Media Buying Briefing: Which media will buyers turn to in a soft local market in 2023?

This Media Buying Briefing covers the latest in agency news and media buying for Digiday+ members and is distributed over email every Monday at 10 a.m. ET. More from the series →

As the entire marketing and media ecosystem braces for a rough 2023 by most definitions, local media — particularly traditional media including broadcast and print — are expected to be hit hard by revenue losses. What will save local from a deeper downward trend next year will be local ad spending on digital, digital out-of-home (OOH) media and connected TV, according to numerous media agency sources as well as Borrell & Associates, a firm that tracks local advertising in the U.S.

Borrell just last week laid out its rationale for 2023 local media expectations in a webinar, predicting local advertising will hit $120.7 billion this year, and barely grow to $121.5 billion in 2023, an anemic 0.6%. Within that, Borrell forecasts that digital forms of ad spend will grow 5.2% next year, while traditional print, broadcast, outdoor and cable are collectively forecast to drop 6.5%.

Borrell’s findings point to the disappearance of thousands of small businesses, and a shift in the type of small businesses that have popped up. (Small businesses are essentially the lifeblood of much of ad-supported local media.) In preparing its forecast, Borrell found the number of U.S. businesses with fewer than 10 employees have nearly doubled, while the number of businesses with 25 or more employees declined since March 2020.

A quick survey of media buyers, planners and strategists at both holding company and independent media agencies largely bears out Borrell’s findings, with some interesting nuances and twists. 

Charlotte Mercer, COO of independent digital agency Media Two Interactive, based in Raleigh, N.C., noted that the shift to smaller small businesses could be an important factor in the continued rise of digital budgets. “My hypothesis would be that smaller small businesses that have popped up and had staying power are potentially of a younger generation than the larger businesses that went out of business during the pandemic,” said Mercer. “And those decision makers at the small businesses would be more comfortable with leaning into digital ad options, versus a more traditional mindset.”

“It’s potentially a twofold blow on local broadcast and print as new SMBs are more digitally savvy than previous [ones], and media consumption habits are shifting to streaming and digital, away from local broadcast and print,” added Eric Perko, founder/CEO of independent Apollo Partners. 

It’s becoming easier for local businesses to buy digital ads beyond search, which has been a mainstay for local advertisers for more than a decade — including in connected TV, said Talia Arnold, head of strategy and planning at fellow independent Exverus Media. Just as smaller advertisers could buy Google search or Facebook ads, now NBCU’s Peacock and Hulu offer ad platforms that make it easy for local advertisers to buy their inventory, she said.

Businesses that cater to an aging demographic, such as health or elderly care facilities, are also shifting away from traditional channels to digital, Arnold said, as their audiences are increasingly cord-cutters.

Although it comes as a surprise to no one that digital continues to wrest more local dollars away from traditional media, there’s a similar shift in local media dollars heading to OOH, which has worked hard to transform much of its industry from static billboards to digitally alterable ones, and continues to roll out video networks in locations such as stores, gas stations and health clubs. “We do think that the tangible and physical nature of outdoor will continue to drive a resurgence of the medium in markets of all sizes,” Apollo Partners’ Perko said.

Paul DeJarnatt, vp and head of digital at independent Novus Media, agreed. “It’s an effective and efficient way to get in front of people, especially in a localized setting,” said DeJarnatt. “You can have a lot more fun with the creative — it’s not just about targeting. When you mesh targeting, digital delivery, digital analytics, and creative nuance together, you start to create something that’s really fun and effective. That’s something that out-of-home has really done a good job evolving into.”

One factor affecting 2023 local budget is the fact that some clients still haven’t committed to spend yet, given the murkiness of economic conditions, continued supply-chain issues for some categories, and hiring challenges. “Our planning for [local spending] for 2023 hasn’t started yet,” said Taji Zaminasli, co-founder and managing director, Media Matters Worldwide, who’s also seeing a general trend toward digital. “We are seeing overall marketing budgets being squeezed as we head into an economic downturn/recession/etc. What local TV markets could be feeling is a result of budget consolidation to the more efficient, measurable, and optimizable digital channels.”

But hesitation from one category can lead to opportunity for another. Tracy Chavez, evp of local investment for Publicis Media, said softness by any major ad category would most likely get filled quickly.  “I think other categories are seeing that if auto was down, oh then inventory is available,” she said. “They’re exploring those opportunities and then taking advantage on when it makes sense.”

Color by numbers

Dentsu’s attention economy team released a new study assessing Snap augmented reality this month. The goal was trying to measure attention by using Snap’s AR lenses and testing whether immersive ads did better than regular commercials. Overall, the team concluded through an eye-tracking study that the AR content garnered four times more attention than Dentsu’s benchmark. More results:

  • Snap’s vertical videos saw five times more attention compared to normal social videos and higher viewability rates:
  • The depth of engagement on AR lenses was comparable to television, one of the main formats for driving attention;
  • On average, less than 10% of people engaged with social media formats for more than 2 seconds, but more than 80% engaged with the Snap glasses for at least 2 seconds.
  • The attention through lenses translated to 1.3 times more brand recall compared to Dentsu’s benchmark. –Antoinette Siu

Takeoff & landing

  • Havas Media Group claims it is the first holding company to add attention-related data on a global scale to its planning tools. Attention data from Lumen Research is being incorporated into its global planning platform Converged.
  • Horizon Media relaunched its Scout sports & entertainment unit as Horizon Sports & Entertainment, and hired ex-Turner Broadcasting president David Levy and ex-Momentum CEO Chris Weil as co-CEOs and equity partners in it. 
  • Netflix continues to beef up its ad sales team, the latest hire being Adam Gerber who most recently was executive director of U.S. investment strategy at GroupM. No word yet on Gerber’s replacement.

Direct quote

“If you think about what’s happening now, whoever owns the viewer, or whoever can get to the viewer efficiently — if you own the glass, then guess what? That’s your viewer — you control what happens when the TV comes on, and when you press the Home button. And so you’ve now got these consumer electronics giants who never made another dollar ever once you walked out of Best Buy with a TV set. Now they’ve got a revenue stream.”

— Blair Harrison, founder and CEO of Frequency, a provider of ad-supported content packaging and distribution for CTV and FAST services, on the growing clout of TV set manufacturers.

Speed reading

  • I wrote about change in the data-driven linear TV measurement space, as a new company datafuelX looks to fill a gap left by Xandr’s shuttering of its Clypd service — while also trying to improve on it. 
  • Digiday’s media agency reporter Antoinette Siu covered the expansion of influencer agency Goat in the U.S. with a high-level hire and a guarantee of reach that other agencies haven’t yet committed to. 
  • Siu also wrote about which social trends will be hottest in 2023, courtesy of research from Talkwalker and Khoros. Hint: think decentralization and predictive analytics.

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