The outcome of next year’s elections will chart the country’s path forward on multiple policy fronts. For media companies, local ad spending will also be affected, according to BIA Advisory Services’ monthly Economic Pulse report. If a Republican takes the White House in 2024, it will mean “a significant bump in local advertising spending heading into 2025 with businesses feeling more confident about their tax situation and their ability to spend, invest and grow,” says VP of Forecasting & Analysis Nicole Ovadia.
Should the Democrats remain in the West Wing in 2024, Ovadia predicts “a more tepid” local advertising landscape for 2025. Her rationale is that it will take time for the Dems’ economic policies to work their way through the system until consumers feel their wallets getting heavier. In that scenario, it could take one to three years before they significantly adjust spending levels. “Therefore, the change in local advertising spending is likely to be positive, but much less of a noticeable uptick in 2025 and more of a gradual lift starting in late 2025 through 2027,” Ovadia says.
She bases her prognosis on significant variations in the fiscal plans of the current Biden Administration and the Republican candidates. And she identifies taxes and banking as the two most important issues affecting the U.S. economy and the future of local advertising spend.
As for taxes, the Tax Cut and Jobs Act (TCJA), passed by the Trump administration in 2017 and supported by most of the 2024 Republican presidential candidates, benefited higher income people more than lower income people. The theory is that cutting taxes for everyone, and especially for businesses and for wealthy people, will allow businesses to grow more, hire more people, and spend more on investments while consumers will have more money to spend on goods and services.
Democrats, meanwhile, are working on a policy that would reform and reverse many of the changes made by the TCJA with a focus on taxing wealth and work comparably.
“At the end of the day, both parties want to stimulate spending and economic activity,” Ovadia writes in the blog post. “Republicans believe that putting money in the hands of businesses will spur more investment, create more jobs, and help consumers. Democrats want to put the money in the hands of the consumers to encourage more spending and small business launches.”
As for banking, most Republicans don’t agree with Fed Chairman Jerome Powell’s handling of the economy over the last few years – especially the high inflation rates and bank failures. Democrats are seen as being less likely to shift away from Powell’s policies. “Therefore, if the Republicans win, we can expect to see significant changes at the Fed which will likely result in more business-friendly policies and, most importantly, lower interest rates,” Ovadia writes. “That would stimulate advertising spending immediately by many sectors including auto and real estate.”
Regardless of the outcome, one thing is certain about next year’s elections: Political ad spending on local ad media will be significant. The latest data from AdImpact shows that as of last week, $617.4 million has been spent on ads for the 2024 political cycle to date. That is an 82% increase compared to the $337 million that had been spent at this point four years ago.