Ad spend expected to drop for health brands

Reduced advertising spend from healthcare brands is expected in Australia this year, according to a Zenith report.

Zenith’s ‘Healthcare Advertising Expenditure Forecasts’ outlines the trends within global advertising expenditure by healthcare brands.

For Australia, the report shows a 0.5 per cent fall in advertising spend this year to $181.6m. This, it says, will be followed by limited growth of 0.5 per cent to $182.5m in 2020.

Zenith Australia CEO Nickie Scriven says many businesses will find 2019 a difficult year with the country entering a “pro-rata” recession and with consumer confidence at its lowest in years.

The report says global healthcare advertising expenditure will grow 3.6 per cent this year to reach $US36bn. It has also been forecast to increase by 3.6 per cent growth in 2020.

Healthcare advertising, however, 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.

Healthcare brands’ advertising is hindered due to high research costs and persistent downward pressure on prices.

“As consumers pull back on non-essential spending, we anticipate advertising spend to grow slightly in 2020 and beyond,” Ms Scriven said.

“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.”

Key points in the report:

  • The US and China dominate healthcare spending, but India is the fastest growing market.
  • Television budgets are shifting to out-of-home and online.
  • Healthcare companies acting primarily as manufacturers and suppliers of drugs will face low growth and falling returns on investment.
  • Brands that extend into OTC medicines and wider healthcare services will have more promising routes to expansion.

 “Healthcare ad spend is lagging the market as a whole as companies struggle with a sluggish core business,” Zenith Head of Forecasting Jonathon Barnard said.

“We expect faster growth in the future as healthcare companies introduce innovative services for an ageing but more wealthy global population.”

This forecasts are published in collaboration with Zenith’s sister agency, Publicis Health Media.

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