While digital ad spending by the healthcare and pharmaceutical industries in the U.S. saw major gains during the COVID waves of 2020 and 2021 – where spend increased by 27.6% and 26.2%, respectively – that growth is slowing, even as total ad spend is estimated to reach close to $16 billion this year, $18 billion in 2023 and $20 billion in 2024.
The forecast from eMarketer explains how healthcare's digital ad spend both boomed, and will continue to grow albeit at slower rates, due to the pandemic. “2020 was the only year in which healthcare and pharma overindexed the overall market digital ad spending growth,” eMarketer's report says. “Digital ad spending in the industry shot up to nearly $11 billion as providers, insurers and pharma companies raced to reach consumers with updates on symptom checkers, office and pharmacy hours, and vaccines. The rate of growth will slow now that the pandemic is becoming endemic, [and] digital ad budgets will keep growing over the next few years, but not at the pace seen in 2020 and 2021.”
As a result, healthcare's and pharma's share of digital spend is predicted to fall from 2020's 7.2% down a full point to 6.2% by 2024. “Spending still lags the overall digital ad market, largely because other industries—primarily retail, travel, and financial services—will pour even more money into digital channels,” the report says. “Retail is the biggest digital ad category in the U.S., with advertisers spending an estimated $65 billion this year.”
Breaking down eMarketer's digital ad spend estimates by device and format, mobile ads are expected to reach $11.3 billion, search $10.9 billion, display $8.5 billion, video $5.1 billion and the B2B category $1.8 billion, by 2024. Healthcare and pharma underspend on mobile vs. nonmobile, with 57.1% of spend vs. the overall average 67.9%. “Consumers are more likely to see healthcare and pharma ads on a CTV screen (slowly replacing traditional TV) and on desktop/laptop devices, where they typically continue their research journey,” the report says.
Search ads, which are expected to account for 57.2% of healthcare and pharma ad spend in 2022 but slip to 55.6% in 2024, have become the most important part of their digital strategy since the onset of COVID. “Most people go online to look for health and medical information,” eMarketer says. “Search terms include retailers’ names such as CVS, Walgreens, Rite Aid, Walmart, Publix and Kroger.” Display ads are expected to become more important, with 2022's $6.6 billion making up 41.6% of spend, while video ads will account for 56.0% of healthcare and pharma display budgets, moving to 60.6% by 2024.
As for traditional TV, eMarketer's report cites research showing that even with the move toward CTV, there will remain a heavy emphasis on linear for reaching wide audiences with messages about new drugs. Based on a March 2022 Advertiser Perceptions poll, 38% saw CTV as an extension of their linear TV campaigns, and another 31% would use it to capture declining TV audiences.