Spend Trends 2007: Hang 10
Direct-to-consumer advertising officially becomes a "tweenager" this August—and, oh my, how it has grown. DTC was officially born in 1997 when FDA gave the green light to companies to advertise their drugs to consumers. In the first year, pharmaceutical marketers bounded onto the scene and spent more than $1 billion. Years passed. Debates ensued. Patients learned more about drugs. And, yes, spending grew. The latest available figures for 2006 show that the industry spent $4.8 billion on DTC advertising, a 13 percent increase over 2005 and the second year of double-digit growth.
"There is definitely an extra feeling of credibility conveyed by magazines," says Tim Kelly, practice leader of promotion management for IMS Health. "There's something tangible that resonates with people with print advertising. It's something they can hand to their doctor."
Twenty-seven percent of today's online dollars for patients are spent on educational "sponsorships," according to the benchmarking consultancy TGaS Advisors. (Web sponsorships are primarily defined as an ongoing deal with a third-party site—like WebMD—involving some tool or editorial content.) Two-thirds of these deals achieved or exceeded their target goals in 2006, says Stephen Gerard, founder of TGaS Advisors, and investment is expected to increase in 2007 and 2008. Other areas of investment include banner ads and paid search, which when taken with sponsorships, make up 61 percent of the total online DTC budget.
Search-engine marketing is still in vogue, but the opportunity there is dwindling. Years past saw pharma companies buying up keywords on major search engines like Google and Yahoo! and focusing on search-engine optimization. Companies that weren't early movers were early losers.
As in previous years, paid online banner advertising has remained a staple in the marketing mix as biopharmaceutical manufacturers continue to find the Web a good place to reach their target audience. The more complex drugs become, the more likely consumers and patients will spend time searching the Web for health information. And as drugs on the whole become more specialized, particularly with targeted therapies in oncology, this online marketplace of healthcare information is expected to deliver even more value.
"The Internet used to be perceived as a consumer vehicle," says Peter Nalen, president and CEO of Compass Healthcare Communications. "But in the last two years, we've found 85 percent of healthcare professionals have broadband access and 62 percent of them use handheld devices." Nalen and others attribute this change to specific factors: Older doctors are finally following their patients' cue to go online for information, while newly minted healthcare professionals have grown up with the Web in medical school and now depend on it for information.
Until recently, pharmaceutical sales reps have outnumbered patients in many doctors' waiting rooms, but now pharma's "contact" dollars—in other words, detailing—declined for the second year in a row. (See "The Detail Drop.")
"We're seeing big cuts in professional sales-force spending because of a cutback in the 'arms race,'" says IMS's Kelly. "Pharmaceutical companies found they weren't getting their reps in front of doctors as frequently, and the quality of their message was coming down. You're starting to see an older, more knowledgeable, more clinically educated sales rep calling on doctors now."
"The overall trend of pharmaceutical companies is to try to gain more efficiencies in their current sales force," says David Coman, vice president of global marketing for Dendrite International, a provider of sales, marketing, and clinical solutions. "There is a clear desire to get more out of the sales reps that are out there."
Certainly, digital tactics will help, but it is still too early to accurately predict how online detailing could impact the traditional feet-on-the-street pharma sales-force model. "We see e-detailing as being completely complementary," Coman says. "What we've seen and heard is that doctors are becoming a lot more sophisticated in seeking drug information in an alternative manner. Therefore, the more channels you can combine, the more you create a holistic marketing approach and a perfect supplement to the field sales-force representative."
Compass Health Care's Nalen says the decline in sales force spending doesn't just come from layoffs. "Companies are looking more toward outsmarting the competition as opposed to outspending them," says Nalen. "Some doctors like to work with reps, others don't. Some would rather attend an online 'dinner' meeting with a key opinion leader than visit a restaurant—and industry regulations say you can't spend more than a certain amount on dinner for a doctor anymore, anyway."
Virtual Reality Relationships
Company executives see this wave of relationship marketing focusing on medication compliance and adherence strategies and getting patients to fill a prescription—whether it is for the first time or the 50th. "We found that 20 percent of people who type a brand name into an Internet search engine are already holding what we call an 'unfilled first script' in their hands," Nalen says.
One of the hallmarks of relationship marketing is constant, steady, and strong messages to stakeholders. In this way, if pharmaceutical marketers want relationship marketing to work, they need to take a tip from the tactic they are seeking to employ, and stick with their marketing efforts for the long-haul. "Pharma is finding that relationship marketing is a trust account that is not susceptible to the winds of the day," he says. "So they need to make a commitment and put it at the 'adult' table."
One might say that at 10 years old, DTC is growing up.
Diane West is a freelance contributing author. She can be reached at firstname.lastname@example.org.
One Decade of DTC Advertising
Companies hone their communication craft to focus on the next 10 years of DTC challenges
If pharma companies were throwing money at consumer advertising, then their aim has gotten better. "The ad agencies who did early DTC were the same ones that advertised laundry detergent—so they didn't really know how to drive someone to the physician to talk about a condition," says Kelly. "But companies became smarter and quickly formed whole brand teams around the drugs they were promoting."
Looking to the next decade, Kelly sees three key issues that DTC must face. The first is adherence to PhRMA's Guiding Principles on Direct-to-Consumer Advertising. Announced in August 2005, the Principles urge healthcare companies to follow industry-generated guidelines for responsible DTC. "Some companies follow the principles religiously," Kelly says. "Safety issues are a public relations nightmare, so it's actually better to wait until the second year before making a big marketing push."
The second issue is regional managed care networks. Marketers must wrestle with understanding if their advertising can be effective in the face of high co-pays. Says Kelly: "What good is the best advertising in the world if patients don't have access to the drug because of a $30 or $50 co-pay?"
The last is a continued emphasis on understanding prescriptions from the patient's point of view—and why patients might (or might not) comply with a drug's dosing.
Insomnia Marketers Not Asleep at the Switch (But Consumers May Be Asleep at the Wheel)
The more visible the ads, the more scrutiny they receive. FDA recently ordered sleep-aid makers to warn consumers of the risk of "severe allergic reactions and complex sleep-related behaviors, which may include sleep-driving." (Yes, driving in your sleep.)
With this cross-category warning, marketers must differentiate their respective products from the pack. "But being unique is not tantamount to success," warns Kweskin, pointing to Rozerem's quirky ads featuring a talking beaver. "They grab your attention—but does it create recall?"
Supply Chain Strategy: Managing risk and opportunity in a changing global landscape