Increased viewing, content and competition mean ad spend by video entertainment brands will fall just 0.2% in 2020
- Recovery in 2021 and 2022 will be hindered by falling revenues from free and pay-TV.
- India and Spain to lead ad spend growth through 2022.
The remarkable resilience of video entertainment ad spend in this year of a global pandemic and subsequent recession is the result of increased demand from consumers, increased supply of content, and intense competition among video brands for viewers.
Faced with spending much more time at home, consumers turned to video content to keep themselves informed and entertained. In France, for example, TV viewing time was 30% higher year-on-year in April, and was still 11% higher in August. Meanwhile
Ad Spend by online video brands has far outpaced traditional television recently. In the US, online video brands increased their ad budgets by 142% in 2019, while television brands increased their spending by 15%. In the UK, ad spend by online video platforms increased by 79%, while ad spend by traditional television grew 34%. In both markets, television broadcasters and pay-TV platforms pushed up spending temporarily in response to their new competition, but this will prove unsustainable in the face of ongoing decline in their revenues, both COVID-19-related and structural. Meanwhile online video platforms have continued to raise their budgets as they seek to exploit the current window of opportunity to build a loyal customer base. Each platform is spending heavily to ensure that they are top of mind while consumers consider which ones to commit to for the long term.
“Consumers are now faced with a vast and confusing array of programmes 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
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Video entertainment ad spend 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 ad spend 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 ad spend
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.
Spain and India both have fast-growing appetites for video-on-demand, especially on smartphones in India. India’s television ad market also enjoys rapid long-term growth – unlike in most Western countries – and should bounce back quickly in 2021.
The US is the only market where video entertainment ad spend 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 ad spend 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.”
* 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 ad spend.