Although telecommunications sales shrank by 3.4% in 2020 as consumers, worried about their future, put off buying new mobile phones, and the sharp drop in international travel cut back roaming charges, the industry — including Verizon, AT&T and Comcast as well as Apple, Samsung and Huawei — will bounce back strongly to grow at an average rate of 6.4% over the next three years, according to a new forecast from Zenith Media.
Sales will grow by $52 billion in 2021 to reach $671 billion, more than recovering from the $22 billion drop caused by the pandemic. By 2023, sales will hit $745 billion.
This demand will help fuel healthy growth in telecom advertising over the same time frame, including a 4.7% in 2021, 4.4% in 2022 and 4.3% in 2023. Telecom ad spend globally will rise from $17.8 billion in 2020 to $18.7 billion in 2021, and return to its pre-pandemic level of $19.5 billion in 2022.
Advertisers in the category will spend substantially more on television and radio advertising than the average brand in order to reach mass audiences. In 2020 telecom brands spent 42% of their budgets on television and radio, 42% more than the average for those channels. Moreover, this high concentration on television and radio means telecom brands spend less on digital media than average, but not by much: 49% of telecom ad spend went to digital channels in 2020, compared to 56% of advertising as a whole.
Still, digital advertising is the only channel in which telecom ad spend is increasing as they are forming partnerships with online video, audio and gaming platforms, where they can promote the benefits of 5G for mobile gamers, reports Zenith.
To that end, telecom brands will increase their digital ad spend at an average rate of 5% a year between 2019 and 2023.
“COVID-19 has demonstrated how dependent we are on good, fast and reliable internet connections. Telecom companies have been the unsung heroes of the pandemic, shifting our lives online and keeping us connected to entertainment, work and commerce,” said Ben Lukawski, Global Chief Strategy Officer, Zenith. “Their challenge is to go from being unsung to being acknowledged and appreciated for their efforts. The spread of 5G and the reality of our new-found virtual lives give telecom brands the opportunity to move into the limelight.”
India will be the fastest-growing market for telecom advertising between 2020 and 2023, with 11% annual growth. Russia is another market with relatively low (57%) but fast-growing smartphone penetration and with ad spend projected to grow 8% a year.
Most of the other global markets are forecast to grow by between 3% and 6% a year to 2023. The exception will be France, not because of any inherent weakness in demand, but unlike those in most markets, French telecom brands actually increased spending in 2020 – by 6% – in response to the extra demand for data.
The 12 markets included in the report are Australia, Canada, China, France, Germany, India, Italy, Russia, Spain, Switzerland, the UK and the US, which between them account for 73% of total global ad spend. Telecom is defined as services and equipment facilitating the transmission of voice calls and data by land lines and mobile networks.