Pharma marketing appears to operate in a world of its own. When US ad expenditures dipped in 2001, pharma’s spend marched
steadily on. (See "A Different Drum."). Now, as the ad industry celebrates the quadrennial coincidence of the Olympics and
the US presidential campaign, is pharma taking notice? “Not really,” says Anne Devereaux, chief integration officer at BBDO.
Last year the industry spent nearly $20 billion for marketing. It will almost certainly spend more in coming years. What
is it paying for? Is it getting value in return? What worries pharma marketers most? Stay tuned...
Devil's in the Detailing
Direct-to-consumer (DTC) advertising gets a lot of attention but detailing and sampling, lurking below the waterline, still
constitute the bulk of pharma's marketing spend. (See "Where the Money Goes.") No one expects this to last.
"We have a 90,000-plus sales force because of blockbusters and striving for reach and frequency," says Maureen McLaughlin,
head of the promotional effectiveness practice at NOP World. "But now the return isn't there, and so a lot of people are grappling
with sales force reduction." Cutbacks, though, have yet to happen. Meanwhile, the cost of detailing and sampling continues
to climb. For the last five years, the average annual increase has been just over 14 percent. For the last year and a half,
it's been closer to 20 percent. It's a classic case of perverse "system effects." Left to itself, each company would disarm,
but the competitive standoff leads them all to do just the opposite.
A Different Drum
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Big-Picture TV
Detailing may have reached a point of diminishing returns, but "DTC advertising is still early in its lifecycle," says Sue
Ramspacher, head of the healthcare consumer practice at NOP World. What drives DTC spending? Devereaux says it's "launch dependent
and responsive to the competitive environment. For some brands—allergy, the COX-2s, and other high-volume parity categories—considerable
DTC spending is just a cost of entry. There are such subtle differences between brands that DTC is one of the few ways to
differentiate."
So why does DTC spending go up every year if it's driven by launches? The number of product introductions isn't rising. One
reason is that DTC has only been around since 1997, so it's building on a relatively small base. (By contrast, the detailing
and sampling spend, already huge, just keeps getting bigger at a similar pace—no mean feat.) Another reason is the constantly
increasing cost of air time. Finally, Ramspacher says, "a small number of big DTC players have generated an 'arms race' like
the one in detailing. These companies have just got to be out there more often than their competitors." Consider the Super
Bowl. Given the fragmentation of the mass audience and the diminished reach of network TV these days, why was there so much
pharma advertising during the game? Devereaux says, "The majority was spent by three competing brands who all felt it was
an ideal way to reach their male targets and to announce their strong presence as players."
What's odd is how unevenly DTC works. Peter Mehr, vice-president of promotion analytics for Health Products Research, says
DTC is not performing as strongly across all brands as people think. For some it works brilliantly. But half the time it fizzles.
(See "Moving the Market.") What makes the difference? Mehr says some companies know what they're doing, others don't. DTC
campaigns "lose traction. They wear out. Target markets and demographics shift. Diligence is required to keep campaigns effective
year after year, to make sure your message isn't stale and is still breaking through the clutter." Mehr says, "There's an
embedded belief that if an initial campaign is successful, the follow-on will be, too. Not necessarily."
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