DTC Grows Up

Oct 15, 2007

RESEARCHERS call it the "10-year rule"—the notion that mastery in any complex skill comes after 10 years of intensive study, diligent practice, and constant trial and error.

Well, it's been 10 years since the Food and Drug Administration (FDA) relaxed its guidelines on advertising pharmaceuticals in broadcast media. And, true to the rule, not only have direct-to-consumer (DTC) strategies and practices matured, but the methods with which companies can gauge their success have also come of age.

Figure 1
But what does it mean for the current state of DTC pharmaceutical advertising when it comes to spending trends, return-on-investment standards, and new measurement options? And where is DTC likely to go in the next five years?


Spending on DTC advertising has risen fairly steadily over the past 10 years—and less erratically than spending on samples and detailing.

In 2006, the industry's total DTC expenditure of $4.5 billion represented a 220 percent increase over the 1997 expenditure of $1.4 billion. Meanwhile, the cost of sampling skyrocketed from $7.7 billion in 1997 to $19 billion in 2006, and detailing budgets rose from $4.1 billion in 1997 to a high of $7.7 billion in 2004. They have since leveled out at $6.8 billion. From 2000 to 2006, DTC channels consistently gained ground in the marketing mix as focus shifted away from physician detailing. In that time, the largest spending increases were for TV advertising and, more recently, for magazine exposures.


Of the industry's total DTC expenditure of $4.5 billion in 2006, the lion's share ($1.6 billion) went to the broadcast networks, while the smallest portion went to the Internet ($163 million).

More telling, perhaps, is the change over the prior year. In 2006, investment in broadcast media rose 9.4 percent; in cable, 6.1 percent; in print, 24.7 percent; and in the Internet, 9.5 percent.

Figure 2
Spending was very concentrated. The 10 most-advertised brands accounted for 37 percent of the industry's DTC spending (see figure 2). The most money was lavished on Lunesta, Sepracor's sleep aid, which had a DTC advertising budget of $300 million.

In researching more than 500 US product launches, IMS Health, a consulting and data services company, found that for blockbuster brands, DTC spending peaked in the first year post-launch.

Interestingly, that peak is shifting further away from launch, as that many companies are following PhRMA's guidelines to educate physicians about new products before advertising them to consumers. To fill the void, companies are devoting more of their DTC mix to unbranded, unpaid advertising during the year before and after launch—activities driven by PR and key opinion leaders to promote disease awareness and "prime" the market.


IMS's normative database of the promotional effort and market response across five years for hundreds of brands in a broad range of therapeutic categories is kept up-to-date. It currently encompasses many newly launched brands. It provides a way to monitor DTC trends, benchmark performance, and observe the best practices.