Healthcare and pharma ad spending remains the smallest ad spending category in the US due to restrictive compliance laws that make it difficult to target audiences, but the legalization of cannabis has helped bolster spending.

US healthcare and pharma advertisers will spend $3.62 billion on digital ads this year, a 20.1% increase from last year’s $3.01 billion. In 2020, the industry will spend $4.23 billion. Companies in this category made up 2.8% of total digital ad spending for the last four years, and will continue to make up the same share next year as well.

“There are a lot more regulations in the [healthcare and pharma] industry,” said Ali Plonchak, managing director of digital strategy and integration at ad agency Crossmedia. She spoke with us for our latest report on US healthcare and pharma ad spending, adding that there are many restrictions on “how granular you can target a user [with healthcare and pharma ads], and even within the messaging, [on] what will and will not be accepted across various inventory partners.”

The continued legalization of cannabis in US states—and many states’ legislatures taking up ballot measures to consider decriminalizing the substance—has boosted spending in the healthcare category. Last year, US cannabis retail ad spending increased 23% to $4.12 million, with most of it coming from out-of-home advertising, per Kantar.

The healthcare and pharma industry is spending more ad dollars on social media, with digital video spend and social spend often overlapping.

“The biggest shift in terms of increased [ad budgets in the healthcare sector] is exploration with social,” said Richard Gagnon, head of Havas HealthMedia. “And while the pharma category won’t do deep social like some other companies might, using it as a platform for communicating approved messaging within Facebook or other [platforms] is certainly a growth area that more pharmaceutical brands are taking advantage of.”

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