Local ad revenue forecast contracts 10.6% due to coronavirus, study says

Linda J. Dodson

Table of Contents

Dive Brief:

  • Local advertising revenue in the U.S. is expected to total $144.3 billion in 2020, a 10.6% decrease from the $161.3 billion previously forecast, according to new research revealed in a press release from BIA Advisory Services.
  • The new estimate, which comes in response to the coronavirus lockdowns, reflects a 3.6% decline from 2019 activity, even with political advertising revenue of $7.1 billion expected this election year.
  • Online ad spend, which is largely driven by small- and medium-sized businesses, has seen a drastic drop as closures and reduced sales hit “non-essential” SMBs, per the report. Leisure and entertainment cancellations are hurting out-of-home (OOH) ad sales. Local radio and TV are seeing dips in ad sales because of store and restaurant closures and sports and event cancellations. Direct mail is taking a hit as retailers and financial services firms reduce spending.

Dive Insight:

BIA Advisory Services’ revised forecast assumes a negative impact on spending from the coronavirus health crisis in Q2, a continuation of this trend into Q3 and a strong rebound in the latter part of the year. However, the company acknowledges that it may need to re-evaluate its forecast again as the economic implications of the pandemic become clearer later in 2020.

The body of research is growing around the pandemic’s impact on marketers, with the travel sector particularly hard hit. While some expect the impact could trickle into 2021, BIA’s report points to the uncertainties around local advertising as businesses close their doors during lockdowns. As local restaurants and retail stores are closed with no clear vision of when they can reopen, many are cutting back on their ad spend this quarter with no definitive plans to relaunch advertising efforts. When these companies reopen, many could have limited budgets after months of little to no income.

Elections could help to support ad revenues this year, as election years typically draw big spending from candidates’ campaigns. Still, while the presidential election will likely take place as scheduled, that event alone may not draw enough media spending to fully compensate for coronavirus-related pullbacks this year, per BIA. Another potential bright spot is the healthcare business sector, which could see a small lift in ad spending as marketers target hospitals and health professionals, the report said.

Big questions remain for advertisers and media, such as when the country can reopen safely and whether consumers will have the money to go out and spend once local businesses open their doors given the historic levels of unemployment. Without consumers spending, local businesses will be challenged to allocate money to advertising budgets when they are also struggling to survive.

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