Media Spend Trends

If 2008 was the Year of the Great Recession, and 2009 the Year of the Very Slight Recovery, then, at least as far as advertisers are concerned, 2010 looks to be the Year of the Return to Normalcy. At first glance, it may not seem that way; 2009 saw a decrease of 2.2 percent in total global media spend. But that number is weighed down by a 10.8 percent drop in spend on professional marketing—DTC spend increased 0.5 percent, and e-marketing jumped 8.2 percent. The reasons for this increase, though, reflect more than just a natural bounce back. They're indicators of the way pharma will navigate a post-advertising world.

The ad landscape has been shifting for years. So it's not surprising that pharma media spend has been moving—albeit with the speed of molasses in winter—to online. After finally increasing online spend in 2007 by a monster 35 percent, life sciences agency Razorfish Health saw its clients hit the brakes, and hard. In 2008, online spending dipped an average of 13 percent before recovering last year to an average increase of 4 percent. Digital spend accounted for roughly 21 percent of a company's US marketing budget in 2009, according to a survey from consulting firm TGaS. But don't let that relatively low number fool you: Online ads are generally less expensive than their TV or even print counterparts. For example, a full-page color ad in a single issue of Women's Health costs $161,090, and a 30-second spot during ABC's demo-grabbing drama Grey's Anatomy weighed in this season at $240,462, according to Ad Age. Meanshile, Razorfish reports that the rate for an ad on a major search engine or portal ranges from $0.56 to $0.88 per click. The takeaway: Online, the same presence can be achieved with far less cost.

Make 'Em Laugh

Other industries have been a little quicker than pharma on the online uptake. They host online video contests; present youth-driven content (a la Burger King's sponsorship of Family Guy creator Seth MacFarlane's Cavalcade of Comedy online series), and give potential customers the ability to view products from every possible angle before committing to a purchase.

Razorfish sister agency Digitas hosted its third annual digital "newfront" (playing off the traditional network TV "upfront" annual presentations to advertisers) in June. The focus was mainly on non-pharma online consumer advertising, but CEO Laura Lang stressed the philosophy pharma needs to adopt. "Make them laugh, make them think, remind them that they are unique, help them through their day. When you do that, your brand becomes part of that alchemy where brand objectives and creative insight and the cultural zeitgeist all come together," says Lang.

Razorfish Health General Manager Katy Thorbahn also believes pharma can learn a great deal from one successful non-pharma online campaign. Kraft recently ran a video recipe contest for its Philadelphia Cream Cheese brand, enlisting the help of Food Network host Paula Deen to get consumers to submit their cream cheese–based recipes in video form to a special site designed just for the contest. The contest began on March 29, and ended May 23; Kraft received more than 5,000 submissions.

Though some of the more niche disease states seem like better targets it is possible for drugs with mass appeal to break in via a similar sort of unbranded marketing, such as public health initiatives and third party sponsorships, says Donna Wray, executive director and management advisor at TGaS.

"The Kraft example is a really interesting case study around how to engage people around a beloved food product," Thorbahn says. "They created this entire ecosystem of experience."

From a pharma perspective, it's a matter of figuring out the audience's relationship with the brand. Thorbahn notes that Kraft understood that it had the potential for an engaging and authentic experience coming from its brand, without beating the consumer over the head with promotion. Though the contest has been over for more than a month, people still actively participate in the community, exchanging recipes and stories.

The notion of community isn't new in pharma; online patient groups have been around since the dawn of the Internet age. But, like walking the traditional DTC tightrope, finding the right balance between heavy-handed overpromotion and non-purchase–inducing subliminal messaging is a question keeping many marketers up at night.

EMD Serono took a step in the right direction with its "Increase Your Chances" fertility ads. The company took a sensitive issue—infertility—and wrapped it in a sweetly humorous, webisode-based package on a snazzy site, www.increaseyourchances.com. The webisodes follow an ordinary bird-and-bee couple (actors dressed in a bird and bee costume, respectively) in their quest to get pregnant. The minimal self-promotion and deft handling of the subject matter garnered praise from press and patients alike.

Rules and Reps Mix it Up

Of course, other industries don't labor under the same regulatory strictures that pharma must endure. And regulatory additions like the Physician Payment Sunshine Act and DDMAC's heightened sensitivity to non-kosher ads have now made promotion even more of a balancing act. Giants like Pfizer and GlaxoSmithKline have received warnings from FDA over various campaigns, both DTC and professional, and the agency is showing no signs of resting on its regulatory laurels.

Professional marketing via sales reps took a dive last year; with the sales force often the first to feel the heavy hand of cost-cutting, companies felt the need to divert funds to culling new customers via DTC. Of the respondents to a Cegedim Dendrite study on DTC who anticipate an increase in spending in 2010, nearly half said that increase would result from a shift to targeted DTC. Add to that the increasing need for vagueness in DTC ads, and you've got a recipe for double the DTC spend on certain brands—which is what TGaS found. "You have to spend more money to achieve the same level of educational effect and overall presence," Wray says.

That's not to say traditional DTC is gasping for air. "There are certain brands that are just more consumer-oriented," says Wray. "For a product like [Allergan's] Latisse, the doctor isn't going to say, 'Your lashes could be longer,' so they really need the consumer advertising to generate the demand." Thus the 0.5 percent global DTC increase last year.

Part of the solution to the effectiveness problem also comes in the form of online ads. "With an ad on a site, at least users can click to get more information," says Thorbahn. "On TV or in print, you're left with these reminders or unbranded ads, where the likelihood of getting someone to call the one-800 number or visit the Web site is much lower"—though Web promotion during a TV ad (something as simple as a "For more safety information, please visit our Web site at www.product.com" tag) has shown a definite increase in traffic. While it may seem difficult to measure the impact that tag has on traffic, Wray says there are two ways to do so: Create a unique URL that consumers wouldn't enter without prompting from an outside source (i.e. Cymbalta's www.depressionhurts.com), or just look for a correlation between increased offline ads and traffic.

Paid search ads (the ones you see next to your search results on Google, for example) aren't as easily monitored as display ads that appear at the top of your homepage of choice, so the importance of ad verification is also on the rise. Razorfish that notes as a portion of the budget, ad verification went mostly overlooked in 2009. Ad placement is as crucial online as in traditional media; a Viagra ad appearing next to a result for a Web site with high tween traffic leads to just as low an ROI as a Viagra ad in Teen Beat magazine. Thus, 20 percent of the Razorfish respondents indicated a desire to at least dip their toes in the verification pond, using third party vendors to shoulder the burden.

Another challenge stemming from sales cuts—from personnel to overall spending—is finding more efficient avenues for professional marketing. The answer here, too, lies in the online space. Healthcare professional portals (HCPs), besides being cheaper than thousands of physician calls and sample drops, are an easy way to engage with HCPs without incurring the wrath of FDA and the public at large. TGaS found that companies have actually incorporated these portals into their natural cost of business; they no longer have to show ROI for these expenses. The same goes for the essential product site, which not only provides another dimension to a campaign, but also helps with regulatory compliance via those site-direction tags in traditional ads. Rather than going through all the prescriber's information (PI) on-air, companies can offer a subset and tell the viewer where to find the complete PI.

But not all pharma companies have been sitting back on their heels the last five years or so. Merck was far ahead of the curve in its series of Gardasil campaigns, launched when the drug hit the market in 2006. The company seamlessly integrated static and non-static Web, unbranded, and traditional DTC ads into cohesive, intelligently evolving campaigns aimed straight at young women, drastically boosting visibility (and even earning it Pharm Exec's first Brand of the Year designation in 2007).

Targeted Conversations

As some brands lend themselves more readily to traditional DTC, the same holds true for online campaigns. Companies have realized that blanket ads for blockbuster drugs are a thing of the past; instead, "targeted messaging" has become one of the new buzz phrases. This involves more than just tossing money at media companies and waiting for the results. In the future, pharma needs to work more directly with content creators and social media strategists to create these targeted messages, according to Alyson Hyder, Razorfish Health's vice president of digital marketing.

The key to marketing is audience knowledge, Thorbahn says. That knowledge leads to the ability to open up a conversation with consumers and patients. Standard ads—banners, pop-ups, and others of that ilk—still take up the biggest slice of the online pie, but social media spend is finally becoming a much higher priority.

"More and more, they're ramping up their investment in building experiences and ways to communicate," says Thorbahn. The 4 percent of a company's budget that's going toward social media will grow, but impact will be harder to measure. Because most of the money goes into labor, seeing your dollar-impact is not as easy. One way to accomplish that task is to look at response. For instance, how many people "like" your Facebook page? How many replies does your Twitter account receive?

Donna Wray suggests that pharma's social media phobia isn't necessarily a phobia. "Traditionally, the marketers have control of the budget, and they're more focused on education than conversation," she says. "PR—and customer service, even—are where social media lives." Companies are (contrary to popular belief) no longer playing the "wait-and-see" game of two years ago; they just haven't found a way to turn a campaign into a true two-way conversation.

Facebook and Twitter, the current kings of social media, have of late found their desirability diluted—at least as far as pharma is concerned. Their monopoly on marketers' time and resources is nearing termination. "The challenge that we all have as marketers is getting enamored with a certain functionality," Thorbahn says. "Having 10,000 Facebook pages for 10,000 brands is probably not the right solution."

Instead, unbranded or lightly branded sites that integrate other forms of social media (using a widget to display a Twitter stream, for instance) and offer their own space for kibitzing, condolences, etc., are the order of the day.

That's not to say the two social media regents won't continue to be popular among agencies and clients. Twitter, in particular, is relatively easy to monitor for adverse events or cost complaints due to its search parameters. Users can also direct tweets to a company's official Twitter account. Then, it's only a matter of directing the user to the correct department.

Meanwhile, unlike Facebook and Twitter, YouTube is showing no signs of slowing down its budget consumption. The reason, in a word: video.

Online Video: Killing TV's Star?

Video-viewing consumers are ripe for the picking: According to data from eMarketer, 147.5 million Americans will partake of online video offerings at least once a month in 2010. That number is up almost 3 percent from 2009's 135.1 million. This meshes nicely with stats on Hulu, the video-slinging giant that launched in 2008, and is rapidly becoming the go-to TV-viewing site among the younger demographics. It hosts episodes and clips from shows on NBC, Fox, and ABC, and recently added movies and original, Hulu-produced content to its offerings. The episodes and movies have the same commercial-break structure as on TV, but viewers only have to sit through one ad—which can run 15, 30, or 60 seconds—before the return of their regularly scheduled program.

The site is also leading the charge toward two-way interaction in video ads, and the benefits are already tangible. Last year, it began offering viewers a choice of advertising. Before the main event began playing, viewers were presented with options as to what ad "experience" they preferred. This choice increased intent to purchase by 33 percent. It also makes ad tracking and targeted messaging easier by providing concrete feedback.

The Razorfish report says this concept of "choice" will become a key facet of pharma's new media strategy. The speed with which the online animal is evolving requires adaptability. No longer is it enough for a company to simply slap a Flash ad onto the beginning of a video on Hulu or YouTube.

By contrast, choice doesn't play much of a role in TV ads—unless you count skipping them altogether with your DVR remote. DVR, far more than online viewing habits, has eaten away at ROI on TV ads, driving down their prices. According to AdAge, a 30-second spot on CBS' reality show Survivor went for $418,750 in 2002; in 2008, the price was $212,800—a drop of nearly 50 percent. Yet though ROI isn't quite what it used to be, especially in the cable space, IMS Consulting principal John Busbice says it's still high enough to justify the spend—for top-25 brands.

In IMS's 2009 media analysis, brands with over $750 million in sales increased DTC spend, while those bringing in less than that had their budgets shifted from traditional media to the more targeted world of the Internet. "DTC advertising is the domain of the largest brands," Busbice says. "The larger brand, the larger patient base; it's logical to spend more on them."

He adds that what TV really needs to watch out for is print—a medium that saw deep spending cuts in 2009, but is now making a comeback (contrary to the commonly held opinion that print is dead). Companies steadily moved money from TV back to print in Q1 2010. Busbice attributes the shift to a realization that the print cuts during the recession were too deep—as well as a desire to get into the local market. "There's much more focus on the local market in pharma, due to managed care and companies shifting to a more centralized management strategy," he says. "Newspaper, in particular, is a good medium to address those local markets." The logic behind the shift becomes even clearer when you consider ROI. Print edged out TV last year with a 1.7:1 ROI ratio, compared to network TV's 1.4:1.

The Year of the Mobile—Again

One "trend" that hasn't yet panned out in the US is mobile spend, though other countries (Japan, for instance) long ago embraced mobile culture. But with the advent of super-smart phones such as the iPhone, as well as new mobile operating system Android, Thorbahn thinks the "Year of the Mobile" might actually be at hand—though not, perhaps, in 2010. Katy Thorbahn puts smart phone penetration in the US at about 15 percent.

Still, Razorfish isn't excited so much by the prospect of paid mobile ads as the rise of compliance apps. In the mobile world, paid ads' cons outweigh any pros; they take too long to load, their impact insufficient to justify the cost. Instead, using the same principal as that of building an online community, companies are looking to engender goodwill and increase product visibility in a subtle manner. Apps like Novartis' VaxTrak, which keeps track of and gives updates on patients' vaccinations; and Sanofi-Aventis' diabetes-friendly GoMeals, which helps patients count the carbs to ensure the correct amount of insulin is injected or released from a pump, are good examples for pharma to follow.

"There is truly nothing as personal as your health and wellness," Thorbahn says. Focus on prevention and overall wellness, serve it with a side of branded messaging, and the sales increases won't be far behind.