Zenith predicts rise in OTC healthcare adspend by brands

pharmacy sign

Advertising expenditure by over-the-counter (OTC) healthcare brands in 13 key markets will expand by 7.6% in 2022 and 5.0% in 2023, according to ad agency Zenith’s new Business Intelligence – OTC Healthcare report, published today. 

This growth will be driven by tailored digital brand advertising, as well as performance advertising driving traffic to OTC e-commerce platforms.

OTC advertising

OTC advertising grew throughout the pandemic, with adspend expanding by 6.8% in 2020 while the market as a whole shrank by 3.5%, as healthcare messages soared in relevance for consumers. 

Demand for cold and flu remedies sank sharply as social distancing cut their transmission, but most other sub-categories continued to grow, and sales of sleep aids spiked. 

When the pandemic hit, brands in many categories cut back or even ceased their communications, concerned that their messaging was no longer appropriate, or in some cases counterproductive in the new context. 

This gave OTC brands the opportunity to use plentiful cheap media to reinforce their contribution to consumers’ health and wellbeing.

OTC advertising then rose a very healthy 12.8% in 2021, though in this case its growth was slightly behind the overall market, which had its lost ground to make up. 

We forecast growth in OTC advertising to remain healthy over the next two years, as brands defend their price

premiums and e-commerce platforms compete to establish dominance.

OTC has lagged some way behind the market as a whole in embracing e-commerce, but the lockdowns and other restrictions led to a leap in OTC e-commerce in 2020. 

Now that more consumers are aware of and comfortable with the option of shopping for OTC products online, it will become an ever more important sales channel over the next few years. 

This means traditional distributors such as pharmacies and supermarkets are facing new competition from digital e-commerce platforms, and brands have new opportunities to launch new partnerships or even direct-to-consumer ventures. 

The increased competition for traffic and sales will fuel continued growth in brand and performance advertising.

We forecast that OTC healthcare adspend will grow from £15.7bn in 2021 to £17.7bn in 2023, 36% above pre-pandemic spending level of £13.0bn in 2019.

Zenith UK’s Kush Bhardwaj, Business Director on the Reckitt Health team, said: “Brands like Dettol and Lysol saw huge growth in penetration and usage at the height of the pandemic. 

“80% of people globally say they will maintain new hygiene behaviours acquired during Covid so we can expect long-term growth in these categories. 

“OTC has also become a hugely important category enabling consumers to self-care at a time when health systems around the world are under immense pressure.

“As people gradually return to their regular routines post-pandemic, the need for immediacy within this category will stay. 

“Ultimately, saliency for brands has never been more important and that is why TV will continue to be an essential aspect of the media plan.”