Zenith predicts that telecoms advertising will grow at an average rate of 4.5 per cent a year to 2023 as its recovers from an 8.7 per cent decline in 2020, according to Zenith’s Business Intelligence – Telecommunications report, published today.
Telecoms adspend in the 12 key markets included in the report will rise from US$17.8bn in 2020 to US$18.7bn in 2021, and then return to its pre-pandemic level of US$19.5bn in 2022.
In Australia, growth in adspend will be slow and steady. It is forecasted to reach US$314m by 2023, compared to US$365m in 2019. As with other markets, digital advertising will rebound more strongly than other media channels, with spend expected to near pre-pandemic levels by 2023 to reach US$217m, compared to US$224m in 2019.
Smartphone sales will start to spring back this year once consumers feel more confident in their future. Consumers are becoming more willing to finance and purchase handsets independently from their network providers, giving manufacturers and retailers a greater incentive to advertise handsets themselves. Meanwhile, the networks will seek to recoup their investment in 5G licences and infrastructure through new services and more expensive data packages. All these trends will help fuel healthy growth in telecoms advertising over the next three years. Zenith predicts telecoms adspend will grow 4.7 per cent in 2021, 4.4 per cent in 2022 and 4.3 per cent in 2023.
Digital platforms help telecoms brands demonstrate relevance to exacting consumers
Voice and data services are commoditised and functionally indistinguishable to consumers, who expect them to work flawlessly in the background and only pay attention to them when they go wrong. High-impact advertising in mass-audience media like television and radio allows telecoms companies to differentiate themselves from others through branding, and makes them more relevant to consumers by promoting their association with things consumers are passionate about, such as entertainment, sport and music. Telecoms brands therefore spend substantially more on television and radio advertising than the average brand – in 2020 they spent 42 per cent of their budgets on television and radio, while the average brand spent 30 per cent.
But as audiences migrate online, telecoms companies are refocusing on communicating their brand narratives to mass digital audiences. Telecoms brands spend less on digital media than average (49 per cent of their budgets went to digital channels in 2020, compared to 56 per cent for the average advertiser), but digital advertising is also the only channel in which telecoms adspend is increasing. Zenith forecasts that telecoms brands will increase their digital adspend at an average rate of five per cent a year between 2019 and 2023. By 2023, digital advertising will account for 54 per cent of all telecoms advertising.
“COVID-19 has demonstrated how dependent we are on good, fast and reliable internet connections. Telecoms 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.”
According to results from a ZenPoll conducted last week, the most important aspects for Australian consumers when choosing a network provider are Cost (57 per cnet), followed by Unlimited Calls & Messaging (38 per cnet) and Amount of Data (34 per cent), and then Brand Reputation (27 per cent).
In other findings, the top uses for smartphones among Australian consumers (excluding calls and messaging) were Checking the Time/Watch (63 per cent) and Reading/Sending Emails (62 per cent), closely followed by Social Media (57 per cent), Maps/Directions (56 per cent), and Online banking (53per cent).
Zenith Australia’s head of strategic insights, Kim Xavier, said: “It’s clear that connection is a key driver in how people use their smartphones, whether it’s to look at emails, or go onto social media. To reiterate this point, we also found that more than 60 per cent of Australians feel being reachable and connected are the most important factors associated with telco services.”
