Video Entertainment Ad Market Stable Amid Pandemic

Despite the ongoing COVID-19 pandemic, video entertainment advertising will shrink by just 0.2 percent across ten key markets this year, according to Zenith, as compared with the ad market as a whole, which is projected to fall by 8.7 percent in those markets.

The Business Intelligence—Video Entertainment report from Zenith looked at adspend in long-form video content—including free TV, pay TV and online video-on-demand platforms—in Australia, Canada, Germany, India, Italy, Russia, Spain, Switzerland, the U.K. and U.S. These markets collectively account for 57 percent of all global adspend.

Zenith says that video entertainment ad spend will remain stable due to increased viewing on the part of consumers, an increased supply of content and strong competition among video providers.

Adspend by online video brands has far outpaced traditional television, Zenith notes. For example, in the U.S., online video brands increased their ad budgets by 142 percent in 2019, while television brands increased their spending by just 15 percent. In the U.K., video platform spending rose by 79 percent compared with traditional television’s 34 percent.

“Consumers are now faced with a vast and confusing array of programs and films vying for their attention,” said Christian Lee, global managing director at 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.”

In 2021, Zenith projects no growth in video entertainment adspend, before it rebounds to 1.3 percent 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.

Zenith notes that there is considerable variation among the ten markets. In 2022, video entertainment brands are forecast to spend 27 percent more than in 2019 in Spain, and 19 percent more in India. Meanwhile, spending is expected to decline by 5 percent in the U.S. and 7 percent in Australia. The U.S. is the only market where video entertainment adspend is expected to continue to decline after 2020. Zenith notes that rising online revenues will fail to compensate for the ongoing declines in TV advertising and pay-TV subscriptions.

“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 longterm, and we forecast very little growth in 2021 and 2022.”