Unlock the secrets of what’s driving local advertising in 2024 as BIA's Nicole Ovadia and Rick Ducey discuss the firm’s March update to the 2024 U.S. Local Ad Forecast. They explain the backdrop behind the adjusted estimate of $172 billion, which is buoyed by political advertising, now pegged at $11.1 billion. Plus, hear how Connected TV (CTV)/Over-The-Top (OTT) platforms are impacting the campaign trail, offering data-driven, high-quality avenues for even the smallest players to get their message across.
Unlock the secrets of what’s driving local advertising in 2024 as BIA's Nicole Ovadia and Rick Ducey discuss the firm’s March update to the 2024 U.S. Local Ad Forecast. They explain the backdrop behind the adjusted estimate of $172 billion, which is buoyed by political advertising, now pegged at $11.1 billion. Plus, hear how Connected TV (CTV)/Over-The-Top (OTT) platforms are impacting the campaign trail, offering data-driven, high-quality avenues for even the smallest players to get their message across.
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. 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. Say hi to all your fans out there, rick.
Rick Ducey:Nicole, it's good to be with you. Hello everybody, Looking forward to our discussion today.
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. 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. So our new expectations for 2024 local advertising spend will be $172 billion. This includes political spending, and it's about 2 percent lower than we were expecting back in our November forecast. 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. Some of the holiday spending wasn't quite as high as we were expecting in 2023. So that's led to muted expectations into 2024. Consumer spending has slowed down a little bit as well, so again, that's muting some of our expectations for 2024. 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.
Nicole Ovadia:First and foremost, we cannot talk about 2024 without talking about political. 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. So our current local political 2024 forecast is $11.1 billion. Two major reasons why I wound up taking it up even high. 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. But there are two reasons One, down ballot races and two, CTV/OTT. Actually, I'm going to take those in reverse. And, Rick, why don't I toss it over to you? 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.
Rick Ducey:I mean we're taking that up in your estimation process, which makes sense. 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. So for audience segmentation, targeting, activation, all easier, more powerful to do now than it has been in recent years. That's all good for the marketplace. 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. So that will be an infusion of a lot of high quality content, high quality inventory. There are a lot of ways to spend money in CTV with all of fast, free ad supported TV services. 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. So so that's all good.
Rick Ducey:There's a lot of inventory Generally speaking. So if you want to come into CTV you can enter different price points. 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. 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. So that opens up a new demands bigot that I think will drive forward the revenue growth that you're putting into your forecast. 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. There's more behind that, but those are some of the big ones. 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.
Nicole Ovadia:Yeah, and even as you're talking, I mean just making CTV and OTT more accessible and more approachable. So I mean those smaller quote, you know races and people like can. 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. 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. So I do want to talk about some other political spending that I'm expecting. First of all, the down ballot races. So we've been talking about this for at least the last two years and the last four years. But the state Supreme Court races and some of the gubernatorial races. 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. So, whereas we used to only mainly talk about the money being spent in presidential elections. 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. They are a major driver for the reason why my political estimate went up.
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. That means that more dollars are being spent by political candidates and by issue money, which means they need to raise more money. They're spending more money because they're raising more money. 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. So a significant portion of the money that comes in will be used to bring in even more dollars. So it's an interesting trend to keep an eye on for this political season.
Nicole Ovadia:But even beyond that, I mean, there are other verticals. I know it's hard to think about that, but there are other verticals and other media and other things happening in 2024. 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. So political alone we just talked about how that's growing basically to almost a billion dollars. It was $100 million in 2022, was spent on CTV, ott, political, and now it'll be close to a billion dollars. But even outside of political, ctv and OTT is growing faster than any other media. Rick, you talked about that a little bit in terms of Apple might be coming into the picture and some of the. You know there's more inventory out there, but just because there's more inventory doesn't necessarily lead to more sales. 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?
Rick Ducey:Sure. Well, yeah, increasing supply doesn't necessarily increase demand. However, TV is arguably the strongest form ever to many brands and agencies. 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. So local cable has been an attractive place for video spending for buyers that can't afford more expensive broadcast TV or network TV.
Rick Ducey:So with CTV it's a complicated process to buy. It gets a little bit easier. But going forward the technology has made it less complicated and then these self-serve onboarding platforms for the programmatic make it easier. So if you want to do a CTV buy through an agency, say, the minimum buy is tens of thousands of dollars. That's like, well, that's my annual advertising budget. 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. 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. We've seen that in many other parts of the economy. So that's one growth multiplier.
Nicole Ovadia:Absolutely. 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. And so, speaking of some of these other verticals, one of the verticals I'm really excited about for 2024 is real estate. 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. 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. But what I'm expecting here? I'm pretty keen on them. I think it's going to pick up a lot in the back half of this year.
Nicole Ovadia:Interest rates have remained stubbornly high. We talked about how consumer spending is starting to slow a little bit. Inflation is still high but coming down, and consumer spending has outpaced inflation till now. Things are getting interesting right around now, which is again speaking back to those temperate expectations. 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. We just saw some February numbers that were a little troubling in terms of inflation being strong. So therefore I'm expecting interest rates to come down over the summer into the fall, which should open up real estate significantly. Once that happens, we'll see a ton of advertising.
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. The fact that I'm not discussing automotive or saying much about it, it tells you what I think. So things are pretty muted for 2024. I think that there was a lot of excitement around the electric vehicles and they are taking off. Demand is increasing, but I'm also seeing some hesitation around. 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. If you will, there's probably more infrastructure that needs to happen around that. So I expect the EV launch and takeoff to be a little bit tempered. I also expect auto to back off, with all the political crowd out and those stubbornly high interest rates. So, in terms of automotive spending, the steady as she goes, but I'm not expecting massive growth there.
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. The forecast is live and it is available. So if you are an advantage subscriber, please, please, please, log in right now. Get in there, start looking around, start poking around and ask us questions. If you are not an advantage subscriber, we do have our nationwide forecast.
Nicole Ovadia:We put together a deck so you could always grab that from our shopping cart, which is at www. shop. bia. com. Go ahead and grab that nationwide. It's a great. It's a very comprehensive summary of our forecast and if you're interested in specific markets or a different slice, just shoot us a note at info@ bia. com. We'll be happy to help you. We can talk about any market, any opportunity, anything you'd like to see. 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. Thank you all, have a great week and I'll see you next time.