The economy impacts every type of business spending. Different factors affect how a company will use its advertising budget. As things get clearer for 2022, what economic factors will influence TV ad spend?

Let’s look at the data and trends to answer the question.

Projections for Local TV Ad Spend and Drivers

As discussed in our TV trends webinar, local TV OTA (over the air) will significantly boost in 2022. BIA projected that local TV ad revenue would reach $21 billion this year. That number included traditional and digital, with the former being the largest contributor at $19.3 billion.


Political Spending

What’s fueling this increase? The main driver is the midterm election cycle. Because these are local and state campaigns, local TV stations will reap the revenue. Economics don’t factor into political advertising. Regardless of what volatility there is in the market, those are funds you can count on.

Online Sports Betting

Another significant contributor to TV ad spending is online sports betting. This somewhat new ad category was a highlight in BIA’s report. Data already confirms this impact on local TV ad sales. Nielsen reported that $154 million entered the market in Q1 2021, and BIA predicts it will contribute over $587 million to spot TV by 2025.

This segment is somewhat connected to economic prosperity. Online betting requires wagers from consumers, and this disposal income wouldn’t be available to some if downturns occur.

TV Ad Spend and the Economic Factors Ahead

While we don’t have a crystal ball to determine what will happen this year, we have some hypotheses. It’s difficult to make many concrete revelations, considering the complexity of economics and the mounting unknowns about the pandemic, inflation, labor challenges and international instability.

Advertisers Have Gotten Better at Managing Risks

At the beginning of the pandemic, there was no playbook for businesses. Many pivoted with great returns like restaurants focused on drive-thru, curbside pickup and delivery. Retailers also had to make their supply chains more resilient by diversifying sourcing.

Because the circumstances forced them to be flexible and innovative, many companies feel more confident in 2022. That confidence will show in how they ramp up advertising to acquire and retain customers.

Labor Market May Change the Focus of Ad Dollars

Retail, hospitality, restaurants, trades and many other sectors face labor challenges. The pandemic proved to be a catalyst for many leaving these fields and starting new careers. The Great Resignation also impacts employers, as individuals seek to live and work on their own terms and escape burnout. Since the spring of 2021, around 33 million Americans have quit their jobs.

As of January 2022, the national unemployment rate is only 4%, and the U.S. economy added 467,000 new jobs. Job openings were at record-breaking numbers at the end of 2021, as many candidates can now pick from multiple offers. Many are also demanding higher wages and benefits.

Companies may use more ad dollars toward recruitment ads. Local TV could be an excellent channel to use because of its reach and ability to tell a story. An integrated campaign would also include targeted digital ads.

This is an opportunity for broadcast sales professionals to check in with customers about their needs. They may hold off on promotional ads because they need the staff first to deliver. You can help them do this.

Consumer Spending Still Strong, but Inflation Could Curtail

If you want to check the economy’s pulse, you start with consumer spending. Some recent numbers give reason for optimism. The NRF (National Retail Federation) reported that 2021 holiday shopping hit $886.7 billion, up 14.1% from 2020. As of the end of January 2022, consumer spending was up 0.8% from December 2021.

Some experts, publications and other stakeholders believe consumer spending may decline as consumers worry about inflation. However, Bank of America CEO Brian Moynihan recently stated that consumer spending was “very strong” in February.

The ability for consumers to spend, of course, depends on employment and wage increases.

COVID-19 Becomes Endemic?

Of course, the primary wild card for any economy is the pandemic. Currently, most states repealed or relaxed mandates around COVID-19. Many leading scientific experts have acknowledged that the virus could become endemic. There is always the chance a new variant could wreak havoc, so this is still a wait-and-see situation.

If it impacts TV ad spend, it will likely have to be dire to disrupt the recovery most industries and regions have made.

TV Ad Spend and the Economy Are Certainly Connected

The economy has always influenced ad spending. However, companies don’t only spend when things are prosperous. Other advertisers thrive during different economic events or adapt to keep generating revenue. Each of your customers is unique in how the economy may impact their TV ad spend. By understanding those possible effects and their goals, you can provide the ad products they need, no matter the external forces.

If you want to learn more about maximizing revenue for local TV ads in a data-centric way, read our article on dynamic pricing for TV advertising.

Dynamic pricing for TV advertising
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