BIA Advisory Services Vice President of Forecasting & Analysis Nicole Ovadia is giving the latest outlook on the macroeconomic influences shaping local advertising spending in Q2 2024 and for the rest of the year – including an updated outlook on political revenue.
With inflation being been a central theme over the past year, consumer spending patterns appear to finally be stabilizing despite initial concerns, as indicated by increased wages and greater credit usage. Changes began to emerge by late 2023, with noticeable shifts such as brand switching within the Quick Service Restaurant sector and other price-sensitive industries.
Currently, the focus in marketing has shifted towards “Deals and Savings.” QSRs are fiercely competing on price points and value meals, while large box stores are slashing prices to stay competitive and attract new customers. These changes are not just reshaping consumer behavior but are also significantly impacting the US economy, with rising consumer debt, particularly among households with lower incomes.
For local advertisers, Ovadia says these shifts present both challenges and opportunities. Businesses are encouraged to adopt a dual strategy in their advertising efforts. The first strategy should aim to retain existing customers through loyalty-driven initiatives, such as discounts for app usage or subscriptions. The second strategy should aim to attract new customers by emphasizing competitive pricing and value, essential in today’s economically sensitive environment.
Looking ahead, Ovadia notes that while earlier predictions for 2024 anticipated a possible decrease in inflation and consumer spending that could lead to lower interest rates, recent signals from the Federal Reserve suggest that high interest rates might persist through the end of the year. This adjustment means that the growth previously expected in late 2024 might now be postponed until 2025.
Despite a cautious outlook on some fronts, the political advertising sector remains robust, with expectations for substantial spending in 2024. Local political advertising is predicted to reach $11.1 billion, driven by intense campaigning in battleground states and historic spending in Senate races, such as those in Montana.
This area of advertising could potentially exceed expectations if political fundraising continues at its current pace, which has been remarkably strong among both major political parties as Presidential ad spend wanes lower than anticipated.
BIA previously revised its US Local Advertising Forecast in March, indicating less optimistic projections for radio. Initially expecting a surge in ad spending driven by political campaigns, the latest update now anticipates a 9.3% increase in overall media revenue to $172 billion, down 2% from earlier predictions.
This adjustment is due to mixed economic signals and decelerating consumer spending. Additionally, local political ad spending is expected to reach $11.1 billion, up 15.5% from 2020, showing a recalibration in spending forecasts.
