2022 -  Q1

Digital advertising and online commerce drive the OTC advertising market

By 2023, OTC advertising spend will be 36% higher than in 2019. Digital advertising will increase from 46% of the global OTC budget in 2021 to 49% in 2023

Digital advertising and online commerce drive the OTC advertising market

  • Two dominant trends, the rise of personalised digital advertising and e-commerce, are driving an 8% increase in over-the-counter (OTC) advertising spend
  • The law on the widespread home delivery of healthcare products in the domestic market, which came into force in January, has made it impossible for e-commerce to penetrate the OTC market and has diverted advertising spending to other areas
  • By 2023, OTC advertising spend will be 36% higher than in 2019. Digital advertising will increase from 46% of the global OTC budget in 2021 to 49% in 2023

According to the latest Business Intelligence – OTC Healthcare report published today by Zenith, part of Publicis Groupe, over-the-counter (OTC) advertising spend will grow by 7.6% in 2022 and 5.0% in 2023 in the 13 most relevant countries* in the global market. This growth is expected to be driven mainly by personalised digital brand advertising and traffic-based advertising to stimulate e-commerce.

Spending on advertising for OTC medicines and pharmaceuticals increased throughout the pandemic. As the relevance of healthcare products to consumers has skyrocketed, the sector’s advertising spend grew by 6.8% in 2020, while the overall advertising market shrank by 3.5%. Demand for cold and flu remedies, which are generally seen as important factors, has fallen sharply, as social distancing has reduced the spread of these diseases. However, other important sub-categories continued to grow, with sales of sleep aids, for example, surging. In the wake of the pandemic, brands in many categories cut back or even stopped communicating, concerned that their messages were no longer appropriate or, in some cases, could be harmful in the changed circumstances.

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The resurrection after the pandemic

Following a downturn in 2020, OTC advertising in 2021 saw a significant increase of 12.8%, although in this case the growth was slightly below the overall advertising market, which had to make up for lost ground accumulated in the previous year. OTC advertising is forecast to continue to grow at a similar pace over the next two years as brands defend their price premiums and e-commerce platforms compete for dominance.

We forecast OTC healthcare advertising spend to grow from $20.1bn in 2021 to $22.7bn in 2023, up 36% from the pre-pandemic spend level of $16.7bn in 2019.

Digital spend in OTC at home lags far behind the global market. Precise figures are not available (campaign budgets for global players are not available at this level of detail), but Zenith’s domestic team estimates this spend at around 15%. The reason for this is that TV still has the biggest impact on sales in the OTC market in Hungary, so all players are optimising their TV presence first, and there is less of a shift of TV ad spend to digital platforms.

“In 2021, the total spend in the OTC market in Hungary will decrease, which is contrary to global trends. This is due to the absence of the flu season and a significant drop in media spend on cold products, one of the dominant segments of the market. We are already forecasting growth in 2022.” emphasised Rita Horváth, Chief Media Officer at Publicis Groupe Hungary.

The rise of e-commerce

The take-up of online sales of over-the-counter medicines has lagged somewhat behind other areas, but closures and other restrictions have led to a surge in this area in 2020. Now that more consumers are aware of and comfortable with the possibility of buying OTC products online, it will become an increasingly important sales channel in the coming years. This means that traditional distributors such as pharmacies and supermarkets will face new competition from digital e-commerce platforms, and brands will have new opportunities to build new reseller partnerships or even direct-to-consumer channels. This increased competition is expected to lead to further growth in advertising spend.

Domestically, e-commerce efforts have also started in 2021 with major players, for example, several pharmacies have launched instant home delivery on Kifli.hu and Wolt, as Benu has introduced increasingly advanced solutions for online sales. Efforts in this direction were then stalled with the passing of the government’s pharmacy home delivery regulation, with OTC advertisers shifting advertising dollars to this area to other channels.

Digitalisation in the advertising market

Until recently, it was difficult to create emotional engagement and lasting brand loyalty with digital advertising, but the shift to digital is helping brands to deliver messages tailored to consumers’ specific needs. The rise of high-quality advertising solutions, online video and retail media – advertising on retail websites and e-commerce platforms – means brands can use digital to effectively communicate brand values all the way to the point of sale. Brands are also spending more on traffic-based advertising as OTC e-commerce grows.

When consumers first purchase an OTC product, they often spend time researching the purchase and talking to family, friends and trusted advisors such as pharmacists. However, after the first purchase, buying over-the-counter products quickly becomes routine, part of regular shopping. OTC advertising, like FMCG advertising, therefore has the biggest role to play in maintaining brand awareness, a sector that also often uses television for its high impact mass reach. In 2021, OTC advertisers spent 38% of their budgets on television advertising, compared to an average of 21% for all categories. OTC brands also spend more on radio and magazines – radio for its mass reach and magazines for their high impact.

Zenith predicts that OTC brands will increase their digital ad spend by an average of 11% per year between 2021 and 2023, while radio will grow by 5%, television by 3% and magazines will shrink by 3%. Digital advertising will account for 49% of OTC advertising in 2023, up from 46% in 2021.


*Business Intelligence – OTC Healthcare

The 13 countries included in the report are Australia, Canada, China, France, Germany, India, Italy, Poland, Russia, Spain, Switzerland, France, Germany, India, UK and USA, which together account for 74% of global advertising spend. The report covers over-the-counter medicines and remedies, including cold and allergy remedies, contraception, digestive aids, eye care, oral care, pain relief, skin care, sleep aids, smoking cessation products and wound care.