Tuesday, April 22, 2008

Will Pharma's Big Ad Spend Move Online?

APRIL 22, 2008

Drug companies won't abandon traditional media.

US direct-to-consumer pharmaceutical marketers say they plan to increase their online marketing spending this year and decrease spending on traditional media, according to a March 2008 Cegedim Dendrite study.

Respondents generally said they planned to spend more this year on Web sites, search and e-mail marketing, and less on TV and radio.

Respondents were split over the effectiveness of DTC marketing; 31% said it was less effective than in the past, while the same number said it is now more effective.

Among those who said DTC had become less effective, a plurality (36%) said there were just too many ads in a saturated market. They also cited public backlash and poor media plans as reasons for declining effectiveness.

Those who said DTC was more effective were most likely to credit increasingly savvy consumers who conduct independent research.

Cegedim said that while respondents said they wanted to see more focus on emerging and targeted channels, and less on general mass media tactics, the industry seemed reluctant to actually reallocate budgets to make it happen.

eMarketer predicts that online ad spending by the pharmaceutical industry will indeed increase through 2011, reaching $2.2 billion from $1.2 billion in 2008.

Yet this will represent almost no change as a percentage of total media spending by the industry. US pharmaceutical and healthcare companies spent about 5% of their ad budgets online in 2006—almost the exact same percentage as they will spend in 2011.

"The pharmaceutical industry is in a state of flux or siege depending on your point of view," said Lisa Phillips, senior analyst at eMarketer. "Some of the trouble is self-induced and some is caused by market and regulatory forces, a change in congressional leadership and just plain bad luck.

"In the face of all this, pharmaceutical marketers are sticking with what they know —brand awareness messages—in the media they know best: TV and print," Ms. Phillips said.

The eMarketer Pharmaceutical Marketing Online report will be published next month. Click here to be notified when it is released.

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