Local Advertisers Navigate Looming Surge in Political Ads Pricing
As the global economy braces itself for the possibility of a recession, some sectors are standing out with surprising resilience. Driven largely by the anticipation of enormous spending on political ads in the coming year, local advertising in the U.S. is expected to increase by 8.6%. That puts anticipated revenue across all media in the U.S. at $175.6 billion next year — an enormous leap at a time when many other sectors are struggling.
According to a report by BIA Advisory Services, political advertising is expected to play a role in virtually all markets throughout the U.S. in 2024, including those areas that are not highly contested, politically speaking. BIA found that local political advertising will be fueled by the presidential and congressional campaigns, as well as “issue-based advertising.”
Excluding political advertising, BIA estimates local advertising in the U.S. would drop to $164.6 billion. That’s still an impressive figure, but at a modest 2.2% increase, local advertising would fall more closely in line with other struggling U.S. sectors.
“Political spend will be back in the picture in 2024, and it will put some pressure on the economics for local advertisers, pushing prices up,” says Tom Cheli, CEO of Frequence, a firm that specializes in advertising sales automation and workflow software. “It won’t change the benefit or importance of taking an omnichannel approach.”
Four years ago, the political ads cycle put some pressure on local-market ad prices, but Cheli says the impact was more muted before compared to now.
A Shifting Landscape
The local advertising in the U.S. has been continuously evolving over the past decade. Broadly speaking, traditional advertising channels, like print media, radio, and TV, have been steadily losing ground to digital platforms. This shift was accelerated by the pandemic in 2020 and 2021, which forced businesses to pivot quickly towards online advertising to reach customers.
However, a significant chunk of political ads spending still takes place on platforms like television and radio. Coupled with BIA’s analysis, which found that digital isn’t growing as fast as it once was, more advertisers are looking at the omnichannel approach as a way to combat rising ad prices in 2024.
Among the various media platforms, BIA anticipates the biggest improvements will be in connected TV/OTT, with a projected increase of 39% compared to 2023. Over-the-air TV station broadcast could rise by as much as 30%, and local cable TV by more than 19%. Out-of-home advertising is expected to increase by 9.4% in 2024.
“With an omnichannel approach, advertisers can be flexible about their spend between channels. For local-market media companies, they own that relationship. Local advertisers want to interact with a single expert for all of their needs, so for local-market media companies, being able to own that relationship and offer omnichannel campaigns puts them in a very good position.”
While the local advertising sector’s growth is impressive, it’s not without challenges. As digital advertising becomes increasingly competitive, businesses will need to invest in creative and data-driven strategies to stand out. Moreover, an impending recession could still have an impact on consumer spending habits and marketing budgets.
Stay tuned, as Street Fight plans to continue covering the evolution of local advertising as political ads spending ramps up in the coming year.