All kinds of ad estimates predict plenty of bounce back -- at least for 2021. But, a usual, there are some eye-raisers here: One of those are local TV stations.
A recent Magna Global forecast says 2019 shows local TV was down 15.6% in ad revenue versus 2018. This year, it is expected to be down 2.4%. And sinking further in 2021, a bigger 14.5% pull back.
Some of this can be explain. 2019 was down double-digit percentages from the year because of unfavorable comparisons to 2018, given the U.S. midterm elections and the Winter Olympics.
This year, local TV stations will take another hit -- but not as bad. While havoc has been incurred due to overall pandemic business advertising disruptions and the postponement of the Summer Tokyo Olympics, record presidential election advertising is expected to keep losses to a minimum. The bottom line: expect a 2.4% hit.
Next year, 2021 will be down again, in part, due to the loss of political advertising. (But it will be helped by the Tokyo Summer Olympics.)
OK, one might say none of this shows structural concerns -- just glaring asterisks from unexpected damage of an historically bad economic marketplace.
But we still need to consider slow-moving attempts to automate the local TV advertising business -- something media agencies have long complained about, which continue to put TV stations at a disadvantage. That said, in 2019, Hudson MX, the local TV automated ad-buying platform, says $5 billion of local TV advertising flowed through its systems -- around 30% of the overall local, linear TV marketplace.
But this is only one piece of the puzzle. Add in lackluster TV stations’ digital media advertising efforts.
By way of comparison, total digital-first media -- which includes Facebook catering to 8 million mostly small- and mid-size businesses -- continues to have big growth. Those businesses' advertising once went to local TV.
This year -- with the backdrop of COVID-19 -- Magna Global projects a 3% rise in total digital media advertising — and 7.3% higher in 2021.
Those single-digit percentage gains are new territory. Last year, there was 17% growth rate for example. This year, digital publishers of all types have seen sizable cost-per-thousand price decrease across the board.
Local TV advertising may look stagnant by comparison. BIA Advisory services estimates local over-the-air TV ad revenue will come in at $17 billion in 2020, while local TV’s digital ad revenue will hit $1.5 billion.
What does this tell you about the future and how TV stations can compete?