Lilly Overtakes Pfizer as Biggest DTC Advertising Spender!

Lilly Overtakes Pfizer as Biggest DTC Advertising Spender!

According to cegedim Strategic Data, Lilly overtook Pfizer in total direct-to-consumer (DTC) spending in April, 2012. The chart below shows the top 10 DTC spenders between July 2011 and April 2012.

Pfizer spent nearly $900 million in DTC advertising in 2011. $220 million of that was for Lipitor. I predicted that Lipitor would hold the "Key to DTC Ad Spending in 2012" (see here) and this chart proves it.

Lilly's Cymbalta and Cialis were the #2 and #3 highest in DTC ad spending in 2011. It looks like they will be #1 and #2 in 2012.

Bogus Predictions of Pharma Industry Online Ad Spending

Bogus Predictions of Pharma Industry Online Ad Spending

Here's a headline, versions of which I have been seeing for years: "Pharmaceutical Advertising Spending Shifts to Digital." That's how Business 2 Community -- "an independent online community focused on sharing the latest news surrounding Social Media, Marketing, Branding, Public Relations & much more" -- describes the latest data from eMarketer, which predicts that "pharmaceutical" online marketing will increase by a staggering 23.3% in 2012 vs. 2011 (see here and chart below).

First, eMarketer's data are not specifically focused on the pharmaceutical industry. The data includes ALL healthcare industries, including doctors, hospitals and "other entities that deliver health services such as health maintenance organizations (HMOs)" and, I presume, health insurance companies. What percent of the $1.58 billion in online spending predicted for 2012 is pharma specific? Probably over 50%, but not 100%. Perhaps 75%? Your guess is as good as mine (or eMarketer's).

So the headline above is misleading. It should read "Healthcare Advertising Shifts to Digital." But is it really?

Another problem is that eMarketer's predictions about online healthcare ad spending have been "all over the map" by which I mean wildly inaccurate and meaningless. In 2007, for example, eMarketer predicted that the spending on online HC marketing would be $2.20 billion in 2011 (see here and chart below). But the eMarketer chart above now indicates the number is closer to $1.28 billion, which is quite a difference.

So, why should we believe eMarketer's prediction that online HC ad spending will increase by 23.3% this year? You tell me.

Pfizer Throws In the Lipitor Marketing Towel. Repercussions in Job Market Will Be Swift

Pfizer Throws In the Lipitor Marketing Towel. Repercussions in Job Market Will Be Swift

Despite Pfizer's heroic and unprecedented effort to maintain Lipitor's market share after expiry last November and after spending "more than $87 million promoting the medicine, the world's biggest drug company is quietly giving up on its once-great cash cow for good because more generic versions will soon be going on sale" (see this Wall Street Journal story: "Farewell after all, Lipitor").

As I reported here on Pharma Marketing Blog on May 2 (see here), Pfizer's Lipitor co-pay card/PBM discount plan failed to meet its goal of maintaining a 40% share of the combined market for Lipitor and its generic equivalents for at least 6 months after generic brands are launched. As reported in the WSJ (op cit), Lipitor's U.S. market share is 33% after 5 months (more generics will come on the market after May 31).

Although Pfizer will say that its program was a succes, the program has not met its sales goal and is considered a public relations failure by some people in the industry. A pharmaceutical marketing VP attending a recent conference referred to my blog posts "Occupy Pfizer! Protest It's Deal to Block Sales of Generic Lipitor! #OccupyPFE" and "Do Drug Coupons Hurt Employee Health Plans and Ultimately Employees?"

But after spending more than $87 million promoting Lipitor in recent months, Pfizer officials told The Wall Street Journal that the company is "no longer negotiating new contracts to sell Lipitor to health plans, which are signing up to sell generic versions at far lower prices. The company recently stopped sending sales representatives to promote Lipitor to doctors and halted advertising in print, on television and online, which once commanded a $271.9 million yearly budget." Here's a chart showing Lipitor's direct-to-consumer (DTC) advertising budget over the past 9 years:

[Note the minuscule proportion allocated to "Internet" ad spending. I cannot see from this chart what the $ amount is!]

The elimination of $220 or so million in Lipitor DTC advertising will, I predict, result in a 3% drop in overall DTC advertising in 2012 compared to 2011 (see "Lipitor Holds Key to DTC Ad Spending in 2012"). But that is only the tip of the Lipitor marketing budget, which totaled over $660 million in 2010. Included in that number is marketing to physicians and samples (see here).

When that much money is taken out of the Rx brand marketing equation, there are bound to be repercussions within Pfizer itself and within marketing communications companies that provide services to Pfizer. Meaning, of course, jobs will be lost. Perhaps that correction has already occurred. Or perhaps there are more layoffs to come.

Lipitor Holds Key to DTC Ad Spending in 2012

Lipitor Holds Key to DTC Ad Spending in 2012

As reported by Nielsen, direct-to-consumer (DTC) advertising spending by the pharmaceutical industry was down by 1% compared to 2010. I used that bit of information to update my chart of DTC spending trend over the years (see below).

This chart actually plots measured media data (excluding Internet display and search advertising) through 2010 from AdAge, which got the data from TNS Health. I calculated the 2011 total based on the 1% decrease reported by Nielsen (sorry, I don't have TNS data for 2011).

The final bar of the chart is my estimate for 2012, which is based on the premise that DTC ad spending for Lipitor will be less than half of what it was in 2011. Of course, Lipitor is now available in generic form, so we would expect Pfizer to spend less on its advertising. However, for the first 6 months or so in 2012, Pfizer will continue to spend money on advertising its $4 co-pay coupon for branded Lipitor. But after that, I expect spending to drop precipitously.

I did a little exercise to predict that DTC spending in 2012 will be down by over 3% compared to 2011 solely due to the drop in Lipitor advertising. Here's how I came up with that estimate.

First, let's look at the TOP 20 brands by DTC spending in 2011 (this chart is based on Nielsen data that I found in the April 2012 issue of MM&M):

In 2011, Pfizer spent $220 million on Lipitor DTC advertising according to Nielsen. That compares to $272 million in 2010 (a 20% decrease). So, right away, we know that Lipitor DTC spending is dropping although it still represents 5.5% of the total spend in 2011 (it was 6.3% in 2010).

Based on what I said above and a poll of readers (see here), I estimate that Pfizer will spend less than $100 million (ie, $90 million) on Lipitor DTC in 2012. If we assume everything else remains the same, that decrease of $130 million represents a 3.3% decrease in overall DTC spending!

Of course, not everything else will "remain the same." Other drugs may come on the market that may be have substantial DTC advertising budgets. But I don't think that is likely -- more and more drugs in the TOP 20 list will be coming off patent.

In any case, this is just a little thought exercise that demonstrates how much a SINGLE drug can impact the overall DTC spending trend. Not only that, but a single drug company -- Pfizer -- accounts for nearly one-quarter (22.3%) of the total (see chart below)! Seven of the TOP 20 drugs are marketed by Pfizer.

One of the TOP 20 advertised Pfizer drugs is VIAGRA. Currently, it appears that Pfizer is focusing on the counterfeit Viagra problem to bring in web visitors to viagra.com (see display ad on left).

Another TOP 20 advertised Pfizer drug is ENBREL. Pfizer & Amgen spent nearly $100 million on Enbrel DTC advertising in 2011 (compared to $71 million in 2010). And this number does NOT include what the Amgen/Pfizer has paid Phil Mickelson to be the Enbrel celebrity spokesperson (see "Amgen Blows Its Marketing Budget on Phil Mickelson Campaign" for more on that). On TV, Mickelson promotes Enbrel for the treatment of his psoriatic arthritis. According to the MM&M article cited above, psoriatic arthritis afflicts "around one in 20 of the 2% of Americans who suffer from psoriasis." That works out to be 375,000 people (1 in 20 of 7.5 million).

Approximately 63 cents out of every DTC ad dollar goes to TV. So, Pfizer/Amgen spend about $63 million to reach 375,000 people via TV ads! It seems a bit exorbitant to spend so much for broadcasting versus a more targeted approach. Anyway, that's the crazy world of Pharma DTC advertising! Go figure.

Pharma Marketing Vs. Insurance Marketing: What Pharma Can Learn from Geico

Pharma Marketing Vs. Insurance Marketing: What Pharma Can Learn from Geico

Often, when proponents of pharma eMarketing get together at industry conferences, or cry into their beers at receptions afterward, they lament the fact that the drug industry isn't doing as much as other industries in the "e" arena. Sometimes, they cite eMarketing campaigns of companies like Procter & Gamble (P&G) and ask, Why aren't drug companies doing that?

The responses to that question generally fall into the category of "It's Regulations, Stupid!" That is, FDA regulations are hampering what pharma marketers can do online. The packaged goods industry -- of which P&G is a member -- is not regulated like the drug industry is regulated. True that!

So, let's look at another industry that IS regulated: the insurance industry. Where do insurance marketers spend their dollars and how does that compare with pharma? It just so happens that I came across some data that might shed some light on that (see the chart below; click on the chart to enlarge).

The data come from Kantar Media. The Internet data does NOT include search advertising. The insurance data is for the first three quarters of 2011 (total spend = $3.56 Bn) whereas the data for pharma is for 2010  (total spend = $4.3 Bn). To compare apples to apples, in 2010 the insurance industry media spend pie looks like this: TV, 54%; Print, 6%; Internet, 21%.

No matter how you look at it, the insurance industry favors Internet over print whereas the opposite is true for pharma. Why?

Here's what I have learned from personal experience. In my family -- and probably in your family too -- health decisions and purchases are generally the domain of my wife, whereas insurance decisions and purchases are my responsibility. It's no secret that pharma marketers target mostly women. My wife reads magazines like Prevention, etc. that feature a lot of drug ads. I don't read these magazines. While I have seen print ads for insurance companies, they haven't made much of an impression on me, whereas TV ads have.

So, from my personal experience, it's logical that both industries allocate a big portion of their media spend on TV advertising, but only the drug industry spends a lot on print advertising.

What's surprising, however, is the insurance industry's 28% of total media spend on the Internet (versus 5% for the pharma industry).

Coincidentally, yesterday I received an e-mail message from Geico about their "Family Pricing Program" for my son Greg. (We are Geico customers, having both our car and home insurance with them.) The message said:

"If Gregory is getting ready to graduate, preparing for a new job, or looking to establish a little independence, our Family Pricing program allows you the freedom of moving Gregory to his own policy while he continues to receive the same great rates you're currently receiving."

That spooked me a bit because Greg just started his first full-time job after graduating and I mentioned to my wife that soon it will be time for Greg to get his own insurance policy! I tweeted:

"Got email from Geico about transferring my son 2 his own car insur plan now that he has a job. How'd they know I was just thinking that?"

Of course, they didn't know what I was thinking, but it was nice to know that they anticipated what I may be thinking! Geico knows a lot about me and my family. They know our ages, our sex, our driver's license numbers, our driving records, what kinds of cars we own, etc. I had to give them that information to get insurance. No big deal.

So, it would be easy for Geico to anticipate that Greg recently graduated and that he may have a new job. Further, they know from experience that parents want to get their kids off their insurance plans ASAP.

After I posted that tweet, I received this response from "Shay" tweeting from the @GEICO_Service Twitter account:

"We would be more than happy to give him a quote! He can go to geico.com or give us a call at 1-800-861-8380. -Shay"

That was a pleasant note that makes this whole experience even more personal than if I just got an e-mail message.

When I complained that Greg was likely to push back on the idea of paying his own insurance, Shay reassured me that "We will do everything we can!" and added: "Thank you so much for being part of the GEICO family!"

I don't think I can leverage this new found "family" relationship to get an even better deal from Geico, but the experience made me an even better fan of Geico -- I was already impressed with their online services. Hopefully, if we ever need to make a claim, I will be equally impressed.

Can the pharmaceutical industry do something similar? I'm not sure. The first hurdle for pharma is breaking away from print. As I said, pharma marketers may depend upon print to reach their core audience -- women. But they may be ignoring social media's ability to reach that core -- listen, for example, to this podcast: "How to Score With Women (as a Marketer) via Social Media."

Keep in mind, however, that social media marketing is virtually "free" compared to print advertising, which is something the packaged goods industry is learning (see "The Coming Pharma Digital Depression"). Given that, even if pharma moves big time into social media marketing, I'm not sure the spend pie would look much different. The insurance industry probably spends a lot more on internet display advertising and e-mail direct marketing than does the pharma industry. These activities are much more expensive than paying Shay to reach out to me via Twitter!

Double Dip in DTC Spending Plus 33% Drop in Internet Display Ad Spending!

Double Dip in DTC Spending Plus 33% Drop in Internet Display Ad Spending!

Direct-to-Consumer (DTC) pharmaceutical advertising spending suffered a "double dip" recession between 2007 and 2010, according to  data presented in the AdAge Insights Whitepaper "Pharmaceutical Marketing: Targeting Consumers & Connecting Online" (find the link to that report here).

Spending dipped 14% from a high of $5.4 billion in 2006 to $4.7 billion in 2008 and dipped again 9% in 2010 compared to 2009, which saw a modest 2.4% increase over 2008. This "double dip" in DTC spending is apparent in the following chart (click on chart for larger view):

Measured media includes Internet display ads, but not search ads.

The industry spent $4.34 billion on DTC advertising in 2010. This is the lowest spend since 2004, when the industry spent $4.43 billion. There are many reasons cited for this decrease but the "main reason they’ve cut back is, like many other companies and consumers in the recession and tepid recovery, they simply have less to spend," according to the AdAge report.

The top 25 advertisers in 2010 accounted for 98.5% of the total spend. Pfizer was the biggest DTC spender. It's $967.5 million DTC budget in 2010 was more than double the DTC spend of its closest rival, Eli Lilly, which spent $470.8 million on DTC advertising in 2010 (see chart below; click on chart for larger view).

LIPITOR was the #1 most-advertised Rx drug in 2010. In 2010, Pfizer spent a whopping $272 million on DTC advertising for LIPITOR, which is scheduled to go off patent in November, 2011 (see chart below; click on chart for larger view).

I don't have data for 2011, but I notice a lot more LIPITOR ads these final days before the end of LIPITOR's market exclusivity. My doctor also recommended I switch from generic pravastatin to LIPITOR, assuring me that it will go generic by the end of the year. Some of that DTC advertising must have reached my doc, who previously had recommended CRESTOR, which spent only a minuscule $95 million on DTC advertising 2010! Maybe, however, it was the speaker fees Pfizer paid my doctor that changed her mind (see here).

As I have often noted, digital display ad spending is only a minor fraction of pharma's overall DTC budget. In 2010, digital represented only 4.7% of total DTC spending (see chart below).

Although Pfizer was the top spender on Internet display ads in 2010, it cut its digital budget by 55% compared to 2009 ($28.6 million spent in 2010 vs. $64 million in 2009).

Here's is how much the top 10 Internet display advertisers spent in 2010 compared to 2009:

The spending of these top 10 advertisers represent 74% of the total $204 million spent on Internet display advertising by the pharmaceutical industry in 2010. These companies spent 33% less on the Internet in 2010 than they did in 2009. It's likely the same is true for other companies as well.

Again, I do not have data for 2011 Internet spending by pharma. I do know, however, that a representative of Google just recently said "pharma needs to leverage the Internet" and that "pharma was not considered a key client by Google because of pharma’s low spend" (see here). That suggests to me that 2011 will NOT shape up much better than 2010.

If you look at the number of drug industry conferences devoted to digital marketing and the record attendance at some of these conferences, however, you might believe there is a turnaround in the works. Only time will tell.

Ad Dollars Follow Eyeballs to Web

Ad Dollars Follow Eyeballs to Web

Internet advertising revenue in the United States totaled $26.0 billion for the full year of 2010, whereas ad revenue earned by newspapers was $22.8 billion, according to a PwC/IAB report (see here). Here's the distribution of ad revenue charted by category:

Here's the trend in annual Web ad revenue from 2000 through 2010:

Search continues to get the largest share of online revenue, although this share decreased to 46% in 2010 from 47% in 2009. Still, search revenue totaled $12.0 billion in 2010, up over 12% from $10.7 billion in 2009. Display-related advertising revenues -- which includes revenue from display banners, rich media, digital video, and sponsorships -- totaled $9.9 billion or 38% percent of 2010 revenues, up 24% from the $8.0 billion reported in 2009. Digital video ad revenue accounts for 5% ($1.4 billion) of the total Web ad revenue.

From these data, you might assume that the drug industry spends 25% of its ad dollars on Web advertising. That could be a false assumption. It's generally believed that the drug industry Web advertising slice of total ad spend is much less than 25%.

Finally, according to PwC/IAB, here's the percent of total Internet ad revenues from different industries:

GUESSTIMATING Total Pharma Web Ad Spending
Pharma & Healthcare are near the bottom of this chart. 5% of $26.0 billion is $1.3 billion, which is what the Pharma/Healthcare industry spends on Internet advertising (INCLUDING search) according to PwC/IAB. Let's say 80% (ie, $1 billion) of that is Pharma-related. Pharma spends about $4.5 billion in direct-to-consumer advertising. It may spend the same in advertising to physicians -- not counting samples and sales rep expenses. If my guesstimate is correct, then $1 billion accounts for about 11% of the total pharma ad spend.

Detailing by Telephone Accounts for Nearly Half of "New Media" Promotion to Physicians

Detailing by Telephone Accounts for Nearly Half of "New Media" Promotion to Physicians

*** PODCAST: Pharma TeleWeb e-Detailing - A CASE STUDY: Lilly's Experience in Europe Recorded LIVE Feb 23, 2011, 2 PM Eastern US. ***

It's always been difficult to get a handle on the amount of money pharmaceutical companies spend on promotion to physicians and especially how much of the total spend is focused on "e" channels such as Web advertising and Internet detailing. Several different companies offer estimates that vary depending upon exactly what they include when totaling up the numbers.

But no matter what the source and how the numbers differ, my analysis is always the same: spending in the "e" space is a tiny fraction (less than 5%) of total promotional spend and has remained in that range every since I can remember!

Today, I received a summary of a report from SK&A, a market research company, titled "U.S. Pharma Company Promotional Spending Trends in New Media" (see here). Of interest to me were the sections on "New-Media Average Monthly Expenditures, 2006 to 2010" and "Promotional Expenditures by New-Media Channel, Oct. 2009 to Sept. 2010." Again, the numbers show that pharma spends very little on ePromotions or "New Media" promotions or whatever you want to call it.

According to this report, "Pharmaceutical companies are finding novel ways to promote their products to physicians and other prescribers, namely through new media channels such as internet detailing, tele-detailing, e-meetings and web advertising." It's interesting that the telephone (as in "tele-detailing"/"Telephone Detailing") has been included as a "new media" channel. And here I thought the telephone was invented over 100 years ago!

SK&A says that "tele-detailing" accounts for 49% of the new media channel physician promotional spend, whereas "Internet Detailing" is only 35% and Web advertising is a meager 1% (see chart below).

According to the report, which is based on an "ongoing survey panel of 2,455 physicians and other healthcare practitioners," the total U.S. "New Media" channel promotion spend by pharma focused on physicians was $327 million during the 1-year period between October 2009 and September 2010. That includes $160 million for "Telephone Detailing."

The report claims that "In the U.S., promotional spending [aimed at the HCP audience] totaled $24 billion between October 2009 and September 2010." Thus, "New Media" spending represents ONLY 1.4% of the total spent on promotion to physicians by pharma companies. If we eliminate the $160 million spent on telephone detailing, that percentage drops to 0.7%!

But I bet the $24 billion includes the retail cost of samples, which could account for as much as $18 billion a year (see here). If so, then only $6 billion was spent on non-sample promotion to physicians and 2.8% of that went to "true" new media (ie, not telephone detailing).

But "New Media" promotional spending is increasing by leaps and bounds according to the report, which states "[monthly] promotional spending in new media has increased significantly from about $5 million in January 2006 to about $26 million by September 2010" (see chart below).

Again, telephone detailing is included in the "new media" category. It could be that ALL of this "significant" increase is due to docs receiving more telephone calls from sales reps!

FOLLOW UP: November 23, 2010. Rich Meyer over at World of DTC Marketing Blog clarified how "Telephone Detailing" works and why it may have been included under "new media" in the SK&A report.

"There are many types of electronic detailing including detailing by phone," said Meyer. "Phone allows physicians to hear a detail on demand along with an interactive presentation via the Web."

See Meyer's complete post: "Detailing by phone: What do physicians think?"

How Much Does Pharma Spend on ePromtion? The Mystery Continues - UPDATE

How Much Does Pharma Spend on ePromtion? The Mystery Continues - UPDATE

Depending upon what publication reports the data, the TOP 12 pharma companies either spent $287.60 or $168.12 million on "ePromotion" in 2008. The two publications I am talking about are Medical Marketing & Media (MM&M; see "Pharma Report: When Generics Attack") and AdAge (see "Marketing Mix of Leading Pharma Advertisers in 2008"). The "measured media" DTC data reproduced in these publications come from the same source: TNS, which is now part of Kantar Health.

I focus on the 2008 data because I don't have 2009 data from AdAge, but I DO have 2009 data from the May 2010 issue of MM&M, which reported promotional spending in several categories: DTC, detailing, ePromotion, meetings, and journal advertising. Some of the data -- it's not clear which data -- come from SDI's Promotional Audit. 

The 2009 data reported in MM&M covers the TOP 20 pharma companies in terms of "Total Promo Spend" (see chart below, which shows the Detailing, DTC, and ePromotion spend for the 20 companies; not included are the data for meetings and journal advertising; click on the chart for an enlarged view):

What's immediately evident is how LITTLE each company spends on "ePromotion," which -- I assume -- includes only display ads placed on 3rd-party Web sites and specifically not search advertising. This is part of what's called "measured" media spending, which many experts say overstates the actual amount that companies spend on advertising -- because of discounting. Let's not worry about that because discounts probably apply to both types of media.

What % of total measured media spending is devoted to ePromotion? To calculate that I added the spending on DTC, ePromotion, and Journal Ads to get the total measured media spend, which was $4.208 Bn in 2009 according to data reported in MM&M. The total ePromotion spend was $0.3037 Bn, which is 7.2% of the total.

The 7.2% figure is suspect. Measured media data reported in AdAge ("Marketing Mix of Leading Pharma Advertisers in 2008") indicate that Internet display ad spending was 2.4% of total measured media spending in 2008 and 3.1% in 2007. Unless I am missing some data from the MM&M source or made an error in math, I don't see how you can go from 2.4% to 7.4% in one year.

Meanwhile, Melissa Leonhauser, director at SDI, was quoted in MM&M as saying that 2009 pharma ePromotion spending increased 6.6% compared to 2008. Total industry promotional spending increased 2% according to Leonhauser

The other thing I notice from the data reported in MM&M (see chart) is that some companies spend nearly as much or more on DTC as they do on detailing to physicians (eg, Pfizer, BMS, Amgen, BI, and Daiichi-Sankyo). If true, that's pretty amazing. Amazing, because I've seen estimates of physician detail spending of $12 billion industrywide, whereas overall DTC spending is more in the range of $4-5 billion. That yields a Detailing/DTC spending ratio of about 3 to 1. For the biggest spender -- ie, Pfizer -- to have a Detailing/DTC ratio of 1.12 to 1 (based on data reported by MM&M; ie, $1.223 Bn/$1.089 Bn) seems very suspect to me.

I have more suspicions about the data reported in MM&M. In the case of Daiichi-Sankyo, for example, when you add up the columns (ie, different types of promotion) you get $554.50 million, whereas the table has $300.75 million in the Total column.

Let's get back to comparing 2008 ePromotion pharma spending reported in AdAge vs the spending calculated from data reported in MM&M. These numbers are very different for most of the companies on the two lists. Again, I am comparing data for 2008. To do that, I used the % change reported in MM&M to calculate the ePromotion spend for 2008 from the 2009 data. This calculation for Merck, for example, yields $95.5 million whereas AdAge reported that Merck spent only $8.60 on ePromotion (Internet display ads) in 2008 -- a difference of $86.9 million! Anyway, here are the numbers (note:for the AdAge data I merged SP data into Merck and Wyeth data into Pfizer to account for mergers after 2008 and to make a fair comparison to what MM&M reported; 2008 data from MM&M were calculated from % change information published in MM&M):

What can account for the huge differences seen for many companies on this list? There must be a mistake somewhere -- as I said, I may have made a mistake in my math or assumptions. But I know for sure that there is at least one error in the MM&M table -- the data for Daiichi-Sankyo just doesn't add up to the total reported.

UPDATE (6/12/2010):

Bob Harrell commented on my Facebook page: "Are you sure the definition of "ePromotion" in either or both cases is *really just* online display advertising (basically banner ads)? That seems like a very odd and narrow definition to use for ePromotion in pharma - putting aside the question of what can easily be tracked/indexed - and thus a questionable assumption for your comments above."

It's not clear from MM&M Table 4 ("Total Promo Spend, DTC SPend, ePromotional Spend") whether or not the ePromotion numbers refer only to display ads. It is also not clear if the numbers refer to direct-to-consumer ePromotion or ePromotion to physicians, which can include eDetailing, etc, or to BOTH consumers and physicians. Since MM&M put ePromotion and DTC in the same table and had another table (Table 5) devoted to physician promotion, I assumed that the ePromotion numbers in Table 4 referred to consumer ad spending.

The source of the ePromotion numbers reported in MM&M (Table 4) is "SDI's ePromtion Audit," which I now have learned "tracks online promotional activities for physicians" (see "SDI Reports: Pharmaceutical Promotional Spending Indicates Trend Toward Electronic and Online..."). This would explain the inconsistencies I calculated in the table above. It would not explain, however, what the the level of ePromotion to consumers is.

SDI noted an increase of more than 32% in industry spending on ePromotion (to physicians). Kelly Sborlini, Vice President of Market Research Audits at SDI said "we're also seeing a similar shift in pharmaceutical direct-to-consumer advertising. The largest growth area in DTC advertising is on the Internet, whereas spending on consumer magazine print ads is decreasing." I cannot find the numbers that SDI used to support this statement.

Making Sense of Pharma DTC Spending Trends

Making Sense of Pharma DTC Spending Trends

ePharma boosters see the latest direct-to-consumer (DTC) advertising spending numbers as a positive sign that the drug industry is finally increasing its allotment to the Internet in its DTC marketing budget. Nielsen data indicate that "spending on Internet ads, which has doubled over the last five years, hit $117.4 million, up 31 percent" (see "Drugmakers boost consumer ad spending 2 pct in '09"). Total DTC spending increased 1.9% in 2009 vs. 2008. All these data do NOT include search engine advertising, which I will get to in a minute.

I am having some problems with the numbers when I compare them to previous reports. For example, the total ad spend in 2009 was reported to be $4.51 Bn. If that is a 1.9% increase over 2008, then ad spending in 2008 must have been $4.42 Bn. But data reported previously by Nielson (see here) says pharma ad spending in 2008 was $4.34 Bn. My notes, however, indicate that the latter was an estimate based on spending for the first 9 months of 2008. So let's forget the latter total and use the former (I adjusted it to $4.425 based on a 1.9% year-over-year increase, which corresponds to Nielsen's latest data; see here).

Working backwards from the year-over-year percent increases reported by Nielsen, I get the following table comparing 2009 to 2008:





All the % Inc/Dec numbers agree with the Nielsen data as reported by AP here. However, the Outdoor spending number for 2008 is suspect. I had to use that number to make sure the total for 2008 more or less agreed with the total based on a 1.9% year-over-year increase. Believe me there are other numbers out there that add up even worse, such as this table I found on World of DTC Marketing:


The totals in this table aren't even close to what was reported in the AP article (Nielsen data). Actually, these are numbers for the first 9 months of each year. But TNS Media Intel's 2009 Internet number of $220.9 million is much larger than Nielsen's 2009 number of $117.4 million. How can these be so different? I'm pretty sure both are reported "measured" media, which does not include search engine ads. TNS/Kantar Media Intelligence told me that it tracks over 3,000 sites throughout the US and Canada, which is a different methodology than that used by Nielsen. So it's important not to compare these apples and oranges! Note: TNS/Kantar Media reports that outdoor pharma ad spending for 2008 was $3,084 million.

In any case, here's what the media mix looks like, 2009 vs. 2008 (using Nielsen data):




According to this, Internet spending (not including search) increased to 2.6% of the overall DTC budget. This is still much less than the 3.6% spent on newspapers! What happens, however, if you add in an estimate for search engine ads? It's been estimated that SE advertising accounts for 40% of online spending. But I'm guessing that pharma pulled back from SE advertising after FDA issued warning letters at the end of March 2009. Let's say SE spending by pharma in the 9 months after that dropped by one-third. According to my back-of-the-napkin calculations, this is how I see TOTAL Internet spending by pharma in 2009 compares with that in 2008:




You can check my math. You will see that in 2008 search equaled 40% of the total Internet spend, whereas in 2009 it is only 33%. This seems believable. If so, then the total Internet spend in 2009 increase only about 18% over 2008, which is a lot less of an increase than 31% and in line with the increase for old media newspaper advertising! Who'd have thunk old media could compete so well with new media?