Zenith Report: Healthcare Brands Adspend Held Back By Rising Costs & Pressure On Prices
Global advertising expenditure by healthcare brands will grow 3.6 per cent this year to reach US$36 billionn, according to Zenith’s Healthcare Advertising Expenditure Forecasts, published today.
Zenith forecasts another year of 3.6 per cent growth in 2020.
This first exclusive survey of healthcare advertising in 13 key markets across the world builds on Zenith’s authoritative Advertising Expenditure Forecasts, and is published in collaboration with Zenith’s sister agency Publicis Health Media.
Healthcare advertising is growing at a slower rate than advertising as a whole, which is expected to grow by 4.8 per cent in 2019 and 4.3 per cent in 2020 across the same 13 markets.
High research costs and persistent downward pressure on prices are hindering the prescription medicine business and restraining advertising spend by the big healthcare companies.
However, this will begin to change as the ageing global population creates a higher demand for healthcare, combined with new Fildena and services that will expand the supply, enabled by new technologies like personal data tracking, telemedicine, and AI.
In Australia, advertising expenditure by healthcare brands is expected to see a slight 0.5 per cent fall this year to AU$181.6m.
This will be followed by limited growth of 0.5 per cent to AU$182.5m in 2020.
Zenith Australia CEO, Nickie Scriven, said with the country recently entering a ‘pro-rata’ recession and with consumer confidence at its lowest level in years, many businesses will find 2019 a difficult year.
He commented: “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.
“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.”
The US and China dominate healthcare spending, but India is the fastest growing
The overwhelming leaders in healthcare advertising expenditure are the US and China, which together accounted for 86 per cent of spend in 2018, or US$15.9bn and US$14.4bn respectively.
All other markets accounted for less than US$1bn.
In other large advertising markets, the types of healthcare products and services that can be advertised are more restricted, as are the media in which they can appear and what they can say.
None allows direct-to-consumer advertising of prescription medicines, as does the US.
The level of healthcare spending is therefore much lower than might be expected given the size of overall adspend in markets like Brazil, France, Germany, South Korea, and the UK.
US healthcare adspend grew at an average rate of six per cent a year between 2013 and 2018, partly driven by strong growth in television advertising of prescription medicines.
However, US pharmaceutical companies are facing particularly intense scrutiny of their prescription prices.
There has been consolidation among intermediaries such as managed care organisations and pharmacy benefit managers, which has been taking a tougher stance in price negotiations.
The government has also been trying to force companies to include prices in their television ads for prescription medicines.
While a recent attempt has been successfully challenged in court, it’s clear that the government intends to use television advertising as a tool to create more price competition.
For the moment, we forecast only a mild slowdown in US healthcare adspend, with six per cent growth in 2019 followed by five per cent growth in 2020 and 2021, as strong expansion in internet advertising compensates for a slow erosion in television.
India is by far the fastest-growing market, growing at an average of 26 per cent a year between 2018 and 2021.
Rising incomes and increased access to health insurance are making healthcare more accessible and encouraging a more direct-to-consumer marketing of healthcare products and services.
The next fastest-growing is Brazil at nine per cent a year.
Television budgets are shifting to out-of-home and online
Television is the most important medium for healthcare advertising, accounting for 54.7 per cent of spend in 2018, far higher than television’s 30.8 per cent share of the advertising market as a whole.
However, continued media inflation and declining ratings in key markets are pushing healthcare brands to build awareness in other media, notably out-of-home and online.
Healthcare adspend on television fell 3.1 per cent in 2018 and is forecast to decline 4.6 per cent in 2019 and 5.2 per cent in both 2020 and 2021.
This is faster than the decline in television adspend across the market as a whole, which is shrinking at about one per cent a year.
The spread of digital display is making out-of-home a more effective substitute for television in awareness campaigns.
Out-of-home is currently somewhat underused by healthcare advertisers – it will account for four per cent of healthcare adspend this year, compared to 6.4 per cent for adspend across the whole market.
But that’s changing rapidly: out-of-home healthcare adspend grew 11 per cent in 2018, and is forecast to grow 15 per cent in 2019.
Television’s main competition is internet advertising, which accounted for 34 per cent of healthcare adspend in 2018.
Internet advertising allows healthcare brands to reach potential customers with discretion, often when they are actively searching for information about their health problems and are therefore receptive to the solutions on offer.
As healthcare adspend moves into more targeted and personalised social and digital channels, this will reduce exposure to consumer who are not potential customers and improve efficiency, pulling further spending from television – especially if US legislation successfully requires broadcast ads to carry pricing information.
Healthcare internet adspend grew 16 per cent in 2018, and Zenith forecasts another year of 16 per cent growth in 2019.
In 2021, the internet will overtake television to become the biggest medium for healthcare advertising, attracting 46 per cent of all healthcare adspend.
In Australia, internet adspend is forecast to grow by 10.9 per cent to AU$47.3m in 2019, and continue to grow at a similar rate over the next two years. Television adspend on the other hand is forecast to fall by 3.6% to AU$99.2m this year, though the decline is expected to slow to 1.8% by 2021.
Scriven said: “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.
“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”
Unusually, healthcare advertising is expanding quickly in newspapers.
It rose six per cent in 2018, and growth is forecast to strengthen over the next few years, reaching 17 per cent in 2021.
This stands in stark contrast to the five per cent annual decline in global newspaper adspend across the market as a whole.
The reason for this disparity is the rapid rise of India.
Indian healthcare advertising has traditionally been concentrated in print, which accounts for over three quarters of healthcare adspend.
And India is one of the few markets in which newspaper circulation, readership and adspend are all on the rise.
Excluding India, the share of healthcare advertising taken by newspapers is actually expected to drop from 2.1 per cent in 2018 to just 1.6 per cent in 2021.
The key trends shaping healthcare marketing
It is difficult and expensive to bring new prescription medicines to market as the investment needed to develop, test and gain approval suffers from diminishing returns.
Manufacturers are under increasing political pressure from governments and the public to reduce prices.
Healthcare companies that think of themselves primarily as manufacturers and suppliers of drugs will face low growth and falling returns on investment, but brands that extend into over-the-counter medicines and wider healthcare services will have more promising routes to expansion.
Zenith’s global brand president, Matt James said: “The future of healthcare services lies in data and bleeding-edge technology, and the same is true for healthcare marketing communication.
“The increased prevalence of wearable devices that can monitor vital signs not only empowers people to have a greater understanding of their health and activity but also captures data that can be used to create personalised treatment plans.
“The successful healthcare companies of the future will be the ones that eventually become viewed as lifestyle brands.”
Digital technology is transforming the business models of the healthcare operators and opening up new possibilities.
Telemedicine, for example, allows consumers to be diagnosed and treated at a distance.
And the combination of personal health datasets and AI-driven diagnosis and treatment promises great improvements in healthcare outcomes.
As in every category, start-ups are challenging established brands by overturning conventional ways of doing business.
Publicis Health Media president, Andrea Palmer said: “The rapid expansion of e-commerce 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.
“The role of unbranded communications is also changing.
“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.”
Consumers are more interested in maintaining and improving their health than ever before.
They are using devices such as smartwatches and home medical equipment to track data about their bodies and activities, building up a more detailed and personal picture of their health than has previously been possible.
James added: “Careful targeting and personalisation of creative at scale will allow healthcare brands to address consumers’ individual needs at the point where they are seeking support.”
Life expectancy is increasing worldwide, and as people age there will be more demand for healthcare services and products in the future.
In addition, rising incomes in many developing markets are giving more people access to better health products and services.
Long-term investment in brand awareness now will pay off later.
In high-growth markets like China, India and Brazil, the adoption of mobile devices helps brands reach a new class of consumers through digital channels that never had access to high-speed desktop internet.
This, together with the tracking of health by mobile devices, on-demand e-commerce options and stable high-speed connections, means mobile is fast becoming the primary digital driver of health information management and promotion.
Zenith head of forecasting, Jonathan Barnard said: “Healthcare adspend is lagging the market as a whole as companies struggle with a sluggish core business.
“But we expect faster growth in the future as healthcare companies introduce innovative services for an ageing but more wealthy global population.”
Latest News
ABC Launches Two New Channels Combining Kids, Family & General Titles
The ABC will introduce two new channels in June—ABC Family and ABC Entertains—and four new innovative digital streams that will combine the best kids’, family, and general entertainment titles. The new channels will make it easier for audiences to find the programs they love. They will showcase the ABC’s catalogue of family and entertainment programs […]
Wests Tigers Lose One Million Dollar Sponsorship Deal In Hagipantelis Fallout
The Wests Tigers have confirmed that Brydens Lawyers will end their one-million-dollar partnership with the club at the end of the 2024 season. The law firm first joined the club in 2015 and upgraded to a principal shirtfront partnership in 2016. In an official statement shared to the Tigers’ website today, it was announced the […]
Ads That Entertain And Surprise Consumers Perform Best In Asia-Pacific – WARC report
New study reveals humorous ads "entertain and surprise consumers". Here's hoping Julia Morris doesn't get any ideas.
Aussie Employees Want AI At Work And Won’t Wait For Companies To Catch Up, Study Finds
Someone has clearly told Aussie workers AI wont steal their jobs, but might help them get to the pub more quickly.
Introducing Sam, Mamamia’s New AI-Powered Programmatic Audio Offering For Brands
Mamamia one of the first indie publishers to be really playing in the AI space. Well, the only one really.
OMA Appoints Motio’s Adam Cadwallader & JCDecaux David Watkins To Board Of Directors
New appointments to the OMA board of directors today. Monthly meetings' finger sandwiches to remain strictly egg or ham.
Bastion’s Harry Roth Selected For Cannes Lions Creative Academy
Bastion's Harry Roth off to this year's Cannes creative academy. May wear his Wallabies jersey to ruffle feathers.
TV Ratings (08/05/2024): Seven Has A Huge Night As News & Quiz Shows Dominate
News & quiz shows dominate last night's TV viewing. Further proof of our interest in the Middle East & steak knives.
Network 10 Wants Government Help To Save Regional Broadcast TV
Could Farmer Wants A Wife help Network Ten out of this mess?
Royalties Generated By Aussie Artists On Spotify Reached Nearly $275M In 2023
Royalties generated by Aussie artists on Spotify in 2023 hit $275 million. Shannon Noll's contribution reached $4.45.
eBay Study: Aussies’ Growing Love For Pre-loved Fashion Soaring To New Heights
New study reveals Aussies' love of second-hand fashion. Meaning it's now very cool to smell of moth balls.
Bud Communications Expands APAC Footprint With Australian Office Launch
Singapore-based PR & content agency Bud specialises in disruptor brands, not marijuana ones as the name may infer.
Coles Group Ranks Number One In Disability Access & Inclusion
Hats off to Coles for this top work. Now if it could only get its trolleys to run straight & its pears a bit less hairy.
Is Alone Australia Coming For MAFS & Survivor?
SBS's Alone Australia proving such a hit with viewers, B&T is rather surprised the commercial networks haven't nicked it.
AFR Pulls Plug On Newspapers In WA After Printing Costs Soar
West Australians will now have to rely on That's Life & Iron Ore Weekly for their weekly print fix.
Spotify Delivers A “Masterclass” In Curating User Experiences For Listeners & Artists
As you'll read here, there's more to Spotify than meets the eye. Or, in this case the ear, it being an audible property.
REA Group Delivers Booming Q3 Performance
It's yet further proof the property market is so hot right now. Still not hot enough to save Godfrey's vacuums, however.
iProspect Reveals 2024 Level Up Committee Cohort
iProspect unveils shadow executive leadership team. Staffers warned to be on the lookout when nicking off early.
Surge In Kayo Subscriptions Helps Foxtel Offset Broadcast Declines; News Corp Q3 Revenue Flat
One thing Aussies love is sport. Yet, one thing they hate is paying for it. So, make of this news what you will.
DEPT Doubles Down On Creativity With New APAC Executive Creative Director
Global digital agency announces Brad Stevens as ECD. Says he's happy to go by 'Braddles' or the unimaginative 'Stevo'.
JCDecaux Unveils Giant Melbourne Wrap Around OOH Site
If a worrying vitamin D deficiency isn't enough to get you outdoors, then hopefully this new JCDecaux installation will.
Brazilian Ad Agency Africa Creative Releases Powerful Gay Conversion Therapy Film
The Cure sounds like the serious sequel to Hangover III, let's hope it delivers some sobering food for thought.
Spotlight On Sponsors: PGA Championship Becomes First Men’s Major To Sign Sports Betting Partner
The game of golf is a lot like Lindsay Lohan, Jägermeister or holidaying in Kuta - you never know if it's cool or not.
Mackenzie Arnold & Tony Gustavsson To Take Part In Inspiring Conversation At Vivid Sydney
Matilda's goalie & coach in conversation at this year's Vivid. Won't be conversing about Sam Kerr's ACL, however.
Smart Speakers Stung By Ad Fraud Costing Brands $1M Per Month, Says DoubleVerify
Be wary of a Nigerian sounding bloke that claims he is Kochie and pimping crypto on a smart speaker near you.
Contiki Challenges Influencers To ‘Switch On Social Travel’ In New Campaign Via We Are Social
Contiki wants influencers to give up irritating selfies on holiday by funding them to create irritating selfies. Genius.
“We Are In Our Epic Era”: Natalie Harvey On The Big Changes Coming As Mamamia Celebrates 10 Years Of Podcasting
Natalie Harvey has taken on the Mamamia CEO's chair that B&T hopes sports a mashed pumpkin vomit stain.
TV Ratings (07/05/2024) : Team USA Become First Female Team To Win LEGO Masters Australia
It's not been a great day for Australia - out early in Eurovision, crushed by the Yanks in Lego Masters.
GroupM Hires Former Amazon Ads Global Head Of Services
GroupM poaches Amazon's Mark Lomas to lead its retail media business. Says he has no opinion on Jeff Bezos' new yacht.
It’s All About The Indies! Introducing B&T’s Best Of The Best Indie Executive Creative Leaders 🎉
Indie agencies are thriving & it's mostly thanks to these industry leaders. And their delegating to the lackeys.
Introducing BrandComms.AI, Forethought Revolutionises How Brands Do Effective Creative
Marketing & strategy agency Forethought unveils new AI offering. Yet can't explain the plot to any of the Matrix films.
Independent Media Agencies Of Australia (IMAA) Announces Record 44 New Group Deals For 2024
The Independent Media Agencies rolls out even more support for its members. Alas, no signs of any discounted arancini.
After Google Search Spike, Reddit Shares Jump 14% In First Quarterly Results Since IPO
It looks like being a top time to be investing in the tech space. Defence industries & missile makers also doing well.
Gippsland Dairy Celebrates The Deliciousness Of Patience With ‘Slow Good’ Platform Via Special
Yoghurt's a lot like online dating, red wine & running marathons - you think it's good for you, but it probably isn't.
Let Them Eat Cake: Cashed-Up Professionals Are Back In CBDs And Airports And They Want Their Audis
Latest study finds the ABs are returning to offices & reveals how brands can cash in. Just not the work from home brands.
Mariah Carey Lends Her Inimitable Voice to ‘Portrait of a Portrait’, Audible’s Latest ‘Words + Music’ Installment
Think Mariah's only good for annoying the shit out of colleagues at Christmas? Think again with this new Audible work.