Ad spending by video entertainment services will be down just 0.2% in 10 key global markets this year, a much smaller decline than the market overall, which will decline 8.7%, according to Publicis-owned media agency Zenith.
In a new study, Zenith noted that video entertainment saw increased demand from consumers, a larger supply of content and intense competition among brands for viewers and subscribers.
“Consumers are now faced with a vast and confusing array of programs 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.”
Video brands will spend 57% of their budgets on digital advertising in 2020, up from 53% in 2019.
“The pandemic instigated an increased demand for digital content. For advertisers that have been slow to incorporate digital video into their marketing mix, now is the time to invest and connect with these audiences. Digital video is rich with measurement opportunities to help brands better understand their consumers, how they engage and what types of content resonate best,” said Lauren Hanrahan, CEO of Zenith, Moxie and MRY.
In the U.S. spending on advertising by online video brands has far outpaced traditional television recently, according to Zenith. In the U.S., online video brands increased their ad budgets by 142% in 2019, while television brands increased their spending by 15%.
The U.S. 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.
Globally, Zenith forecasts the video entertainment category 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.
“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.”
The Zenith study looked at Australia, Canada, Germany, India, Italy, Russia, Spain, Switzerland, the U.K. and the U.S, which among them account for 57% of global ad spend. Video entertainment refers to long-form video content supplied over conventional TV or online, including free TV, pay-TV, and online video-on-demand platforms.
