Telecommunications brands such as T-Mobile and AT&T continued to spend more on radio advertising than the total ad market, even in the down year of 2020, according to Zenith’s Business Intelligence – Telecommunications report.
Zenith reports that in 12 markets accounting for 73% of global ad expenditure – Australia, Canada, China, France, Germany, India, Italy, Russia, Spain, Switzerland, the UK and the U.S. – telecom brands spent 42% of their 2020 budgets on radio and television, while brands overall spent 30%. Radio specifically accounted for 9% of telecoms’ ad spend compared to 5% overall.
According to the report, telecom brands’ higher share of budget for radio and television reflects a greater dependency on high-impact ads to differentiate from competitors, and to establish greater relevance to consumers by promoting their association with entertainment, sports and music.
Digital media, which still represents the largest share of telecoms’ ad spend, was lower than average, with 49% of budgets allocated to digital vs. 56% for the overall ad market.
Zenith’s ad forecast through 2023 shows telecom brands decreasing their spending on radio and television as audiences continue to migrate online, but at a lower rate than brands in most other categories. Radio’s annual reduction is expected to be just 2.8%, compared to 4.1% for the market as a whole. Only digital is predicted to show an increase for telecoms, with that 5.3% lower than 7% for total advertisers. The steepest annual ad budget declines are expected for print media, with 13% and 12% dips forecast for newspapers and magazines respectively.
The continued demand for new smartphones and 5G, and the formation of partnerships with online video, audio and gaming platforms should fuel a 4.5% annual increase in telecom ad spend through 2023, according to Zenith. Following an 8.7% spending decrease in 2020 due mainly to a 32% drop in China, the forecast shows a 4.7% gain in 2021 to an estimated $18.7 billion, and for 2022 spending to return to pre-pandemic levels at $19.5 billion.
The report cites several trends expected to spur continued growth in telecom advertising: a rebound in smartphone sales with greater consumer confidence, increasing consumer interest in purchasing handsets independently from network providers, and networks seeking to recoup their investment in 5G licenses and infrastructure through new services and more expensive data packages. “The rollout of 5G services will allow operators to supply bundled voice, data and entertainment services to the home and compete directly with landline broadband,” says Jonathan Barnard, Zenith’s head of forecast. “This will spur greater competition to put together the most attractive services at the best prices and help stimulate a sustained recovery in telecoms ad spend to at least 2023.”