The digital giants may be making more of a play for local ad dollars than ever before, but the broadcast industry continues to hold its own. The U.S. broadcast station industry is forecast to reach $36.19 billion in total advertising revenue in 2024, up 9.3% from a year ago, according to the S&P Global Market Intelligence’s Radio & TV Annual Outlook. The jump is the result primarily from the influx of record political ad spending in a presidential election year, but S&P says the local ad market continues to be stronger than the national spot for stations with their ties to the local community.
S&P media analyst Justin Nielson credits broadcasters playing up their strengths, whether that is radio’s role breaking artists the way streaming services can’t, or TV stations focusing on new sports content. He says the combination of local sales teams and lower ad costs also play to broadcasting’s strengths.
“Radio still has the audience,” Nielson says. “It’s just monetizing that audience has been a challenge.”
Ad buyers are shifting budgets to digital platforms, and S&P’s outlook continues to point to how that impacts radio. The firm expects radio’s digital revenue will grow at a rate of 5.9% annually between 2024 and 2029. That will help to offset declines in broadcast ad spending.
S&P says radio revenue is on pace to decline 3.7% this year to $11.24 billion, excluding network and off-air revenue. S&P expects radio revenue to slip 3.3% in 2025 to $10.86 billion, excluding network and off-air revenue. It forecasts total radio ad revenue will contract to $10.08 billion by 2029.
Radio’s digital revenue overall is climbing, but Nielson says that where those dollars are coming from is company-specific. A group like iHeartMedia may pocket hundreds of millions of dollars in digital audio ad revenue from iHeartRadio and podcasts, while other companies have been emphasizing digital products to local clients.
“Overall, digital marketing services have been a growing area for the business,” Nielsen says. But he thinks for most groups, podcasting will be an ancillary business to the radio brands. “I don’t know if it is a huge attractor of a new audience, but it’s very much in the moment,” he says.
S&P projects digital will grow to 15% to 20% of overall radio revenue within the next five years, while national billings will move in the opposite direction.
Local Driving Broadcast Growth
Current revenue trends in radio reflect what is happening among local broadcasting’s core ad categories. S&P says pharmaceutical, telecom, and professional services continue to outperform. At the same time, automotive, retail, and travel are softer due to high interest rates and inflationary pressures dampening consumer spending on big-ticket items.
Based on conversations with broadcasters and advertisers, S&P says local broadcast sales have been stronger than national. Nielson says professional services like lawyers are behind much of that, with localized campaigns filling the airwaves. And while auto manufacturers have been shifting so-called “tier one” national marketing dollars into digital, they have maintained regional association and local dealer spending. “They’re still trying to move inventory in those markets, so that hasn’t shifted as dramatically as the major brand advertising,” Nielson says.
Radio has traditionally gotten roughly eight of every ten dollars of revenue from local sales, and that has helped as S&P tallied its numbers for 2024. The firm estimates national sales revenue will slide 6% this year for radio, with local declining about a point.
“It’s been a struggle this year, but as you look at lower interest rates that could mean a potential uptick in terms of advertising in the fourth quarter and then into next year,” Nielson predicts. And while supply chain issues hampered year-end auto advertising during the past few years, that is no longer a problem for dealers. Nielson says that means that they are going to need to push year-end inventory clearances in 2024.
What About Local Television?
S&P says television has another election cycle to celebrate with what is on pace to be a record year in 2024. With the influx of $4.09 billion in political ads this year, total TV station ad revenue is expected to grow 14.1% to $24.95 billion.
When the impact of political advertising is removed, the story is mixed for local TV. S&P forecasts local TV spot revenue to be up 1.5% this year, while national spot will be down 4.5%. And digital is estimated to climb 3%. When all three are combined, analysts say it will combine for an overall 0.3% decline, with S&P projecting $17.58 billion in TV station core local and national ad revenue.
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