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. All these trends will help fuel healthy growth in telecoms advertising over the next three years. Zenith predicts telecoms adspend will grow 4.7 per cent in 2021, 4.4 per cent in 2022 and 4.3 per cent in 2023.

Digital platforms help telecoms brands demonstrate relevance to exacting consumers

Voice and data services are commoditised and functionally indistinguishable to consumers, who expect them to work flawlessly in the background and only pay attention to them when they go wrong. High-impact advertising in mass-audience media like television and radio allows telecoms companies to differentiate themselves from others through branding, and makes them more relevant to consumers by promoting their association with things consumers are passionate about, such as entertainment, sport and music. Telecoms brands therefore spend substantially more on television and radio advertising than the average brand – in 2020 they spent 42 per cent of their budgets on television and radio, while the average brand spent 30 per cent.

But 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 per cent of their budgets went to digital channels in 2020, compared to 56 per cent 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 per cent a year between 2019 and 2023. By 2023, digital advertising will account for 54 per cent of all telecoms advertising.

“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,” said global chief strategy officer, Zenith, Ben Lukawski. “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.”

Telecoms brands are cutting back their spending on traditional television and radio as their reach declines, but less rapidly than brands in most other categories. Zenith forecasts that between 2019 and 2023, telecoms brands will reduce their television adspend by an average of 2.0 per cent a year, compared to a 3.5 per cent annual reduction across all categories. They will also reduce their radio adspend by 2.8 per cent a year, compared to 4.1 per cent a year for the market as a whole.