The gloves are off in the fight over legislation to restrict pharmaceutical advertising. At issue is a report released Wednesday by consumer advocate group Families USA that claimed leading drug companies were spending upwards of 40 percent on marketing and administration. A pharmaceutical trade group has now accused Families USA of misleading the public in the report by including administrative costs to show excessive spending by its members. “Families USA is using WorldCom accounting,” said Richard Smith, president of policy ad research for the Pharmaceutical Research and Manufacturers of America. “The only way the group can get a number for promotion that is higher than pharmaceutical R&D spending is to disguise the operating costs of running a business in their figures. Even Families USA has so-called "administrative costs" like electric bills, rent and trash collection.” The Families USA report was released as the Senate is continuing debate on a bill that would limit the amount of money pharmaceutical companies could spend on advertising. The theory behind the bill is that if the drug companies spend less on ads, they will drop prices on widely used prescriptions. The American Association of Advertising Agencies is opposing the bill and has promised to challenge it in court, if it passes. The Families USA report isolates the top ten drug companies and compares R&D budgets to marketing, advertising and administration. For example, Prozac manufacturer Eli Lilly, according to Families USA, spends 19 percent of revenue on R&D and 30 percent on marketing and administration. Smith claims Families USA is misleading the public by including administration costs in the report, which are unrelated to marketing expenses. Families USA says its indicative of a focus on marketing, rather than R&D. “If we’re using WorldCom accounting that is an insult to the members of Mr. Smith’s organization,” says Families USA’s executive director Ron Pollack. “We are taking our data from what his member companies give to the FTC. We’re using what they report and they report marketing and administration costs together.” Not so, says Smith. He claims that last year, PhRMA member companies spent $30.3 billion on new drug research and development. He says the industry spent about $9 billion on promotion to consumers and doctors and about $10 billion on free drug samples. “When Families USA attacks our promotional spending, they are really attacking the $10 billion in free drug samples that we give away each year to doctors who often use these free medicines to help needy patients. That's not very family-friendly,” he said. A survey of top drug companies earnings reports on Dow Jones supports Pollack’s claims. Pollack says he has nothing against the ad agencies or even the drug companies that are advertising their products on TV and in print. Regarding the widely reported claim that the enforced drug ad cuts will lower prices, he says that is not the main goal of his organization’s efforts.
The Internet measurement arena has seen drastic changes recently. The financial failure of Jupiter Media Metrix led to its acquisition by comScore, a former competitor. Meanwhile, Evaliant, another major player, was acquired by CMR, the leader in traditional media measurement. Both acquisitions took place in June. ComScore, which maintains a database of over 1.5 million Internet users whose online activities are measured, has pursued a strategy of "forging compelling partnerships," according to vice president Dan Hess, who spoke with MediaDailyNews yesterday after the company made a joint announcement with CMR, one of its partners, about marketing plans for Media Metrix and Evaliant. The announcement concerns the way comScore and CMR will comarket Media Metrix and Evaliant products. Beginning this fall, comScore will sell and CMR will resell Media Metrix 2.0, a new product that will expand the Media Metrix sample from 60,000 to more than 120,000 Internet users and provide expanded coverage of online buying, transaction behavior and at work Internet use. Meanwhile, CMR will sell and comScore will resell the Evaliant system to clients. The announcement establishes the comarketing relationship of comScore and CMR. "It's a real partnership with tangible products and services and comarketing and codevelopment efforts," Hess says. The companies will also try to package their products to work together. "Clients want audience measurement data delivered through the same system as ad expenditure data, so they don't have to hop back and forth," Hess says. "So we're integrating comScore Media Metrix data into the Evaliant platform so clients can view and analyze both information sources." Yesterday's announcement is "the next step following the acquisitions," Hess says. "Each company has independently moved to develop the next generation of services they will offer and we saw the opportunity to bring them together." The comScore/CMR partnership will likely strengthen Internet measurement because it unites the companies who have provided different kinds of measurement in the past. Bev Andal, president of Evaliant, says, "We track 2500 sites everyday and comScore tracks the ratings side of the business. Working together provides new product opportunities that will improve ad spending methodologies and create opportunities for new online planning capabilities." She also says the companies have different kinds of clients, with Evaliant's strength among agencies and publishers. The partnership "will allow us to integrate our databases," she says. The comScore/CMR partnership has set up a confrontation with NetRatings, the ACNeilsen company that is the other Internet measurement leader. Sean Kaldor, NetRatings vice president of marketing, wasn't exactly awestruck by comScore/CMR's announcement yesterday. "Let's see if they can create new value, instead of just selling each other's products," he says. He says past agreements comScore made, such as one with Doubleclick, didn't pan out, so it remains to be seen what happens here.
A new political and cultural magazine aimed at the political far right expects to have its first biweekly issue out by late September. But advertising may not play a big role at first. The American Conservative was founded by former presidential candidate Pat Buchanan, New York Press columnist Taki Theodoracopulos and former New York Post editorial page editor/columnist Scott McConnell. The suburban Washington, D.C.,-based magazine will be published 24 times a year, start at 32 pages and have a base rate of around 15,000 to start. Editor-in-Chief McConnell said the magazine targets the conservatives who are against open-border immigration and think the United States shouldn’t be involved in wars that don’t have much to do with our national interest. He said this point of view isn’t being represented by other conservative publications like The Weekly Standard, the National Review and the Wall Street Journal’s editorial page. McConnell said the natural readership includes people inspired by Buchanan’s runs at the Republican presidential nomination in 1992 and 1996, and his Reform Party 2000 presidential run. But it’s more than that, McConnell said. “The disaffection with the conservative establishment goes deeper, much deeper,” he said. “[The American Conservative focuses] on an ideological void that needs to be filled.” General Manager James Schlesinger said the magazine believes it demographic to be politically active, affluent and about 70 percent male. “They’re going to have money to spend,” Schlesinger said of the demographic. Like most political magazines from across the ideological spectrum, advertising isn’t expected to be a big part of the picture, at least in the beginning. “We aren’t planning on [a lot of] advertising coming in off the bat,” said Schlesinger. The magazine hasn’t signed any advertisers yet, mostly because it hasn’t begun selling in earnest. Schlesinger said natural product categories include automotive, vacation-oriented and books that target traditional conservatives. Rates are being established at levels lower than what McConnell said its competition charge. A full-page ad will run $1,350; a back cover, $1,800. Discounts are available with frequency, Schlesinger said. A media kit is about a week away, Schlesinger said. In the beginning, The American Conservative won’t have a full-time dedicated sales representative. They’ll be hiring someone who sells other magazines at the same time, Schlesinger said.