Archived Webinar

The New Outlook for 2020: Revised Local Ad Forecasts

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Presented by Gordon Borrell, CEO, Jim Brown, president, and Corey Elliott, executive vice president of local market intelligence, Borrell Associates

That was then … Before COVID, Borrell Associates was projecting a modest 1.4% increase in total U.S. local advertising spend to $129.1 billion. Now Borrell expects 2020 to finish down 13.1% to $111.2 billion.

The outlook? Look out! It’d be something of an understatement to say the ad recovery will be sluggish over the next five years. Borrell’s projections: Down 13.1% this  year, down 1.3% in 2021, up 1.5% in ’22, down 0.5% in ’23 and finally down another 1.9% in 2024.

Search for spend. Jim Brown: Expect advertisers to spend initially on “things they think they can control,” such as search and targeted digital. But then they will turn to their trusted media reps, e.g., from newspapers, for help.

How’s it by you? While the entire U.S. is enduring the pandemic, it’s hitting some places harder than others. Some markets are shutting down — think Texas, Florida and Arizona — while others are recovering, such as New York and Massachusetts.

Booze, yup. Cars, not so much. Similarly, some businesses are actually thriving, or at least hanging in there, while others have declined steeply. Among the winners: Liquor stores, grocery stores, home improvement and pharmacies. Among the losers:  Auto dealerships, furniture stores and clothing retailers.

Gathering data. Borrell Associates culls its numbers from three sources: People, media and SMBs. People includes consumers, five years of demographic data, employment data, COVID-19 death rates and state reopening dates. Media information comes from public filings of media companies, surveys of media managers, Borrell data from the Great Recession of 2008, and direct conversations with media leaders. SMB data includes five-plus years of retail sales data, non-retail data from trade associations, a panel of SMB owners and top executives, and an annual survey of SMBs.

Question. Borrell asked the SMB executives if they expect economic conditions to improve or get worse during next six months. In March, 71% said “get worse.” In June, there was more optimism with 37% expecting improvement and 25% say the economy will get worse.

The big question. What do you do with people who don’t want to spend? Borrell has a video for that. Check it out at  https://www.youtube.com/watch?v=-LFBUrCUi_A Spoiler: The bottom line is that those who advertise in bad times get a big leg up on their competition.

How Gordon Borrell put it: “If you go silent right now — you’ll fail.”

Hello-hello-hello … Many companies are jumping on social media for their marketing and that’s a mistake. It’s an echo chamber, reaching consumers they already know about and who know about their business.  

Gordon Borrell also said it: “Most businesses need your help and they’re willing to pay dearly for it.” Help in what? In a word, storytelling with content marketing. Help the clinic get the word out about how great their Lasix surgeons are or help tell the landscaping service’s story.

Boycotting Facebook. It’s not just for the big guys.  Local businesses follow what national advertisers do, and the many national brands pulling out of Facebook is beginning to have a trickle-down effect among local SMBs. The local businesses are beginning to suspect that they are overusing social media, which reaches the same audience over and over. You know, the echo chamber effect.

New again. In short, the idea of gaining new customers is now coming back.

Newspaper budgets catch a virus. Borrell surveyed 278 newspaper managers to ask how they are re-budgeting for the rest of the year. Overall, newspapers had actually projected an increase in advertising revenue, a modest 1% increase. Now, they figure advertising to be down 27% y-o-y.  

How Borrell sees it: It projects newspaper ad revenue to be down 32% from 2019.

But … Jim Brown said it: “There should be a whole lot of optimism among newspaper folks because you are still ahead of these folks who are doing digital,” referring to legacy media broadcast TV and radio.

Why advertisers will turn to newspapers. Never before has there been a need to adjust their advertising message. They are eager to talk to somebody because they are re-thinking their messages. Gordon Borrell: “The credibility you bring is really important. Tie into that sentiment and channel the thinking of advertisers.”

You gotta know the territory. In this pandemic, to repeat, the markets can differ even if they are the same size. Here’s an example: Las Vegas and Kansas City in 2019 each generated about $78 million in local ad revenue in 2019. Through mid-2020, though, revenue in Vegas has plummeted to half that, about $39.9 (projected for the rest of the year) while KC should finish 2020 with about $58 million.

More free and useful information from Borrell. To get a sample of Borrell's market analysis, go to borrellassociates.com/2020forecast.

You asked: What kind of fresh advertising ideas can newspapers offer when they’re told advertisers are just not spending? First thing, realize in this crisis, businesses don’t really know how to budget their advertising. Help them understand they are competing with more businesses than they think. Educate them on who else is spending and where they are spending in your market.

You asked: Where do FSIs, preprint advertising, stand these days, and into the future? Remember when even the big FSI buyers used to refer to them as “crack cocaine for national advertising?” Good times. But Borrell is not totally pessimistic about them, believing they will come back — just probably not to the level newspapers enjoyed before.

You asked: Okay, so what categories are doing fairly well and should be pursued? Here’s who has money to spend: Legal services, medical facilities, doctors, HVAC, real estate agencies and — believe it or not — colleges and universities.  

One more tip: Streaming video is really big. Every advertiser really wants that.

Want to follow up with the Borrell Associates presenters? Email them at  info@borrellassociates.com or call (757) 221-6641.

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