Borrell Associates Sees A 1.2% Decline In Local Advertising For Radio
January 18, 2016 at 3:54 AM (PT)
BORRELL ASSOCIATES has released the second of a four-part series outlining where local advertising is headed in 2016. The first report offered 10 predictions for 2016 and beyond from their panel. This one offers forecasts for how $132 billion in local advertising will be spent this year. The next report will examine the phenomenon among media companies morphing into advertising-and-services companies, and the final report will offer benchmarking, showing how much digital revenue local media companies are making in each local market.
BORRELL writes, "In this installment, we detail how local advertising is experiencing a growth spurt that is much faster than others have been predicting. There are two reasons: State and local elections alone will likely inject $5.5 billion into the local media this year, adding 4 points to the growth rate; and SMBs’ infatuation with online media is expected to continue, causing it to surge 36.4%. If that forecast bears out, online advertising would account for 94% of this year’s growth. The growth has led to what we call the “X Year,” when the lines cross for analog and digital media, with digital accounting for half of all local advertising expenditures."
The report continues, "Based on what SMBs have been telling us and what our forecasting model continues to indicate, local advertising is poised to surge 16.4%, from $113 billion in 2015 to $132 billion this year. Key propellants are a $5.5 billion injection from state and local election ads, and the $17 billion in additional spending that local businesses are likely to dole out for digital media. In 2016, the lines will begin to cross, following the trajectory everyone’s been predicting: Digital media’s meteoric rise past analog media. This year, digital advertising will reach the halfway point, accounting for roughly half of all local advertising expenditures. By 2020 -- when its 25-year growth jag may finally flatten out -- it will account for two-thirds of all advertising expenditures."
As for Radio, BORRELL finds our medium, "is likely to see a 1.2% decline this year, despite the fact that more than 90% of adults listen to radio at least once a week and it remains one of the least-expensive media choices. Its key problems are the loss of its mainstay advertisers, auto dealers, and heavy competition not only from print and digital media, but also from fellow radio stations. Some markets have four dozen or more radio stations -- three or more stations per format."