ITV

Tag: Zenith report

  • Global ad expenditure to grow 8% in 2022: Zenith’s Report

    Global ad expenditure to grow 8% in 2022: Zenith’s Report

    Mumbai: Global advertising expenditure is expected to grow 8 per cent in 2022, according to Zenith’s latest Advertising Expenditure Forecasts report, which was released on Wednesday. This represents a minor downgrade from a little over 9 per cent growth rate provided by Zenith in December 2021. 

    The Winter Olympics, the mid-term US elections, and the soccer World Cup, which will be held for the first time in the most advertising-intensive period of the year, the run-up to Christmas, will all help to boost growth. Faced with this difficult comparison, the growth will slow down to 5.4 per cent in 2023, before the Summer Olympics and US presidential elections help boost it to 7.6 per cent in 2024.

    Zenith’s forecasts for North America, MENA and Western Europe this year are unchanged at 12 per cent, 7 per cent and 6 per cent growth respectively. Latin America was downgraded slightly from 9 per cent to 8 per cent, but the Asia Pacific was upgraded from 6 per cent to 7 per cent, thanks to a very strong performance from India. 

    Severe disruption in Russia and its closest trading partners after the invasion of Ukraine will lead to a 26 per cent decline in ad spend in Central & Eastern Europe, even though most other markets in the region will continue to grow.

    Ad spend has remained on track despite the macroeconomic headwinds that emerged this year. High inflation, concentrated in essentials like heating, petrol, and food, is forcing consumers to reprioritise their spending, particularly the less well-off, and has led to a drop in consumer confidence. 

    But for now, consumer spending continues to grow, as consumers demonstrate their strong appetite for the travel and entertainment experiences that were denied to them over the pandemic. Business confidence is generally high, corporate investment is rising, and there is little evidence of widespread cost-cutting.

    India to lead growth with 21 per cent expansion this year

    Global ad spend is expected to increase by $58 billion in 2022, rising to $781 billion from $723 billion in 2021. Most of the new ad dollars will come from the US, which is forecast to expand by $33 billion in 2022, driven by continued, rapid digital transformation, accounting for 57 per cent of all the money added to the ad market this year. 

    China, Japan, and the UK come next, supplying 9.1 per cent, 6.2 per cent, and 5.8 per cent of new ad dollars, respectively. India is in fifth place, accounting for 4.6 per cent of the growth in ad spend this year, even though it is only the 12th largest ad market. India will be the fastest-growing market in percentage terms, expanding by 20.8 per cent, driven by election advertising and the resumption of festivals that were cancelled at the height of the pandemic.

    Zenith India chief executive officer Jai Lala said, “India continues to have a robust adex growth on the back of digital and TV. Key categories continue to be led by FMCG and the new app-based clients in the area of fintech, edutech, food tech amongst others.”

    Higher prices in traditional channels accelerate shift to digital alternatives

    The sustained growth in demand from advertisers is pushing up media inflation, particularly in television, where the supply of audiences is falling steadily as viewers switch to alternatives. Price rises vary widely for different audiences in different countries, but the global average cost of television advertising across all audiences is expected to rise by 11 per cent-13 per cent this year. 

    Online video prices are expected to increase by about 7 per cent, although in this case the supply of audiences is rising. Other digital channels where supply is climbing and volumes are flexible are inflating only modestly, with three per cent average price rises forecast for social media and other digital displays. 

    Out-of-home and radio prices will go up about four per cent this year, while print prices will remain stable, because demand for advertising in printed publications is falling as rapidly as readership.

    Brands that simply buy broad audiences to reach targets will not be able to avoid having to spend more to reach the same audiences. But brands that use first-party data to identify their most profitable customers, and combine it with third-party data to target their best prospects in the most efficient channels, will be able to mitigate much of the effect of media inflation. 

    The huge and growing volume of digital content consumption is making it more effective for brands to scale by aggregating digital audiences. Zenith predicts 62 per cent of ad budgets will be spent on digital media in 2022, up from 59 per cent in 2021, and that this proportion will reach 65 per cent in 2024. 

    Zenith Global Chief Strategy Officer Ben Lukawski said, “In a world where trading is becoming dominated by auctions, competitive advantage is achieved not by scale, but by data.”

    “Inflation will hit cheap reach buyers hard, but brands that make smart use of their data will manage costs and grow their business at the same time,” he added.

    Online video overtakes social media as the fastest-growing channel 

    Online video is now predicted to be the fastest-growing channel over the next three years: Zenith forecasts it will grow 15.4 per cent a year on average between 2021 and 2024, driven by the rapid development of connected TV, ad-funded video-on-demand, streaming and other video formats. 

    Connected TV is now a mainstream video platform in the US, with a higher penetration than cable TV, and is becoming established in other markets, especially in Western Europe and Asia Pacific. The introduction of cheaper ad-funded tiers by SVOD services like Netflix and Disney+ will boost growth further by providing new high-quality environments for brand communication. 

    Mixed video-on-demand models that combine subscriptions with advertising will also help online video audiences continue to grow across the world by recruiting consumers unwilling or unable to afford the growing roster of subscription-only services. Zenith expects online video ad spend to rise from $62 billion in 2021 to $95 billion in 2024.

    Online video will overtake social media, the fastest-growing channel for the previous nine years. Social media ad spend (which includes video ads in social media feeds) is still forecast to grow at an average rate of 15.1 per cent a year between 2021 and 2024, propelled by rising competition among platforms that is driving continued innovation on formats and closer integration with commerce. 

    Meta’s share of social media ad spend outside China has been falling steadily since it peaked at 89 per cent in 2019, reaching 85 per cent in 2021 as TikTok, Snapchat, LinkedIn and Pinterest gained market share. Zenith forecasts social media ad spend will rise from $153 billion in 2021 to $187 billion in 2022, when it will account for 25 per cent of expenditure on advertising across all media.

    Cinema and out-of-home will take third and fourth place among the fastest-growing media, averaging 11.9 per cent and 8 per cent annual growth between 2021 and 2024, respectively. 

    These are still recovering from the deep losses they suffered in 2020 and 2021 when cinemas were closed, and consumers were confined indoors. Cinema and out-of-home have a lot of ground to make up, however, and are taking their time to do so. Many brands that were forced to find alternatives, often digital, have found them effective, and see little need to shift their budgets back again. 

    Zenith expects cinema ad spend to reach $3.9 billion in 2024, well below its pre-pandemic level of $4.8 billion in 2019, while out-of-home will reach $45.0 billion in 2024, exceeding the $42.3 billion it achieved in 2019 for the first time.

    Linear television advertising will grow by 1.1 per cent a year on average between 2021 and 2024, from $173.6 billion to $179.2 billion, as price rises continue to compensate for loss of audiences. This ongoing decline in reach and efficiency will drive brands to digital channels, however, including online video. Television’s share of total ad spend is forecast to fall from 24.6 per cent in 2021 to 20.8 per cent in 2024, while online video’s share increases from 8.8 per cent to 11.1 per cent.

    “Online video is growing by creating new opportunities for building brand awareness, complemented by social media’s capacity for cost-effective targeting with low barriers to entry,” said Zenith Head of Forecasting Jonathan Barnard. “Online video is steadily narrowing the spending gap with television, and will be half as large as television by 2024.”

  • Digital will account for 49% of OTC advertising in 2023: Zenith report

    Digital will account for 49% of OTC advertising in 2023: Zenith report

    Mumbai: Advertising expenditure by over-the-counter (OTC) healthcare brands in 13 key markets, including India, will expand by 7.6 per cent in 2022 and five per cent in 2023, according to Zenith’s new Business Intelligence – OTC Healthcare report published on Monday. Digital will account for 49 per cent of OTC advertising in 2023, up from 46 per cent in 2021, said the report.

    By 2023, OTC adspend is expected to be 36 per cent higher than it was in pre-pandemic 2019. This growth will be driven by tailored digital brand advertising, as well as performance advertising driving traffic to OTC e-commerce platforms. The report forecasts that OTC healthcare adspend will grow from $20.1 billion in 2021 to $22.7 billion in 2023, exceeding by far the spending level of $16.7 billion in 2019. 

    OTC brands are expected to increase their digital adspend at an average rate of 11 per cent a year between 2021 and 2023, while radio grows by five per cent, television by three per cent, and magazines shrink by three per cent, as per the Zenith forecast. The 13 markets included in the report, apart from India, are Australia, Canada, China, France, Germany, Italy, Poland, Russia, Spain, Switzerland, UK and USA, which between them account for 74 per cent of total global adspend. The report covers medicines and remedies sold over the counter, including cold and allergy remedies, contraception, digestion care, eye care, oral care, pain relief, skin care, sleep aids, stop-smoking aids and wound care.

    “The pandemic has focused consumers’ attention on their health and disrupted their reliance on traditional OTC distribution channels,” said Zenith head of forecasting Jonathan Barnard. “Brands will continue to step up their investment in digital advertising as the rise of ecommerce gives it a greater role in driving OTC sales and brand growth.”

    OTC advertising grew throughout the pandemic. OTC adspend expanded by 6.8 per cent in 2020 while the market as a whole shrank by 3.5 per cent, as healthcare messages soared in relevance for consumers. Demand for cold and flu remedies sank sharply as social distancing cut their transmission, but most other sub-categories continued to grow, and sales of sleep aids spiked. When the pandemic hit, brands in many categories cut back or even ceased their communications, concerned that their messaging was no longer appropriate, or in some cases counterproductive in the new context. This gave OTC brands the opportunity to use plentiful cheap media to reinforce their contribution to consumers’ health and wellbeing.

    OTC advertising then rose a very healthy 12.8 per cent in 2021, though in this case its growth was slightly behind the overall market, which had lost ground to make up. Zenith forecasts growth in OTC advertising to remain healthy over the next two years, as brands defend their price premiums and ecommerce platforms compete to establish dominance.

    OTC has lagged some way behind the market as a whole in embracing ecommerce, but the lockdowns and other restrictions led to a leap in OTC e-commerce in 2020. Now that more consumers are aware of and comfortable with the option of shopping for OTC products online, it will become an ever more important sales channel over the next few years. This means traditional distributors such as pharmacies and supermarkets are facing new competition from digital ecommerce platforms, and brands have new opportunities to launch new partnerships or even direct-to-consumer ventures. The increased competition for traffic and sales will fuel continued growth in brand and performance advertising.

    Shift to digital helps brands tailor messaging to consumers’ specific needs

    When consumers first buy an OTC product, they often spend time researching the purchase and discussing it with family, friends and trusted advisors like pharmacists. However, after the first purchase, buying OTC products quickly becomes routine, part of the regular shop. The fundamental role of OTC advertising is therefore to maintain brand awareness at the point of purchase, much like FMCG advertising. Similarly, OTC healthcare makes heavy use of television for its high-impact mass reach. OTC advertisers spent 38 per cent of their budgets on television advertising in 2021, compared to 21 per cent for the average advertiser across all categories. OTC brands also spend more on radio and magazines – radio for its mass reach and magazines for their high impact.

    Until recently, it was difficult to use digital advertising to create emotional connections and lasting brand awareness. The rise of high-quality advertising environments, online video and retailer media – ads that appear on retail websites and e-commerce platforms – means brands can use digital to convey brand values effectively right through to the sale. Brands are also spending more on performance advertising as OTC ecommerce scales up.

    “The continued shift to digital allows OTC brands to use smart segmentation and dynamic creative to market the same products to different people with different needs, within the framework of regulations for digital advertising in this category,” said Zenith global chief digital officer Benoit Cacheux. “The gym-goer with muscle ache, the office worker with a headache and the parent whose child has growing pains all need pain relief, but brands need to talk to them in different ways to persuade them most effectively. This ability to tailor the creative to the needs of the audience gives digital advertising an advantage that traditional media never had.”