Zenith: Video adspend will achieve stability this year despite pandemic

• Zenith forecasts video entertainment advertising will shrink by just 0.2% in 2020

• Increased viewing, content and competition mean global adspend by video entertainment brands will fall just 0.2% in 2020
• Video brands will spend 57% of their budgets on digital advertising in 2020
• Recovery in 2021 and 2022 will be hindered by falling revenues from free and pay TV

Zenith forecasts video entertainment advertising will shrink by just 0.2% in 2020 across 10 key markets this year*, according to its Business Intelligence – Video Entertainment report, published today. Video entertainment adspend will far outperform the ad market as a whole, which will drop by 8.7% across these same markets.

Faced with spending much more time at home, consumers turned to video content to keep themselves informed and entertained. Online video platforms have invested huge sums in creating content to attract new viewers, forcing traditional broadcasters to up their game.

“Consumers are now faced with a vast and confusing array of programs and films vying for their attention,” said Christian Lee, global managing director, Zenith. “Video brands need to cut through this complexity and give consumers entertainment that matches their personal preferences with minimum fuss. Brands that provide compelling experiences and act as more than just repositories of content will be best positioned for growth in the long term.”

Lockdown has made digital even more vital to video brands 

Video entertainment brands spend more on digital advertising, out-of-home and cinema than the average brand. Their reliance on out-of-home and cinema has posed a particular challenge this year, as they have been forced to compensate for lost audiences from empty cities and closed cinemas. This means even more digital spending, which is forecast to rise from 53% of total video entertainment spend in 2019 to 57% in 2020.

Video entertainment adspend to exceed 2019 peak by 1.2% in 2022 

While video entertainment is expected to substantially outperform the market in 2020, Zenith forecasts it to underperform over the next two years, with no growth in 2021 and 1.3% growth in 2022. Online video platforms will have less capacity to raise budgets after spending heavily in 2020, and traditional TV broadcasters will be weighed down by shrinking revenues from TV advertising and pay TV subscriptions. Nevertheless, Zenith expects video entertainment adspend to be 1.2% higher in 2022 than it was in 2019, while overall advertising will still be 0.6% below its 2019 peak.

Spain and India to lead growth in video entertainment adspend

The stable headline figures for growth hide considerable variation between the 10 markets. In 2022, video entertainment brands are forecast to spend 27% more than in 2019 in Spain, and 19% more in India. Meanwhile, spending is expected to decline by 5% in the US and 7% in Australia over the same period.

The US is the only market where video entertainment adspend is expected to continue to decline after 2020, as rising online revenues fail to compensate for the ongoing declines in TV advertising and pay-TV subscriptions, reducing available ad budgets. The video industry is healthier in Australia, but here the ad market as a whole is retrenching after the sudden halt to Australia’s 29 years of unbroken economic growth, so video brands can maintain share of voice without raising budgets.

“Consumers are currently benefiting from a generous supply of video content from brands vying for their loyalty,” said Jonathan Barnard, Zenith’s head of forecasting. “This competition is providing a large boost to video entertainment adspend this year. But this level of investment in both content and advertising will prove difficult to sustain for the long-term, and we forecast very little growth in 2021 and 2022.”

Zenith Australia’s national head of investment, Elizabeth Baker (pictured), added: “In Australia, streaming services are the main reason for this category’s growth in ad spend. The surge in demand, fuelled by being at home more throughout pandemic conditions, coupled with the direct-to-consumer release of titles has accelerated subscription, consumption and ad spend. It will be interesting to see what happens moving forward. This period has provided major players with an opportunity to experiment with direct-to-consumer versus theatrical release models.”

* Video entertainment refers to long-form video content, supplied either by conventional television or online, including free TV, pay-TV and online video-on-demand platforms. The markets included in this survey are Australia, Canada, Germany, India, Italy, Russia, Spain, Switzerland, the UK and US, which collectively account for 57% of all global adspend.

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