Under Pressure - Pharmaceutical Executive


Under Pressure

Pharmaceutical Executive

DTC: TV is Still the Media Darling

After a double-digit spending spike in 2005 and 2006, the industry's promotional outlay for DTC advertising has cooled. According to TNS Media Intelligence, in 2007 pharma companies decreased DTC spending to $5.1 billion, a 3 percent drop from the previous year.

Jon Swallen, senior vice president of research for TNS, attributes this to the rising cost of mass media advertising and a greater desire for ROI accountability. "Consider the volumes of money being spent by some of the major brands—ad budgets in the range of $200 million a year," says Swallen. "As the guy who's approving that spending, you want to know that you're getting good value for your dollar. And whether you're talking about a $200 million budget or a $10 million budget, the pressure is there to deliver a good return on investment."

With the change in companies' product portfolios, some predicted that DTC spending would take a bigger hit. Bruce Grant, senior vice president of business strategy at Digitas Health, points out that the drugs that fueled the rise of DTC were indicated for relatively simple conditions such as allergies, acid reflux, and erectile dysfunction, where patients could have more influence on their prescription than they could with a more complex disease like cancer. "Some key products that were very successful on the strength of DTC are facing patent expiration, and pipelines are now much more heavily weighted toward higher-science, specialty products," Grant says. "The messages are more complex, harder to drive home within the confines of a 60-second spot or a print ad."

Since the rules around DTC relaxed in 1997, the practice has been under fire. Last year was no different, as stakeholders continued to argue the need for ad moratoriums and more oversight by FDA. "You wonder whether there's some breaking point," Grant says. "There might be some event that tips the balance, and leads to more severe restrictions on drug companies' ability to undertake consumer marketing. With healthcare being a campaign issue and an issue for the next Congress, whichever party wins the presidential election, the pressure on DTC will certainly not ease."

Despite all the talk of new ways of reaching consumers, companies spent the most by far on TV and magazines as a vehicle for their patient outreach efforts. (See "Play It Again".) In those channels, 2007 spending was fairly consistent with 2006. Much bigger drops were observed in newspaper and radio spending—a whopping 53 percent and 38 percent, respectively.

"TV and DTC still have a very important role, and you can't ignore the power of the television medium," says Joan Mikardos, media director at Sanofi-Aventis. "For some categories, it's really critical. But for others, you could probably eliminate TV completely, or skim a little money off and do something that's a little more personal for the patient. I think the biggest trend is acknowledgement that it can't be one-size-fits-all for every brand."

Online: High Potential, Low Commitment

While online promotion is the talk of the town, for the most part, it's still just talk. TNS data show Internet display advertising dollars down five percent, from approximately $167 million in 2006 to about $159 million in 2007. This represents just over three percent of the total DTC spend. So why is the Internet generating so much excitement but so little investment?

One would think that with the shine coming off mass-media advertising and large sales forces, marketers would see the Internet as a promising avenue to promote their brands. Bruce Grant notes how the format allows companies to better target consumers and healthcare professionals in a cost-effective way. And given the Internet's growing role in consumers' lives and physicians' practices, sources seem to agree that the future is on the Web.

One explanation is a simple lack of comfort with the medium and a lot of uncertainty around regulatory compliance, especially beyond the well-traveled waters of basic Web sites, banner ads, and search advertising. "The industry as a whole is behind," says Sanofi-Aventis' Mikardos. "We haven't figured out what role we can play with social media. That's a huge area that's getting talked about a lot and has a major influence in healthcare. But for a highly regulated industry, it's very difficult to navigate that space."

Another possibility is that insufficient investment has caused some companies to underestimate the potential of online advertising, making it a common casualty of budget cuts. As newcomers like Revolution Health and Everyday Health join Yahoo, WebMD, and MSN, Debrianna Obara, vice president of media at Avenue A|Razorfish, has seen competition for online content heat up. "It's more and more difficult to purchase the online inventory that's appropriate for the client or disease state," she says. "Prices are being forced up, and because pharma marketers are not increasing their online budgets drastically, they're getting less and less for their investment each year and I think some of them are reaching the false conclusion that online's not working."

More than one source indicated that by the end of 2007, many pharma companies were beginning to embrace the idea that physicians (rather than being technophobes) are often early adopters, and that the Internet is becoming integral to the way they practice medicine. In that case, the problem may be that the quality of the pharmaceutical industry's online offerings doesn't yet measure up to what doctors have experienced elsewhere on the Internet. "Even today, in too many cases the use of rich media, video, rich animation, and other engagement devices is lower than physicians have come to expect," says Grant.

Still, companies are reshaping at least some of the Web tools used to target physicians. This most often takes the form of special sections on product Web sites, Web sites just for physicians, and paid searches utilizing technical terms. "In the last year, we've begun seeing companies dip their toes in the water," says Obara.


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