Global advertising expenditure by healthcare brands will grow 3.6% this year to reach $36 billion, according to Zenith’s newly issued Healthcare Advertising Expenditure Forecasts.
The Publicis Groupe-owned media agency is forecasting similar growth in the sector in 2020.
By country, the leaders in healthcare advertising expenditure are the U.S. and China, which together accounted for 86% of spend in 2018. India is the fastest-growing market, growing at an average of 26% a year between 2018 and 2021. Brazil ranks second at 9% a year.
While U.S. ad spend grew at an average annual rate of 6% between 2013 and 2018, partly driven by strong growth in television advertising of prescription medicines, pharmaceutical companies are facing particularly intense scrutiny of their prescription prices.
Zenith reports it is likely that new regulations will be imposed on TV drug ads requiring price disclosures, effectively driving greater competition in the sector.
Television is the most important medium for healthcare advertising, accounting for 54.7% of spend in 2018, far higher than television’s 30.8% share of the advertising market as a whole.
Television’s main competition — internet advertising — accounted for 34% of healthcare ad spend in 2018, thanks to its ability to allow healthcare brands to reach potential customers with discretion, often when they are actively searching for information about their health problems.
“The rapid expansion of ecommerce in the OTC space will continue to shift spending into direct selling channels — search, social and display — as traditional distribution models are further disrupted by Amazon and other retailers,” says Andrea Palmer, President, Publicis Health Media.
Healthcare brands are also exploring other media channels as a result of continued media inflation and declining ratings in key markets. "Whether it’s disease awareness, category awareness, or another type of educational content, brands are diversifying more of their investment into the total care journey," says Palmer.
Out-of-home (OOH) is underused by healthcare advertisers, accounting for 4% of healthcare ad spend this year, compared to 6.4% across the whole market. But that’s changing rapidly as OOH healthcare ad spend grew 11% in 2018 and is forecast to jump 15% in 2019. That's bolstered by the spread of digital display, making this channel a more effective substitute for television in awareness campaigns.
Healthcare advertising is expanding quickly in newspapers, increasing 6% in 2018. Growth is forecast to strengthen over the next few years, reaching 17% in 2021.
Looking forward, Zenith predicts targeting and personalization of creative at scale will invite a broader array of brands to enter this space. "The successful healthcare companies of the future will be the ones that eventually become viewed as lifestyle brands," says Matt James, Global Brand President, Zenith. "The future of healthcare services lies in data and bleeding-edge technology, and the same is true for healthcare marketing communication."
This is the agency’s inaugural healthcare ad expenditure report. It compiles spending data from 13 markets and was published in collaboration with Zenith’s sister agency Publicis Health Media.