In its newly released 2023 U.S. Local Advertising Forecast, BIA Advisory Services estimates revenues across all media in the U.S. will reach $165.7 billion in 2023, a decline of 0.5 percent from the firm’s final estimate of $166.5 billion for 2022. Removing political advertising revenues from the estimate, BIA projects $165.2 billion in total local advertising next year, a 4.8 percent increase year-over-year.

BIA notes that “the almost flat revenue projections for the year indicate continued economic and supply chain concerns, yet the forecast is more bullish starting mid-2023.”

BIA’s local radio (radio OTA+ radio digital) with political ad dollars hit $13.4 billion in 2021 and $14 billion this year, with a projection of $13.5 billion in 2023. Sans political advertising, local radio ad spending was $13.3 billion in 2021 and $13.5 billion this year. BIA expects $13.5 billion in 2023, with or without political ads.

“This year has been filled with contrasting economic indicators creating several challenges for the local advertising marketplace,” said Nicole Ovadia, VP Forecasting & Analysis, BIA Advisory Services. “Supply chain issues continued to plague the first couple of quarters of 2022 making it difficult for local media sellers. In the summer, we had higher hopes for the remainder of the year; however, inflation issues and recession fears started to set in and that stalled anticipated rebounds in key verticals such as automotive.”

“For our 2023 forecast we lowered near-term expectations to reflect the current economic climate that we anticipate will stay with us into next year.”

The 2023 forecast shows digital continues to gain on traditional media, growing its share to 49 percent of the overall advertising spend at $81 billion. Traditional media ad revenue is 51 percent of the ad spend at $84 billion. BIA has been slightly decreasing its digital estimates over the last couple of forecasting rounds because of opt-in privacy measures on Apple and Android devices that have slightly impacted mobile advertising growth.

The business verticals that are expected to grow are education (9.7 percent), retail (8.7 percent) and, restaurants (7.5 percent). Notable declining verticals include political (-78 percent), leisure and recreation (-4.9 percent) and real estate (-1.0 percent). The automotive vertical is projected to grow 4.9 percent, but not until the latter part of 2023.

“When it comes to advertising in the business vertical market, education offers a tremendous opportunity for local media in 2023, with companies offering opportunities for employees to improve their training and with people who are experiencing a job transition often enrolling in classes to advance their education,” said Ovadia. “For other verticals, too, I believe they will pop potentially faster if we see the Fed slow or stop raising interest rates, inflation tamed and a smaller than anticipated recession. Even with the economy in flux, the continuing strength of the labor market and corporate profits makes me feel confident that key verticals will show growth in the year ahead.”