Telecoms advertising will grow at an average rate of 4.5% a year to 2023, following an 8.7% decline in 2020, according to Zenith’s latest Business Intelligence – Telecommunications report. Telecoms adspend in the 12 key markets included in the report will rise from £13.9bn in 2020 to £14.6bn in 2021, and then return to its pre-pandemic level of £15.2bn in 2022.
The report predicts that smartphone sales will start to spring back this year once consumers feel more confident in their future. Consumers are becoming more willing to finance and purchase handsets independently from their network providers, giving manufacturers and retailers a greater incentive to advertise handsets themselves. Meanwhile, the networks will seek to recoup their investment in 5G licences and infrastructure through new services and more expensive data packages.
Together, these trends will help fuel healthy growth in telecoms advertising over the next three years. Zenith predicts telecoms adspend will grow 4.7% in 2021, 4.4% in 2022 and 4.3% in 2023.
Richard Clay, Zenith UK’s Head of Specialist Capabilities, said: “A sharp reduction in smartphone sales in 2020 hit telecoms category spend. As consumer confidence grows and people spend more time out of their homes, the category will benefit from pent-up demand for new handsets and more data. The latest iPhone is Apple’s first 5G enabled handset, this will accelerate 5G’s move to the mainstream and intensify competition and media investment from networks wanting to grow share. A further area of competition in the UK over the next few years will be roaming, as travel increases and networks begin to adapt their offers after free European roaming ended with Brexit.”
Telecoms brands spend substantially more on television and radio advertising than the average brand – in 2020 they spent 42% of their budgets on television and radio, while the average brand spent 30%. However, as audiences migrate online, telecoms companies are refocusing on communicating their brand narratives to mass digital audiences.
Telecoms brands spend less on digital media than average (49% of their budgets went to digital channels in 2020, compared to 56% for the average advertiser), but digital advertising is also the only channel in which telecoms adspend is increasing. Zenith forecasts that telecoms brands will increase their digital adspend at an average rate of 5% a year between 2019 and 2023. By 2023, digital advertising will account for 54% of all telecoms advertising.
Ben Lukawski, Global Chief Strategy Officer, Zenith, said: “COVID-19 has demonstrated how dependent we are on good, fast and reliable internet connections. Telecoms companies have been the unsung heroes of the pandemic, shifting our lives online and keeping us connected to entertainment, work and commerce. Their challenge is to go from being unsung to being acknowledged and appreciated for their efforts. The spread of 5G and the reality of our new-found virtual lives give telecom brands the opportunity to move into the limelight.”
Zenith forecasts that India will be the fastest-growing market for telecoms advertising between 2020 and 2023 by some distance, with 11% annual growth. According to eMarketer, only 31% of the population currently has a smartphone, but thanks to the launch of low-price handsets such as the JioPhone, this proportion is rising rapidly. Russia is another market with relatively low (57%) but fast-growing smartphone penetration, and here telecoms adspend is forecast to rise rapidly too, by 8% a year.
The 12 markets included in the Zenith report are Australia, Canada, China, France, Germany, India, Italy, Russia, Spain, Switzerland, the UK and the US, which between them account for 73% of total global adspend.