 2019, another 20,000 could follow suit this year. There were also bankruptcies in the retail sector in 2020, such as Nieman Marcus, JC Penney, Brooks Brothers and The Men’s Store. On the other hand, major retail chains like Target, Costco and Walmart are performing better and “are better positioned to weather the storm,” Buono said. And online retailers like Amazon and Wayfair have diversified by opening some brick and mortar stores as “omnichannel” shopping becomes the retail mantra.

While the third quarter is shaping up as a recovery period, don’t expect things to go back to the way they were before the pandemic. Brands and advertisers “have changed the way they operate,” Buono said. What used to be a 5-6 month media planning cycle has shrunk to 2-3 months. “They have had to reduce their window for planning purposes because of the uncertainty in the marketplace,” he explained. Advertisers are doubling down on data and insights to monitor fast-evolving consumer behavior and attitudes and increasingly require flexibility from their media partners because of the uncertainty. “Things are changing on the advertising side and they’re becoming much more innovative in how they get their message out to their target audience,” Buono noted. “A lot’s changing with the way advertisers are looking at the marketplace.”

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