The Odd Couple

April 1, 2016

Pharmaceutical Executive

Volume 36, Issue 4

The challenges facing the ad industry and big Pharma are remarkably similar-a point driven home by four distinct themes at this year's 4A's Transformation conference illustrate.

There is big money in medicines. Marketing them to a widening circle of stakeholders is critical to big Pharma’s future health. That’s why we found ourselves as observers at the US advertising industry’s annual gathering of creative types, media buyers, and policy leaders-the “4A” trade group Conference on Transformation, held last month in Miami.  

Years of contact have made advertising and medicines a familial

codependency. Both industries are struggling to maintain their value in the eyes of decision-makers, whether it be a drug formulary committee or an agency client’s purchasing department.   

Neither does a particularly good job at selling itself to the public. It’s counter-intuitive but true: Client-side marketers marginalize agencies by avoiding any semblance of risk on the creative side, ignoring the merits of strong messaging and high-quality content that can multiply brand value. Elaborate campaign pitches are expected to be given on spec. And the battle is on to replace the standard agency hourly bill rate with a procurement-led purchasing model that contends “creative” should be cheap, too. For its part, the ad industry seems unable to confront a race to the bottom on digital display, despite the reputational hazards induced by pervasive viewability problems, fraudulent bots, malware, and all those other pachinko parlor pathways to click-bait hell.     

So it was no surprise to see the challenges facing the ad industry and big Pharma are remarkably similar. To prove the point, just consider four themes dominating the conference discussions:   

Disintermediation. This $100 word about supply chain disruption was on everyone’s lips in Miami, as agencies face an influx of new competitors seeking to hive off big parts of the advertising service portfolio. The spotlight was on tech companies and the Big Four professional services firms, which have data that can shine a brighter light on audience engagement. These groups attack the agencies’ weak point-at the intersection between brand messaging and user need. New players like Google, IBM and Deloitte have the capacity to handle both. To big Pharma companies struggling with how to deploy and manage information as a business, this is a familiar refrain. 

Technology tsunami. The advent of digital media was likened to a “wild west” situation, with few experts admitting to having a handle on how to address the proliferation of platforms and outlets that democratize content through the power of social media. Ad-blocking software, which cost the industry an estimated $20 billion in lost revenue last year, is an embarrassing stain on the idea that an investment in sponsored branding yields higher audience engagement. The long-term business implications of autonomous, self-empowering user technology are profound: whoever said it was necessary to advertise to build a brand?   

Diversity and talent. Like pharma, advertising is a high-visibility sector whose leaders are representative of an older, white male demographic in decline. How to open the “c-suite” to women produced some tense moments in Miami, with the CEOs of the two biggest agency holding companies-Publicis and WPP-disagreeing publicly on whether the industry has a “gender problem.” Nevertheless, diversity in talent helps clients make their best case to the public. The message to the top ranks? If your creative people don’t look like you, they certainly won’t think like you. And as advertisers confront a fragmenting audience with vast choices among platforms and content, that contrast is a good thing.  

Business ethics. Margin pressures are forcing agencies to combine creative guidance on brand messaging for individual clients with separate capabilities as a principal in coordinating group digital media buys-what’s known as programmatic advertising that replaces direct, client-negotiated RFPs with automated software systems. Rebates-some call these kickbacks-to win access to prime media spots raise issues of transparency, particularly on the impact this might have on other clients’ business interests or the confidentiality of agency contracts.  A client-side trade group, the Association of National Advertisers (ANA), has launched an investigation to gauge the extent of the problem-a move that others in the industry see as premature. 

The bright spot for pharma at the 4A Conference was the fresh shout-out to healthcare. For the first time, the 4As included a Health and Wellness category in its annual Partner Awards, which honors creativity and collaboration in advertising. “Not only is health and pharma a sizable market of its own, agencies recognize that no other category has such a direct impact on people’s lives,” said award juror Christian Bauman of Health4Brands. “It’s the last bastion in advertising where a simple, visual metaphor can drive positive behavioral change in physicians and patients.”    

More on those awards next month. 

 

William Looney is Editor-in-Chief of Pharm Exec. He can be reached at wlooney@advanstar.com. Follow Bill on Twitter: @BillPharmExec

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