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Decoding the $172 Billion Puzzle of Local Ad Spending in 2024 · Leading Local Insights

• 0:00
  Nicole Ovadia: Hello leading local insights podcast listeners and welcome to this very special episode where we are going to talk about the latest forecast that was published by BIA Advisory Services in March of 2024.
• 0:13
  Nicole Ovadia: My name is Nicole Ovadia and I lead our forecast team here at BIA, and I'm joined today by my friend and colleague, rick Ducey, managing Director.
• 0:22
  Nicole Ovadia: Say hi to all your fans out there, rick.
• 0:25
  Rick Ducey: Nicole, it's good to be with you.
• 0:26
  Rick Ducey: Hello everybody, Looking forward to our discussion today.
• 0:29
  Nicole Ovadia: So, as I said, we just published our updated forecast, which is super exciting, and so I want to start pretty high level.
• 0:36
  Nicole Ovadia: First and foremost, the most important thing to know is that we adjusted our forecast expectations for 2024, and we actually took things down a little bit.
• 0:46
  Nicole Ovadia: So our new expectations for 2024 local advertising spend will be $172 billion.
• 0:54
  Nicole Ovadia: This includes political spending, and it's about 2 percent lower than we were expecting back in our November forecast.
• 1:01
  Nicole Ovadia: Overall, we just needed to temper expectations for 2023 and 2024, mainly because the end of 2023, it just came in a little softer than we expected.
• 1:13
  Nicole Ovadia: Some of the holiday spending wasn't quite as high as we were expecting in 2023.
• 1:17
  Nicole Ovadia: So that's led to muted expectations into 2024.
• 1:21
  Nicole Ovadia: Consumer spending has slowed down a little bit as well, so again, that's muting some of our expectations for 2024.
• 1:28
  Nicole Ovadia: All of that being said, there are a lot of nuances and layers to all of the changes that we made to our forecast, so I really want to talk about three major things today political, ctv/ott and auto.
• 1:42
  Nicole Ovadia: First and foremost, we cannot talk about 2024 without talking about political.
• 1:46
  Nicole Ovadia: Of course, for our forecast adjustment, we were at $11 billion before this adjustment and I wound up taking it up by about $100 million.
• 1:55
  Nicole Ovadia: So our current local political 2024 forecast is $11.1 billion.
• 2:01
  Nicole Ovadia: Two major reasons why I wound up taking it up even high.
• 2:05
  Nicole Ovadia: Honestly, I have to tell you, I thought my $11 billion number was a little high back in November, so the fact that I took it up even more was surprised me.
• 2:14
  Nicole Ovadia: But there are two reasons One, down ballot races and two, CTV/OTT.
• 2:19
  Nicole Ovadia: Actually, I'm going to take those in reverse.
• 2:21
  Nicole Ovadia: And, Rick, why don't I toss it over to you?
• 2:23
  Nicole Ovadia: Can you talk a little bit about OTT and CTV and just the opportunity and everything that we're seeing with the forecast adjustments we made, especially around political.
• 2:34
  Rick Ducey: I mean we're taking that up in your estimation process, which makes sense.
• 2:38
  Rick Ducey: I mean that's what I'm hearing from the marketplace to in local, for national level, ctv spinning it's a it's different story, but in local, a lot of growth and some some of the key drivers for that are more data available Generally, the theme of quality, I guess, better data.
• 2:55
  Rick Ducey: So for audience segmentation, targeting, activation, all easier, more powerful to do now than it has been in recent years.
• 3:02
  Rick Ducey: That's all good for the marketplace.
• 3:04
  Rick Ducey: Quality also comes in the form of content, with major new entrance into the ad supported CTV marketplace, like Disney, Netflix and I'm hearing rumors of Apple coming in they're hiring people for in the advertising side of things.
• 3:20
  Rick Ducey: So that will be an infusion of a lot of high quality content, high quality inventory.
• 3:24
  Rick Ducey: There are a lot of ways to spend money in CTV with all of fast, free ad supported TV services.
• 3:32
  Rick Ducey: So the audiences can get a bit fragmented, but the ability to aggregate those audiences across the data platforms is a little bit of a countervailing force there.
• 3:41
  Rick Ducey: So so that's all good.
• 3:43
  Rick Ducey: There's a lot of inventory Generally speaking.
• 3:46
  Rick Ducey: So if you want to come into CTV you can enter different price points.
• 3:50
  Rick Ducey: In fact, some of the programmatic platforms and publishers like Disney in particular, and scripts and a few others, are moving towards not just programmatic trading platforms but self serve programmatic trading platforms.
• 4:03
  Rick Ducey: What that means is that inventory can be opened up to the four or five billion small million businesses to get access to some of the high quality CTV ad inventory.
• 4:13
  Rick Ducey: So that opens up a new demands bigot that I think will drive forward the revenue growth that you're putting into your forecast.
• 4:20
  Rick Ducey: And so those are a few of the things the increase in quality, the data, the technology, use of self serve onboarding platforms on the programmatic buy side in the marketplace.
• 4:31
  Rick Ducey: There's more behind that, but those are some of the big ones.
• 4:34
  Rick Ducey: So I'm going to turn it back to you to see you get back to your story about down ballot and then onto social media, Nicole.
• 4:40
  Nicole Ovadia: Yeah, and even as you're talking, I mean just making CTV and OTT more accessible and more approachable.
• 4:45
  Nicole Ovadia: So I mean those smaller quote, you know races and people like can.
• 4:49
  Nicole Ovadia: Only I could imagine someone running for District 12 in whatever city in Des Moines could easily go in and buy their own CTV/ OTT.
• 4:57
  Nicole Ovadia: So that's very interesting how that's changing the barriers to entry and will lead to more political spending, I believe, on that platform in this cycle and beyond that, as you mentioned, there's down ballot races and there's social media.
• 5:11
  Nicole Ovadia: So I do want to talk about some other political spending that I'm expecting.
• 5:15
  Nicole Ovadia: First of all, the down ballot races.
• 5:18
  Nicole Ovadia: So we've been talking about this for at least the last two years and the last four years.
• 5:21
  Nicole Ovadia: But the state Supreme Court races and some of the gubernatorial races.
• 5:26
  Nicole Ovadia: There are other races that state level races, if you will, if not city level, and even down to the county and state level are, excuse me, the county and city level are becoming more and more important because the way in which politics in the US is evolving, where states rights are becoming quote more and more important and decisions are being pushed down from the federal level to the state level.
• 5:51
  Nicole Ovadia: So, whereas we used to only mainly talk about the money being spent in presidential elections.
• 5:57
  Nicole Ovadia: There's now a ton of money being spent by a lot of different people on these quote down ballot races, so we have to keep an eye on them.
• 6:05
  Nicole Ovadia: They are a major driver for the reason why my political estimate went up.
• 6:09
  Nicole Ovadia: And the other thing that is very interesting for this political cycle that I'm seeing for the first time in order for my political estimate to go up.
• 6:20
  Nicole Ovadia: That means that more dollars are being spent by political candidates and by issue money, which means they need to raise more money.
• 6:27
  Nicole Ovadia: They're spending more money because they're raising more money.
• 6:30
  Nicole Ovadia: So that's where this social media is coming in, where I believe that there will be a significant amount of money being spent on advertising in markets that aren't really being contested, and they will be social media advertising looking to raise more money and looking to drive more fund raising.
• 6:45
  Nicole Ovadia: So a significant portion of the money that comes in will be used to bring in even more dollars.
• 6:52
  Nicole Ovadia: So it's an interesting trend to keep an eye on for this political season.
• 6:58
  Nicole Ovadia: But even beyond that, I mean, there are other verticals.
• 7:00
  Nicole Ovadia: I know it's hard to think about that, but there are other verticals and other media and other things happening in 2024.
• 7:07
  Nicole Ovadia: So, beyond political, when I look at the forecast, one of the things that was so interesting to me was that OTT and CTV is the fastest growing media, even if we exclude political.
• 7:19
  Nicole Ovadia: So political alone we just talked about how that's growing basically to almost a billion dollars.
• 7:25
  Nicole Ovadia: It was $100 million in 2022, was spent on CTV, ott, political, and now it'll be close to a billion dollars.
• 7:32
  Nicole Ovadia: But even outside of political, ctv and OTT is growing faster than any other media.
• 7:38
  Nicole Ovadia: Rick, you talked about that a little bit in terms of Apple might be coming into the picture and some of the.
• 7:45
  Nicole Ovadia: You know there's more inventory out there, but just because there's more inventory doesn't necessarily lead to more sales.
• 7:52
  Nicole Ovadia: So can you tell me a little bit more about why you think CTV/ OTT continues to grow and will continue to grow over the course of 2024 outside of political?
• 8:03
  Rick Ducey: Sure.
• 8:03
  Rick Ducey: Well, yeah, increasing supply doesn't necessarily increase demand.
• 8:08
  Rick Ducey: However, TV is arguably the strongest form ever to many brands and agencies.
• 8:17
  Rick Ducey: So it's an important part of a media mix if you can afford it and that's the kicker if you can afford it.
• 8:23
  Rick Ducey: So local cable has been an attractive place for video spending for buyers that can't afford more expensive broadcast TV or network TV.
• 8:33
  Rick Ducey: So with CTV it's a complicated process to buy.
• 8:35
  Rick Ducey: It gets a little bit easier.
• 8:37
  Rick Ducey: But going forward the technology has made it less complicated and then these self-serve onboarding platforms for the programmatic make it easier.
• 8:46
  Rick Ducey: So if you want to do a CTV buy through an agency, say, the minimum buy is tens of thousands of dollars.
• 8:53
  Rick Ducey: That's like, well, that's my annual advertising budget.
• 8:55
  Rick Ducey: You know, if I could put $2,000 or $2,500, since the TV CTV, and buy some kind of inventory that hits my audience target, I'd do that Well times that by a couple million small businesses, significant revenue source.
• 9:10
  Rick Ducey: So opening up the demand, open up the inventory, creates a lower priced inventory which stimulates the long tail of that demand curve in theory and in practice.
• 9:20
  Rick Ducey: We've seen that in many other parts of the economy.
• 9:22
  Rick Ducey: So that's one growth multiplier.
• 9:26
  Nicole Ovadia: Absolutely.
• 9:26
  Nicole Ovadia: And I also think you know, with all the political I keep saying let's not talk about political, and then I keep talking about political, but with all the political crowd out, especially as TV over the air becomes more and more expensive, as you're saying, I think we're going to see some other verticals as well, moving over to see TV OTT for the first time or trying things out during this political season and, as you said, even these local small business owners that might have been a little hesitant in the past, it's much more approachable to them.
• 9:51
  Nicole Ovadia: And so, speaking of some of these other verticals, one of the verticals I'm really excited about for 2024 is real estate.
• 9:59
  Nicole Ovadia: It's gone through a rough patch, if you will I guess is the nicest way to say it over the course of the last two years.
• 10:07
  Nicole Ovadia: If you have tried to move or buy a house or sell a house, so you're very well aware of what's going on in the real estate market.
• 10:14
  Nicole Ovadia: But what I'm expecting here?
• 10:16
  Nicole Ovadia: I'm pretty keen on them.
• 10:18
  Nicole Ovadia: I think it's going to pick up a lot in the back half of this year.
• 10:21
  Nicole Ovadia: Interest rates have remained stubbornly high.
• 10:23
  Nicole Ovadia: We talked about how consumer spending is starting to slow a little bit.
• 10:26
  Nicole Ovadia: Inflation is still high but coming down, and consumer spending has outpaced inflation till now.
• 10:36
  Nicole Ovadia: Things are getting interesting right around now, which is again speaking back to those temperate expectations.
• 10:41
  Nicole Ovadia: So my thought is I'm expecting the Fed to lower interest rates during the summer to the back half of the year, depending on how inflation continues to remain hot.
• 10:52
  Nicole Ovadia: We just saw some February numbers that were a little troubling in terms of inflation being strong.
• 10:56
  Nicole Ovadia: So therefore I'm expecting interest rates to come down over the summer into the fall, which should open up real estate significantly.
• 11:07
  Nicole Ovadia: Once that happens, we'll see a ton of advertising.
• 11:11
  Nicole Ovadia: There is a lot of pent up demand going on there, and one of the other things I have to talk about because I haven't talked about it is automotive.
• 11:18
  Nicole Ovadia: The fact that I'm not discussing automotive or saying much about it, it tells you what I think.
• 11:24
  Nicole Ovadia: So things are pretty muted for 2024.
• 11:26
  Nicole Ovadia: I think that there was a lot of excitement around the electric vehicles and they are taking off.
• 11:34
  Nicole Ovadia: Demand is increasing, but I'm also seeing some hesitation around.
• 11:38
  Nicole Ovadia: Some backlash I mean, we had some of the winter weather we had is causing some questions as to how quickly the EVs will actually take over the world.
• 11:49
  Nicole Ovadia: If you will, there's probably more infrastructure that needs to happen around that.
• 11:53
  Nicole Ovadia: So I expect the EV launch and takeoff to be a little bit tempered.
• 11:57
  Nicole Ovadia: I also expect auto to back off, with all the political crowd out and those stubbornly high interest rates.
• 12:02
  Nicole Ovadia: So, in terms of automotive spending, the steady as she goes, but I'm not expecting massive growth there.
• 12:09
  Nicole Ovadia: So, overall, we've talked a lot about things at a national level and what I want to say to everybody who's listening to this podcast is that if you want to dive into your specific markets and specific verticals, get insights into your world, we can do that and we would love to help you.
• 12:26
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• 12:29
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• 12:33
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• 12:37
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• 12:44
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• 12:48
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• 12:48
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• 12:51
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• 12:53
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• 12:54
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• 13:04
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• 13:05
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• 13:06
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• 13:10
  Nicole Ovadia: So I want to thank Rick for being here and for adding so much insight and for helping with all the forecast and everything that we do, and I want to thank everybody out there for listening, including my mom.
• 13:22
  Nicole Ovadia: Thank you all, have a great week and I'll see you next time.