Zenith releases over-the-counter healthcare adspend forecast


• OTC adspend expanded by 6.8% in 2020 while the market as a whole shrank by 3.5%

Advertising expenditure by over-the-counter (OTC) healthcare brands in 13 key markets will expand by 7.6% in 2022 and 5.0% in 2023, according to the Business Intelligence – OTC Healthcare report from Zenith, published Monday. This growth will be driven by tailored digital brand advertising, as well as performance advertising driving traffic to OTC ecommerce platforms.

OTC advertising grew throughout the pandemic. OTC adspend expanded by 6.8% in 2020 while the market as a whole shrank by 3.5%, as healthcare messages soared in relevance for consumers. 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.

OTC advertising then rose a very healthy 12.8% in 2021, though in this case its growth was slightly behind the overall market, which had its lost ground to make up. Zenith forecasts growth in OTC advertising to remain healthy over the next two years, as brands defend their price premiums and ecommerce platforms compete to establish dominance.

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. Now that more consumers are 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.

In Australia, Zenith predicts that in 2023, advertising expenditure by OTC healthcare brands will be US$436m – 64% above the US$266m spent before the pandemic in 2019.

Zenith Australia’s national head of digital & data, Joshua Lee, said: “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. 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% month-on-month increase in online retail and direct-to-consumer traffic.”

Joshua Lee

“Since 2020, 60% 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 5% over the next two years (as Covid herd immunity increases), we foresee these trends in digital and e-commerce to continue.”

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