Updated Forecast Calls For Radio Advertising To Rebound By 12% In 2021.

As advertisers continue to return to the airwaves, radio industry revenue is forecast to rebound by 12% in 2021 to $14.3 billion. That marks a substantial upward revision in MoffettNathanson’s 2021 Ad Tracker from its earlier forecast of just 1% growth this year. Why the change? The firm chalks it up to “the better than expected rebound in 2Q trends off very easy compares last year.”

The updated Ad Tracker shows radio will make up for about half of the ad loss it incurred in pandemic-inflicted 2020, when radio revenues plummeted by 25% to $12.8 billion.

In fact, the firm raised its overall U.S. ad growth estimate by 23%, versus +19% earlier, citing “stronger than anticipated online advertising results.” Combined U.S. ad revenues are forecast to shoot up 18.7% to $283.8 billion this year, from $230.5 billion in 2020, with online once again capturing the majority of dollars – $166.8 billion, up 32.9% from $119.3 billion last year. Total television will increase 5.3% to $80.8 billion, when local stations, broadcast networks, national and local cable, syndication and advertising-based video on demand (AVOD) are all factored in.

Thanks to online’s strong growth and the shift in Olympics timing, MoffettNathanson now estimates 2021 U.S. ad spend levels will be 25% greater than the base set in pre-pandemic 2019. Beyond the online platforms, it predicts TV to reach 4% higher levels in 2021 than in 2019. However the forecast calls for all traditional media, except TV, to be down double digits from 2019 levels. That includes a 26.5% decline for newspapers, -21.6% for magazines and -19.4% for outdoor. Stacked up against those losses, radio’s -16% revenue decline (2019-2021) almost looks tame. “Given our elevated growth rates for online in the out years, we forecast strong double-digit growth for total advertising for the next few years despite declines across most other categories except for TV,” MoffettNathanson says.

Digital Gets 74% Of Ad Dollars By 2025

Citing “robust growth,” the Ad Tracker estimates online advertising will account for 74% of U.S. ad spending by 2025, up from a 52% share today. “Meanwhile, we expect TV’s share (including AVOD) to drop to under 20% by 2025 from 33% in 2020, more due to weaker relative growth vs. digital rather than an absolute decline in TV ad spending,” the forecast says.

Looking ahead, the analysts at MoffettNathanson are calling for low to mid-single digit revenue declines for radio for the period of 2022-2025.

That dovetails into its breakdown of U.S. ad spend based on the stage of the marketing funnel where each media has the greatest impact. It anticipates top-of-funnel brand marketing through traditional media will continue to lose share to faster growing segments of the market further down-funnel. Here’s how the firm breaks out its advertising estimates based on where the media falls in the marketing funnel:

  • Top-of-funnel advertising through traditional media will fall to 21% share by 2025 from 46% in 2020, while digital video services at the mid-top-of-funnel will grow share from 6% today to 12% “driven by rising engagement as well as more effective targeted and measurable advertising.”

  • Middle-of-the-funnel advertising from online platforms (excluding search) are poised to rise to 32% share of the overall U.S. ad market by 2025 (vs. 22% in 2020), driven by social media and Facebook in particular.

  • Bottom-of-the-funnel advertising from search will account for 35% of the U.S. ad market in 2025 from just over a quarter today.

The MoffettNathanson Ad Tracker uses publicly-reported, quarterly financial results. It also tracks advertising by major advertising media – television (local TV stations, broadcast networks, cable networks and cable MSOs), newspapers, consumer magazines, radio, outdoor and online.

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