Video entertainment brand ad spend holds fast amid turbulence

The findings are particularly important given the outsize importance of digital advertising to such brands.

What have we learned from the new report?

• Zenith's Business Intelligence – Video Entertainment report projects a mere 0.2% decline in adspend by video entertainment brands in 2020, despite the closure of cinema and out-of-home, as increased viewing, content and competition drives digital spend.

• Standing as a rock of stability in an ocean of turmoil video brands will allocate 57% of their budgets to digital advertising over the year. Key to this stability has been the rise of digital as brands compensate for lost physical audiences by upping their digital spend.

• Fueling this success has been unprecedented demand for content as cooped-up consumers switch on their TVs to pass the time, with markets such as France experiencing a 30% year-on-year viewing increase across TV, SVOD and online video through April.

• Rummaging deeper through the tea leaves Zenith expects tough times ahead in 2021 and 2022 as revenues from free and pay-TV decline, as online video brands far outspend their traditional rivals.

• Across the US online video brands increased their ad budgets by 142% last year, versus a 15% increase for television brands. In the UK the equivalent figures were 79 and 34%.

What does Zenith say?

• Jon Stevens, Zenith UK MD, isn't surprised by the findings: “Covid-19 has caused significant disruption across many categories this year, but it isn’t surprising the video entertainment market has maintained buoyancy overall."

• Warning of the impact of cut-throat competition Stevens adds: "But with an extensive array of choice for consumers and new players to the market, most notably Disney+, brands and platforms in the category need to continue to invest to win (and keep) audiences."

• Jonathan Barnard, Zenith’s head of forecasting, adds: "Consumers are currently benefiting from a generous supply of video content from brands vying for their loyalty. 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.”

Are there any regional variations?

• The poorest performing market for video entertainment adspend is expected to be the US, the only territory expected to extend declines after 2020.

• This is attributed to rising online revenues failing to compensate for the ongoing declines in TV advertising and pay-TV subscriptions, reducing available ad budgets.

• By contrast markets such as Spain and India are expected to bounce back quickly in 2021 on the back of insatiable video-on-demand appetites.