What To Expect In Local Media Advertising In 2021
8 min read
With growth in podcasting and streaming, BIA’s Rick Ducey says local radio’s star is rising in 2021. … [+]
Last year with a pandemic and ensuing economic slowdown, many local retailers were forced to close, impacting the local ad marketplace especially local traditional media. To find out what to expect in 2021 and what technological advances local traditional media have in store to offset the continued migration of ad dollars to digital media, we asked Rick Ducey, the Managing Director of BIA for his insights.
Rick Ducey leads BIA Advisory Services’ strategy consulting practice and serves as an advisor to its affiliated investment banking group BIA Capital Strategies. Rick works with media industry clients to see and evaluate opportunities and develop strategies in with traditional and digital platforms to achieve business goals. He helps clients with strategic planning, partnership strategies, product planning, competitive intelligence, revenue growth and diversification. He also works on investment banking projects assisting buy-side and sell-side clients.
With the exception of political advertising, the local ad marketplace underwent a difficult year in 2020 with the pandemic. How is the local ad marketplace for 2021 looking? What product categories are set for a strong rebound in 2021?
Ducey: It is so true, after a great lead-up in the first quarter then came the pandemic curtain of doom. Political was huge, and the delta in 2021 with basically no political is like driving off a cliff. Comparing BIA’s forecast for local ad spending from 2020 to 2021 in the table below, you can see the impact of political. As a political year with hotly contested races and commensurate media spending levels, it was a big help for media otherwise hammered by the pandemic. In 2020, political spending will be down 86.9 percent compared to 2019. Only two business categories break into double digit ad spending growth in 2020, Finance/Insurance (10.0 percent) and Leisure/Recreation (16.5 percent). We expect all other business verticals to show a healthy spending increase in their ad budgets.
Local Advertising
Vertical Advertising % Change
Automotive 5.0%
Education 5.9%
Finance/Insurance 10.0%
General Services 5.1%
Political -86.9%
Health 3.8%
Leisure/Recreation 16.5%
Media 8.3%
Real Estate 8.7%
Restaurants 6.0%
Retail 5.3%
Technology 4.8%
All Verticals 2.5%
Source: BIA ADvantage U.S. Local Ad Forecast 2020-21
What are some of the initiatives we can expect in 2021 (and beyond) in local TV, to keep ad dollars from migrating to digital media?
Ducey: Local TV continues to be the broad based “reach and frequency” medium for advertisers. However, digital media are growing in reach and offer data-driven audience targeting and outcome measures that linear TV cannot. To better compete, local TV operators are improving their own services while distributing their current and new services cross-platform into digital media.
The main innovation initiatives in local TV are related to platform (distribution and devices), data (identity management, personalization, privacy, audience targeting, attribution) and audience experience (sports betting and gamification, cross-platform services).
Local TV groups distribute their programming over all these platforms making for a complex ecosystem for providing both linear and on-demand programming services. BIA forecasts that 44.7 percent of $137.5 billion in local ad spending in 2021 will go to digital media, rising to over 50 percent by 2024. Local TV’s share of this spending is 10.4 percent and will decline over time. To keep competitive for these ad dollars TV broadcasters are rolling out ATSC 3.0 (NextGen TV is the consumer branding) which is a new technology that blends broadcast and Internet services.
Broadcasters are distributing their content cross-platform for subscriber license fees and ad dollars over streaming services including OTT (Over-The-Top), CTV (Connected TV), and vMVPD (virtual MVPDs). OTT , CTV and vMVPD all rely on Internet-connected devices including TV sets, smartphones, desktops, laptops, and tablets to distribute TV programming. For broadcasters, the more distribution they get over all these platforms and devices, the more competitive they can be in the market for winning more share of wallet ad spending.
Using sophisticated data science with first-party and third-party data sources from advertisers, media, and cloud marketing solution providers, advertisers and local TV operators can match advertiser consumer segments to audience target audience segments and assess outcomes for more efficient and effective ad campaigns.
Finally, local TV groups are pursuing new forms of content and audience engagement. One of the faster growing trends is bridging sports fan-based experiences and content with TV in its various forms. Several of the leading local TV groups are pursuing revenue growth opportunities in the sports category with sports betting and gamification.
What are some of the new opportunity’s advertisers can or may look forward to in local radio, to keep ad dollars from being reallocated to digital media?
Ducey: Like radio, 2021 initiatives tie back to platform, data, and audience experience. Radio’s star is rising in 2021 as a core part of what has become a high-growth audio advertising market comprising local radio stations, streaming radio services, and podcasting. In 2021, local radio’s ad revenues will reach $11.2 billion. Online radio including streaming and podcasting, will reach $1.4 billion in local ad spending this year and is a growing segment.
Most local radio stations are available as simulcast streaming services on various platforms. This extends radio’s already massive reach to include over-the-air and digital audiences to generate additional ad revenue. Local radio groups have been both offering and licensing their own podcast content and services and acquiring podcast content and platforms to build-out their capabilities to reach and monetize audiences bases that are both broader and more targetable for advertisers than what they can do just with their over-the-air services.
Since the automobile is such an audio-rich environment and a long-time location for a substantial amount of broadcasting radio time spent listening, developments in the connected car space related to information and entertainment systems are critical to broadcasters. Local radio operators are finding ways to add value to the connected car experience to lock in paths to revenue growth.
This includes offering high value content not only over-the-air but via streaming and podcasting And it also includes enhancing their technology platforms including HD Radio offering digital broadcast audio and additional multicast radio channels and a new hybrid radio receiver combining broadcast and Internet services such as Xperi’s DTS offerings. Hybrid radios are audio-first devices but add substantial value to more capable auto displays that can show visuals tied to ads and program content.
Another basic innovation to the local radio service is the ability to use cellular phone like technology to create hyperlocal zones over which stations can offer geo-zoned content. BIA’s client GeoBroadcast Solutions offers the ZoneCasting solution is one example where for example a Dallas-Fort Worth radio station could provide separate over-the-air geotargeted program breaks with ads, traffic, weather, alerts, and special programming for either Dallas or Fort Worth. That makes that station more affordable to smaller businesses looking to reach just a geo-zone, not the whole market. And it makes content more valuable to listeners since it is more geographically relevant.
Finally, local radio stations are adding value to their services as advertising platforms by leveraging data and attribution solutions that provide outcome-based measures of radio ad campaigns such as driving lift in web and search traffic, completing online forms, and mobile app downloads.
The ad dollars for local newspapers continue to drop with each passing year especially and with the pandemic 2020 was no different with the pandemic shutting down many retailers, are there any new trends or innovations to keep local ad revenue in newspapers?
Ducey: This is an extremely hard-hit part of the local media ecosystem. We have lost a of local news production capacity as so many newspapers have shuttered down in recent years. Most newspapers offer digital as well as print subscriptions. This helped but did not fully stem the massive loss of advertising and subscription revenues over the years. BIA estimates local newspapers will generate $6.8 billion in print ad revenue in 2021, headed down to $6.3 billion by 2025. Newspapers’ digital ad offering will earn about $5.5 billion in 2025. So even looking down the road, that is still a lot of ad spending in local newspapers.
With stay-at-home orders in place for much of 2020, ad dollars for out-of-home media dropped, what can the medium expect in 2021? Are they any new opportunities in OOH for marketers?
Ducey: Obviously, Out-Of-Home (OOH) ad media depend on people being outside in their cars, in cinemas, at event venues, retail, airports, and in their cars. The OOH media segment took a huge pandemic hit and that continues into 2021. CNN Airport recently shut down its operations as a concession to the pandemic ad economy. As recently as August 2020, we forecast OOH 2021 ad spending to be $6.7 billion. We kept taking it down in our estimates as the pandemic progressed. We are now estimating OOH at $6.2 billion for 2021.
The most exciting part of the OOH ad ecosystem is driven by video ad platforms including outdoor large format signage, placed-based media like CNN Airport TV and retail mall kiosks and theater-based ads that run before movies. The underlying display, networking, and advertising workflow technology has made tremendous advancements in recent years making OOH more capable, effective, and affordable than ever. It is notable that the Outdoor Advertising Association of America (OAAA) recently hired Anna Barger as CEO. She is a seasoned ad tech who left an executive post at the Interactive Ad Bureau to join OAAA. The OOH space, particularly on the video and tech side is definitely a place to watch for more innovation in the coming years.
What are some of the new advertising opportunities becoming available with local digital media?
Ducey: For local digital media, the headline winner might be some version of “privacy by design.” Responding to a wave of privacy-oriented policies beginning notably with the European Union’s General Data Protection Regulation (GDPR) and then the California Consumer Privacy Act (CCPA), consumers’ rights to privacy and even data sovereignty is something both public and corporate policy is taking seriously. Google
But the digital ad industry is responding with powerful solutions. IAB’s Project Rearc led by The Trade Desk
With state and federal governments pursuing legal action against the duopoly of Google and Facebook, this complicates but potentially opens the local ad ecosystem to more players, innovations and competitiveness in pricing and services offers.
Finally, going back to data, more advances in location intelligence, attribution, and data-driven cloud marketing services adds more and more muscle bulk to the digital advertising machine. Geotargeting local consumers in a contextually and situationally relevant experience is extremely effective for targeting and delivering ads. Add in more advances in both optimization and attribution data and tools and we will see local digital advertising become more competitive than ever in 2021.
