Home » Zenith Report: OTC Healthcare Brands Ad Spend To Significantly Increase Over Coming Years

7 March, 2022

Zenith Report: OTC Healthcare Brands Ad Spend To Significantly Increase Over Coming Years

Adspend by over-the-counter (OTC) healthcare brands in Australia in 2023 will be 64 per cent above pre-pandemic levels, according to a new report released today by Zenith.

Zenith’s new Business Intelligence – OTC Healthcare report studied OTC healthcare brand adspend across 13 key markets, including Australia, China, UK, and USA, and found adspend will expand by 7.6 per cent this year, and five per cent next year.

According to the report, such growth will be driven by tailored digital brand advertising, as well as performance advertising driving traffic to OTC ecommerce platforms.

The report also found OTC advertising grew during the pandemic, expanding 6.8 per cent in 2020, against the overall market which shrank by 3.5 per cent, owing to increased healthcare messages for consumers during the global pandemic.

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.

The report found OTC adspend subsequently rose 12.8 per cent in 2021, though in this case its growth was slightly behind the overall market, which had its lost ground to make up.

The new report said growth in OTC advertising will remain healthy over the next two years, as brands defend their price premiums and ecommerce platforms compete to establish dominance.

“Over the last two years, double-digit growth of digital adspend in Australia closely correlated with fluctuating COVID restrictions, stockpiling shopping behaviour and lagging vaccination penetration,” said Zenith Australia’s national head of digital and data, Joshua Lee (featured image).

“A recent example can be demonstrated by the emergence of the Omicron variant and delay between booster shots, where the category in January experienced a steep 50 per cent month-on-month increase in online retail and direct-to-consumer traffic.

“Since 2020, 60 per cent of total ad spend is now digital and becoming increasingly video, mobile, and programmatic to drive brand awareness, reach and performance efficiency.

“Although digital ad spending is expected to slow to five per cent over the next two years (as COVID herd immunity increases), we foresee these trends in digital and e-commerce to continue,” Lee added.

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 ecommerce in 2020.

According to Zenith, given consumers are more 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.

Zenith also forecasted OTC brands will 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.

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OTC Zenith Australia