U.S. local radio advertising this year will total about $12.8 billion, according to a new forecast from BIA Advisory Services.
It’s not a welcome number, though it’s unlikely to surprise any radio sales managers. If it holds, it would be a drop of about 9% overall compared to last year’s $14.1 billion, whereas BIA’s original 2020 projection had anticipated slight growth for this year.
The research company said it is reducing its forecast due to the impact of the pandemic on the economy.
Broadcast ads still make up the biggest piece of radio’s revenue pie, and unfortunately that’s the segment where the pandemic is really taking its toll. The BIA estimate projects $11.4 billion for over-the-air revenue — which would be a decline in spending of more than 10% from 2019 — and $1.4 billion for digital revenue, including local ads sold by streaming companies.
The digital component is notable, holding at last year’s pace.
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SVP and Chief Economist Mark Fratrik noted that radio’s digital spending number passed $1 billion only last year. “For 2020, our ad forecast shows that digital sales, including streaming, will stay steady. Then by 2021, radio online revenue will start to climb back up again. On the over-the-air side, we see a bigger COVID hit, with a steep drop in 2020 and some recovery back by 2021.”
It expects the biggest spending on radio will come from the finance/insurance, retail, auto and tech sectors. “These industries may benefit from the continuing shift in radio listening from the car to the home as at-home audio environment features give consumers multiple opportunities to consume promotions,” the company said.
It calls streaming “a major growth opportunity for broadcasters to maintain existing audiences and attract new, younger listeners,” noting the popularity of streaming and podcasting compared to before the pandemic and saying these trends are “likely to take root.”
Earlier BIA projections anticipated that 2020 would be a relatively decent year for radio and other media thanks in part to it being a big election year.