The global pandemic triggered explosive growth for some ad categories while bringing others to a screeching halt. Over-the-counter (OTC) healthcare fell into the former bucket as underscored by a new forecast from Zenith. It predicts OTC ad spend in 13 key global markets, including the U.S., will be 36% higher by 2023 than it was in 2019.
The forecast is for OTC healthcare ad spend to grow from $20.1 billion (USD) in 2021 to $22.7 billion in 2023. That’s more than one third higher than its pre-pandemic spending level of $16.7 billion in 2019.
Digital will post the largest gain, rising from 46% of OTC budgets this year to 49% in 2023. The forecast calls for OTC products – including cold and allergy remedies, contraception, digestion care, eye care, oral care, pain relief, skin care, sleep aids, stop-smoking aids and wound care – to up their digital ad spend at an average rate of 11% a year between 2021 and 2023. Radio is expected to show the second-fastest growth rate at 5%, followed by television at 3%. Magazines will shrink by 3%.
Zenith’s new “Business Intelligence – OTC Healthcare” report, released Monday, offers a tick-tock of how the category grew throughout the pandemic. Ad spending on over-the-counter brands expanded by 6.8% in 2020 while the overall ad market shrank by 3.5% “as healthcare messages soared in relevance for consumers,” the report says. While demand for cold and flu remedies sank sharply as social distancing cut their transmission, most other sub-categories continued to grow and sales of sleep aids spiked.
As radio sales teams know all too well, advertisers in many categories cut back or even pulled their advertising when the pandemic hit, concerned that their messaging was no longer appropriate. “This gave OTC brands the opportunity to use plentiful cheap media to reinforce their contribution to consumers’ health and well-being,” the report says.
Then came a 12.8% OTC ad spending surge in 2021, which, while quite healthy, was slightly behind the overall ad market growth rate, which was moving fast to make up for lost ground in 2020.
Zenith is forecasting 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.”
After lagging behind the market as a whole in embracing ecommerce, 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,” Zenith says in the report. “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.”
The fundamental role of OTC advertising is to maintain brand awareness at the point of purchase, Zenith says. That’s why, like consumer-packaged goods, OTC healthcare advertisers make heavy use of television for its “high-impact mass reach.” TV captures 38% of OTC ad budgets, compared to 21% for the average advertiser across all ad categories. “OTC brands also spend more on radio and magazines – radio for its mass reach and magazines for their high impact,” the report says.
“The pandemic has focused consumers’ attention on their health and disrupted their reliance on traditional OTC distribution channels,” said Jonathan Barnard, Head of Forecasting, Zenith. “Brands will continue to step up their investment in digital advertising as the rise ofecommerce gives it a greater role in driving OTC sales and brand growth.”
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