Local broadcast television advertising  spending is expected to grow 5.9% to $9.91 billion in 2024. according to a new forecast from Borrell Associates.

After the election year, Borrell expects local broadcast advertising to drop to $8.77 billion, its lowest level since at least 2020.

Local cable-TV spending is expected to drop 6% to $2.32 billion in 2024 and continue to fall to $2.12 billion in 2025.

Streaming video advertising (over-the-top and connected TV) among local buyers is predicted to increase by 3.9% to top $23.3 billion. That’s less than Borrell expected in its last forecast.

The dip in the growth rate for local streaming video came as a surprise to Corey Elliott, executive VP of local market intelligence and Borrell’s chief forecaster.

“While there’s a lot of passion around digital video, it presents a bit of a challenge for local businesses,“ Elliott said. “They’ve been telling us in surveys that they don’t know how to purchase it or how it fits into their marketing plan. They aren’t even aware that it’s cheaper than broadcast TV. That all points to a more subdued ramp-up for OTT spending.”

“That being said,” he added, “the OTT jackrabbit is still outpacing everything else. It’s the fastest-growing form of advertising and is already the fourth-largest among the 18 different formats we track.”

Borrell forecasts local streaming advertising will reach the $24.7 billion mark in 2025.

Overall, local advertising is expected to increase by 3.2%, which Borrell described as a “healthy” rate despite being slower than its earlier forecast of 4.4% growth.

The downward adjustment was triggered by new information from Borrell’s principal sources, including the U.S. Bureau of Labor Statistics, Woods & Pool, D&B, IBIS World, and Borrell’s quarterly SMB Business Barometer, the forecaster said.

Over the next five years, Borrell sees total local advertising increasing at a compound annual rate of 2.2%.

“For the past three quarters, we haven’t seen a lot of variation in SMBs’ [small and midsized businesses] attitudes about the economy and their plans to invest in advertising,” Elliott said. “They’re mostly neutral and slightly positive about the economy, but we’re still not seeing anything that would signal the bigger spring-back that many are hoping for.”

Since Q3 of last year and continuing through Q2 of this year, Borrell’s barometer survey has consistently shown that 50% of small and medium-sized businesses consider it to be harder to sustain a small business than it was six months prior.

Among individual local markets, the biggest gainers were Rapid City, South Dakota, up 32.9% to $190.61 million; Springfield, Missouri, up 30.4% to $515.71 million; Missoula, Montana, up 14.1% to $209.51 million; Dothan, Alabama, up 11.3% to $96.41 million; and Flint-Saginaw-Bay City, Michigan, up 11.1% to $389.08 million.

According to Borrell, the biggest declines are being seen in Watertown, New York, down 5.1% to $76.2 million; Miami-Ft. Lauderdale, down 3% to $3.140 billion; Orlando, Florida, down 2.6% to $2.192 billion; and Gainesville, Florida, down 2% to $152.55 million.

Auto dealers, one of the most important local advertising segments, will be shifting ad dollars away from broadcast TV and cable and increasing their spending on digital media, including streaming video and over-the-top, according to a new report from Borrell Associates.

TV spending by auto dealers fell 11.2% in 2021 and Borell expects to see another 6% drop to $568.3 million 2022. The declines come after a 26% plunge in 2020.

The next few years don’t have that new car smell either: Borrell forecasts a 10.4% decline in 2023, a 0.2% dip in 2024 and a 14% drop to $437.1 million in 2025.

Cable is also stuck in reverse. According to Borrell, auto dealer spending on cable dropped 15% in 2020 and 3.1% in 2021. Borrell sees a 4.4% increase in spending on cable to $156.3 million in 2022, but declines of 5% in 2023, 2% in 2024 and 10% in 2025 to $131.1 million.

For auto dealers, the shiny new model in video media is streaming and over-the top. Dealers spent $1 billion on streaming for the first time in 2019. 

Also: Linear TV Advertising Spending Drops 1% in November: SMI

Despite the pandemic, auto dealers increased spending on streaming and OTT by 6.4% in 2020. Spending jumped 35.7% in 2021 and Borrell sees a 20.1% increase in 2022 to $1.75 billion. 

Despite the pullback by auto dealers, local television ad revenue is expected to grow in 2022, thanks to increased political ad spending and digital activity by stations.

Borrell sees spending increases on streaming video and OTT leveling off, forecasting increases of 11.4% in 2023, 7.7% in 2024 and 1.7% to $2.16 billion in 2025.  

Also: GroupM Sees 23% CTV Growth, More Political Spending, Boosting TV

Overall, Borrell expects auto dealer ad spending to increase 8.8% to $9.47 billion in 2022.

Beyond increasing their spending on digital media, car dealers spent $38 billion to maintain their online presence through SEO, web maintenance and hosting, online video production, social media management and other digital marketing services. That’s 4.5 times what they spend on advertising.

Indeed Borrell raises the question of why dealers need to advertise at all at a time when demand for new and used cars is way up and inventory is remarkably tight.

“We believe that 2022 marks the beginning of a transition where dealerships will respond to major changes in the automotive marketplace by spending more to rebrand themselves, educate consumers about what their stores offer, and drive buyers to their websites to interact,” the Borrell report said. “Whereas total spending by dealers declined at an average annual rate of 2% in the past five years, we’re forecasting it will grow 3% annually over the next five.”

Borrell listed several reasons for auto dealers to continue to advertise. They include buying back vehicles, especially trucks, to meet online buyers, to get consumers to test drive electric cars, to promote their parts and service departments and to familiarize viewers with the dealers’ financing and insurance offerings.

The new messages are being used by outfits like CarMax, which doubled its ad budget in 2021, and Carvana, which boosted advertising 71%. ■