Healthcare advertising is growing at a slower rate than advertising as a whole, which is expected to grow by 4.8% in 2019 and 4.3% in 2020 across the same 13 markets*. High research costs and persistent downward pressure on prices are hindering the prescription medicine business and restraining advertising spend by the big healthcare companies. However, this will begin to change as the aging global population creates a higher demand for healthcare, combined with new over-the-counter products and services that will expand the supply, enabled by new technologies like personal data tracking, telemedicine and AI.
The US and China dominate healthcare spending, but India is the fastest growing
The overwhelming leaders in healthcare advertising expenditure are the US and China, which together accounted for 86% of spend in 2018, or US$15.9bn and US$14.4bn respectively. All other markets accounted for less than US$1bn. In other large advertising markets, the types of healthcare products and services that can be advertised are more restricted, as are the media in which they can appear and what they can say. None allows direct-to-consumer advertising of prescription medicines, as does the US. The level of healthcare spending is therefore much lower than might be expected given the size of overall adspend in markets like Brazil, France, Germany, South Korea and the UK.
US healthcare adspend grew at an average rate of 6% a year between 2013 and 2018, partly driven by strong growth in television advertising of prescription medicines. However, US pharmaceutical companies are facing particularly intense scrutiny of their prescription prices. There has been consolidation among intermediaries such as managed care organisations and pharmacy benefit managers, which has been taking a tougher stance in price negotiations. The government has also been trying to force companies to include prices in their television ads for prescription medicines. While a recent attempt has been successfully challenged in court, it’s clear that the government intends to use television advertising as a tool to create more price competition. For the moment, we forecast only a mild slowdown in US healthcare adspend, with 6% growth in 2019 followed by 5% growth in 2020 and 2021, as strong expansion in internet advertising compensates for a slow erosion in television.
India is by far the fastest-growing market, growing at an average of 26% a year between 2018 and 2021. Rising incomes and increased access to health insurance are making healthcare more accessible and encouraging a more direct-to-consumer marketing of healthcare products and services. The next fastest-growing is Brazil at 9% a year.
Television budgets are shifting to out-of-home and online
Television is the most important medium for healthcare advertising, accounting for 54.7% of spend in 2018, far higher than television’s 30.8% share of the advertising market as a whole. However, continued media inflation and declining ratings in key markets are pushing healthcare brands to build awareness in other media, notably out-of-home and online. Healthcare adspend on television fell 3.1% in 2018 and is forecast to decline 4.6% in 2019 and 5.2% in both 2020 and 2021. This is faster than the decline in television adspend across the market as a whole, which is shrinking at about 1.0% a year.
The spread of digital display is making out-of-home a more effective substitute for television in awareness campaigns. Out-of-home is currently somewhat underused by healthcare advertisers – it will account for 4.0% of healthcare adspend this year, compared to 6.4% for adspend across the whole market. But that’s changing rapidly: out-of-home healthcare adspend grew 11% in 2018, and is forecast to grow 15% in 2019.
Television’s main competition is internet advertising, which accounted for 34% of healthcare adspend in 2018. Internet advertising allows healthcare brands to reach potential customers with discretion, often when they are actively searching for information about their health problems and are therefore receptive to the solutions on offer. As healthcare adspend moves into more targeted and personalised social and digital channels, this will reduce exposure to consumer who are not potential customers and improve efficiency, pulling further spending from television – especially if US legislation successfully requires broadcast ads to carry pricing information. Healthcare internet adspend grew 16% in 2018, and Zenith forecasts another year of 16% growth in 2019. In 2021, internet will overtake television to become the biggest medium for healthcare advertising, attracting 46% of all healthcare adspend.
Unusually, healthcare advertising is expanding quickly in newspapers. It rose 6% in 2018, and growth is forecast to strengthen over the next few years, reaching 17% in 2021. This stands in stark contrast to the 5% annual decline in global newspaper adspend across the market as a whole. The reason for this disparity is the rapid rise of India. Indian healthcare advertising has traditionally been concentrated in print, which accounts for over three quarters of healthcare adspend. And India is one of the few markets in which newspaper circulation, readership and adspend are all on the rise. Excluding India, the share of healthcare advertising taken by newspapers is actually expected to drop from 2.1% in 2018 to just 1.6% in 2021.
The key trends shaping healthcare marketing
It is difficult and expensive to bring new prescription medicines to market as the investment needed to develop, test and gain approval suffers from diminishing returns. Manufacturers are under increasing political pressure from governments and the public to reduce prices. Healthcare companies that think of themselves primarily as manufacturers and suppliers of drugs will face low growth and falling returns on investment, but brands that extend into over-the-counter medicines and wider healthcare services will have more promising routes to expansion.
“The future of healthcare services lies in data and bleeding-edge technology, and the same is true for healthcare marketing communication,” said Matt James, Zenith’s Global Brand President. “The increased prevalence of wearable devices that can monitor vital signs not only empowers people to have a greater understanding of their health and activity but also captures data that can be used to create personalised treatment plans. The successful healthcare companies of the future will be the ones that eventually become viewed as lifestyle brands.”
Digital technology is transforming the business models of the healthcare operators and opening up new possibilities. Telemedicine, for example, allows consumers to be diagnosed and treated at a distance. And the combination of personal health datasets and AI-driven diagnosis and treatment promises great improvements in healthcare outcomes. As in every category, start-ups are challenging established brands by overturning conventional ways of doing business.
“The rapid expansion of e-commerce in the OTC space will continue to shift spending into direct selling channels – search, social and display – as traditional distribution models are further disrupted by Amazon and other retailers,” said Andrea Palmer, President of Publicis Health Media. “The role of unbranded communications is also changing. Whether it’s disease awareness, category awareness, or another type of educational content, brands are diversifying more of their investment into the total care journey.”
Consumers are more interested in maintaining and improving their health than ever before. They are using devices such as smartwatches and home medical equipment to track data about their bodies and activities, building up a more detailed and personal picture of their health than has previously been possible.
“Careful targeting and personalisation of creative at scale will allow healthcare brands to address consumers’ individual needs at the point where they are seeking support,” said James.
Life expectancy is increasing worldwide, and as people age there will be more demand for healthcare services and products in the future. In addition, rising incomes in many developing markets are giving more people access to better health products and services. Long-term investment in brand awareness now will pay off later.
In high-growth markets like China, India and Brazil, the adoption of mobile devices helps brands reach a new class of consumers through digital channels that never had access to high-speed desktop internet. This, together with the tracking of health by mobile devices, on-demand e-commerce options and stable high-speed connections, means mobile is fast becoming the primary digital driver of health information management and promotion.
“Healthcare adspend is lagging the market as a whole as companies struggle with a sluggish core business,” said Jonathan Barnard, Head of Forecasting at Zenith. “But we expect faster growth in the future as healthcare companies introduce innovative services for an ageing but more wealthy global population.”
*This first exclusive survey of healthcare advertising in 13 key markets across the world (Australia, Brazil, Canada, China, France, Germany, India, Italy, Russia, South Korea, Spain, the UK, and the USA ) builds on Zenith’s Advertising Expenditure Forecasts, and is published in collaboration with Zenith’s sister agency Publicis Health Media. These markets account for 78% of global adspend across all categories and are representative of trends worldwide. Precisely what counts as healthcare advertising varies from market to market, owing to widely varying government regulations of what products and categories can be advertised to consumers. In this report, we define healthcare advertising to include whatever of the following can be advertised in each market: over-the-counter medicines, prescription medicines, pharmaceutical manufacturers and brands, medical insurance, medical equipment, fitness and diet products and services, hygiene products, and corrective lenses and glasses.
