Healthcare ad spend to fall in Australia this year, with global newspaper spend unusually on the rise

Healthcare brands’ ad spend in Australia will fall 0.5% this year to $181.6m, according to Zenith’s healthcare advertising expenditure forecast, followed by limited growth of 0.5% to $182.5m next year.

The report, published in collaboration with sister agency Publicis Health Media, also reveals that healthcare advertising is growing more slowly than advertising more broadly. Global healthcare ad spend is set to grow 3.6% to US$36bn this year, backing up with the same level of growth in 2020.

“As consumers pull back on non-essential spending, we anticipate advertising spend to grow slightly in 2020 and beyond, as advertisers attempt to stay top-of-mind and stimulate spending against a backdrop of lower demand,” said Zenith Australia CEO Nickie Scriven.

“Though the healthcare sector will be less affected than advertiser categories such as automotive or retail, we anticipate the rise of generics to impact branded product sales as consumers look for cost savings. This will likely continue to trouble the industry, leading to increased brand advertising as a key priority to counter the switching behaviour.”

Locally, internet ad spend is predicted to increase by 10.9% to $47.3m this year, and grow at a similar rate over the next two years. In contrast, TV ad spend is forecast to drop by 3.6% to $99.2m in 2019, slowing to a 1.8% decline by 2021.

Zenith’s Scriven

“We expect that healthcare advertisers will move further into digital advertising, mirroring the wider market. Advertisers in this sector tend to be some of the most sophisticated,” Scriven added.

“Healthcare and pharmaceutical professionals are increasingly exploring innovative ways to utilise data and insights to drive strategy and consumer engagement. As such, we anticipate accelerated investment in data and advertising strategies to leverage and enhance owned first-party data.”

US and China dominate ad spend, but India is fastest-growing

US and China overwhelmingly dominate healthcare ad spend, accounting for 86% of 2018’s spend (US$15.9bn in the US and US$14.4bn in China). All other markets accounted for less than US$1bn. This is due to stricter advertising rules in other large markets such as Brazil, France, South Korea and the UK, where there are restrictions around the types of healthcare products and services that can be advertised, the media they’re advertised in, and what those ads can say.

US healthcare ad spent grew an average rate of 6% each year between 2013 and 2018, and is set to repeat that 6% growth in 2019, slowing to 5% in 2020 and 2021.

India is easily the fastest-growing market, set to experience an average growth of 26% each year between 2018 and 2021, driven by rising incomes and increased access to health insurance. Brazil is next in line at 9% each year.

TV still the most important medium, but is set to be overtaken by online

TV accounted for 54.7% of healthcare ad spend last year (compared to its 30.8% share of the overall advertising market). However, it fell 3.1% last year and is predicted to fall 4.6% this year and 5.2% in both 2020 and 2021 (faster than TV decline in the broader ad market, shrinking about 1% each year).

Out of home is becoming an effective TV substitute, but is currently underused by healthcare advertisers, according to Zenith. OOH will account for 4% of ad spend this year, compared to 6.4% for the broader market. However, it grew 11% last year and should grow 15% this year.

Online remains TV’s biggest competitor, growing 16% to reach 34% of healthcare ad spend in 2018. This should be backed up by 16% growth this year, and overtake TV in 2021 to become healthcare’s biggest medium with 46% of all ad spend.

Newspaper ad spend unusually on the rise

Newspaper ad spend in the healthcare space unusually rose 6% last year, with growth set to increase further in the coming years to peak at 17% in 2021. This is in stark contrast to the 5% decline per year in global newspaper ad spend across the whole market.

Zenith attributes the growth of India as the reason for the spike in newspaper spend, since Indian healthcare advertising has traditionally been concentrated in print and India is one of the few markets in which newspaper circulation, readership and ad spend are on the rise.


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