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Video entertainment adspend to achieve stability this year; forecasts Zenith

Shreoshree Chakrabarty November 2, 2020

According to Zenith’s Business Intelligence – Video Entertainment report published on 2nd November, video entertainment advertising will contract by just 0.2% in 2020 across ten key markets this year*. The ad market is supposed to drop by 8.7% across the same markets, whereas video entertainment adspend will surpass it.

Amongst this year’s global pandemic situation and subsequent recession, the extraordinary resilience of video entertainment adspend is the consequence of the huge consumer’s demand, enormous supply of content and acute competition amid video brands for viewers.

People turned towards video content much more during the lockdown because of their extended stay in homes to keep themselves entertained as well as informed. For instance, TV viewing time in France was 30% higher year-on-year in April and was also higher in August by 11%. Meanwhile, traditional broadcasters had to pack their bags as online video platforms are creating more content to attract new viewers and also invested huge sums.

Recently, traditional television has been outdone by the adspend by online video brands. While television brands expanded their spending by 15% in the US, online video brands their ad budgets by 142% in 2019. As per the report of UK, adspend of traditional television grew by 34% whereas online platforms increased by 79%. In both of these markets, pay-TV platforms and broadcasters in reply to their brand- new competition, have delayed spending for now but this will indicate unsustainability in the face of the downturn in their revenues, both COVID-19-related and structural. On the other hand, the online video platforms are persistent in raising their budgets as they seek to exploit the current window of opportunity to build a loyal customer base. To stay on top of the consumer’s mind, each platform is spending extensively, whereas the viewers are considering which one to stick to for longer.

“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

Video entertainment brands expend more on digital advertising, out-of-home and cinema than the average brand. Their dependency on out-of-home and cinema has posed a specific challenge in 2020, as they have been compelled to compensate for lost audiences from vacant cities and shut cinema halls. This comes down to even more digital spending, which is forecast to rise from 53% of total video entertainment spend in 2019 to 57% in 2020.

Video entertainment adspend to exceed 2019 peak by 1.2% in 2022

With no growth in 2021 and 1.3% growth in 2022, Zenith predicts video entertainment to underperform over the next two years, though it is contemplated to substantially outrun the market in 2020. Online video platforms will be unable to raise much budgets after expending heavily in 2020, and traditional TV broadcasters will be overburdened by the shrinking revenues from TV advertising and pay-TV subscriptions. While overall advertising will still be 0.6% below its 2019 peak, Zenith expects video entertainment adspend to be 1.2% higher in 2022 than it was in 2019.

Spain and India to lead growth in video entertainment adspend

Considerable variation between the 10 markets, the stable headlines figure for growth hide. In 2022, video entertainment brands are predicted to spend 27% more than in 2019 in Spain, and 19% more in India. Meanwhile, spending is expected to get reduced by 5% in the US and 7% in Australia around the same time.

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.

As rising online revenues fail to compensate for the ongoing declines in TV advertising and pay-TV subscriptions, the US is the only market where video entertainment adspend is expected to continue to decline after 2020, reducing available ad budgets. The video industry is healthier in Australia, but here the ad market as a whole is cut back after the unexpected halt to Australia’s 29 years of undamaged economic growth, so video brands can continue 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 adspend 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.”


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