Somehow, it’s already March and I am elated to share our latest forecast with you! We have been feverishly working on updates and adjustments since November of last year, tracking the changes happening in the economy and what implications that will have on the Local Advertising market in 2024 and beyond.
While at first glance it seems our overall forecast estimates didn’t move much since November, if you peel back the layers and dig in a bit, I see three major storylines that require deeper investigation and analysis: shifting consumer behavior, CTV/OTT growth and, of course, Political.
First, before we can forecast 2024, we have to look back at 2023. There was optimism heading into the holiday season with Retailers expecting Consumers to continue to spend as if inflation was having no effect on them. But that isn’t quite how it panned out.
While we have been talking about inflation concerns and rising prices for well over a year, consumer spending behavior remained strong through most of 2023. Towards the end of the year, though, consumer behavior started to catch up to inflation concerns. Buyers began displaying signs that brand loyalty was becoming less important to them than value. We are seeing this with verticals such as QSR right now – brands are promoting “value meals” and “deals” more than general branding right now as consumers show they are willing to switch for the right incentive – something we have not seen in a long time. This is a massive opportunity for the QSR sector over the course of the next six months or so as consumers are open and receptive to new messaging.
Another “emerging trend” that is important to look at is the exponential growth of CTV/OTT advertising. Of course, we’ve all been onto this “trend” for quite some time now, but, for 2024, we expect Political spending on CTV/OTT to be on par with Cable – about $1B. This is a massive increase compared to 2020 (and even 2022) and there are a few reasons driving this change.
First, the barriers to entry for CTV/OTT are much lower than they were in the past. The ability to create a quality video ad is much easier than it ever has been and buying CTV/OTT is also easier than it once was for small, local Advertisers. Second, geotargeting makes CTV/OTT much more efficient for candidates running for Local office. Therefore, we are forecasting that many smaller “down ballot” races will utilize CTV/OTT for their ads.
But, even outside of Political, we are expecting this to be a banner year for Local CTV/OTT. With Political advertising and commentary expected to take up the majority of airtime in the late Summer and Fall, non-Political Advertisers will be looking for “safe spaces” to get their messages out. CTV/OTT can be less cluttered, noisy and expensive than TV OTA which is likely to attract Advertisers that have been hesitant to explore this Media in the past.
Lastly, let’s talk about Political. Overall, our Political forecast was adjusted up slightly from our November estimates. While spending so far has been slightly behind the levels we saw four years ago when it was a Democratic Primary that was playing out, the money being raised by candidates and PACs is outpacing two and four years ago which leads us to expect higher spending as we get deeper into the Summer and Fall. But, as with our overall changes to the forecast, it’s not so much the adjustment that is interesting but where the adjustments were made.
As I said earlier, our CTV/OTT number increased significantly and is now on par with our expectations for Cable. And while we did grow our overall estimates, most of the CTV/OTT growth is coming out of Cable – the shift is significant. Furthermore, the markets where the Political Advertising will be spent looks different this year than it has in the past. Previously, the “toss up states” would get the lion’s share of the spending. This year we are expecting to see more spending in non-contested states. Why? Fundraising! For example, we are forecasting significant spending on social media by the Democrats in the New York and Los Angeles markets. Neither market is “up for grabs” and being threatened by the Republicans, but that’s not what the Democrats are worried about – they will spend money in these states not to get votes, but to get more donations to allow them to spend even more money in those “toss up states”.
So, this year, the Political advertising deluge is coming no matter where you live. Can’t wait!
To summarize, I think the most important takeaway from our forecast update is the continued health of the Local Adverting space. Even if we exclude Political advertising, spending is forecasted to increase in 2024 compared to 2023 (and again in 2025 compared to 2024). We see solid growth from emerging Media, and we see Advertisers willing to spend money to secure Customers at a time when Consumers are open to being wooed. While there is uncertainty in 2024, one thing we can be sure of is that there are opportunities for growth all around.
Clients can log into BIA ADVantage to view the 2024 Local Advertising forecast for their local markets. If you are interested in your own subscription to ADVantage, please email us at advantage@bia.com, or if you would like to purchase the Nationwide forecast for 2024, you can buy it in our shopping cart.
