Direct Marketing Spend To Spike As Drug Sales Dip

As pharmaceutical companies continue to slash their sales forces and groan about arid pipelines, one part of the business getting a financial boost is direct marketing.

The industry is expected to shell out $1.03 billion in total direct marketing (DM) expenditures in 2008—and that number is due to jump to $1.39 billion by 2012, according to new data by the Direct Marketing Association.

As the study's key takeaways illustrate, all trends are up:

• Every dollar spent on DM ads is expected to generate $10.27 in DM-driven sales in 2008
• DM-driven sales are expected to grow annually at a rate of 9.4 percent through 2012
• DM employment is expected to grow annually at a rate of 4.7 percent through 2012
• Telephone marketing advertising spend is expected to grow annually at a rate of 4.7 percent through 2012

So where's the biggest area of marketing growth? The Internet. According to the study, online marketing expenditures are forecast to rise annually at a rate of 17.2 percent through 2012. This year alone, the industry is expected to spend $65.1 million on online marketing efforts to businesses, and $28.5 million on consumers. Those figures are due to jump to $120 million and $53 million, respectively, by 2012. That's in stark contrast to 2002, when pharma spent only a $25 million on total Internet advertising.

And it looks like some drugmakers are already innovating their ad spend strategies. In a study by Cegedim Dendrite released in March, more than 50 percent of pharma marketers said that they would be increasing this year's expenditure on email, search engines, and keywords.

"To see about a 20 percent growth rate per year in Internet is huge. But it shouldn't come as a shock—that's where everyone is pushing," said Michelle Tiletnick, research manager at Direct Marketing Association. "Interactive is becoming cheaper than direct mail, and e-mail is more affordable. It's an easier way to reach people."