• by Paul Gough , October 9, 2003

The rapidly rising costs of broadcast TV are leading pharmaceutical companies to rethink their media mix - a mix that has grown increasingly reliant on TV advertising.

Top pharmaceutical marketers Thursday said the prices they paid during the television upfront have adversely impacted their media budgets and gotten them thinking of other ways to advertise. It's part of a larger initiative many direct-to-consumer (DTC) advertisers have undertaken to apply the lessons they've learned over the eight or so years of advertising prescription drug brands via television.

"Just like everybody else, we are looking at the bottom line. We are looking to become more efficient and effective," said Donna Campanella, director/team leader of media at Pfizer. She and David Grueneberg, director of advertising resources at Bristol Myers Squibb, spoke Thursday morning at a function in New York City sponsored by the Advertising Women of New York.

Neither felt that TV would drop off pharmaceutical companies' radar screens, but both implied that a market adjustment is long overdue in the DTC category, which has been a golden goose for the TV industry.

"Broadcast will remember a big part of our brands," said Campanella. But she said that Pfizer and other DTC advertisers are becoming smarter about the nuances of television, such as daypart and programming. She said DTC advertisers were also learning more about the nuances about magazines and Internet too. And some spending might shift to direct response television, Campanella said.

"To date, they have been very effective for us," she said.

Grueneberg said companies were looking to change the mix and do new things but cautioned that it would take time.

"It's a bus turning rather than a sports car," said Grueneberg.

Neither were particularly optimistic about DTC advertising continuing to be the strong growth driver that media companies have expected from the category in recent years, as much as 35% growth year-over-year that has slowed to about 8% growth in the past year or two. Much DTC spending is focused at or shortly after the launch of new brands. And as pharmaceutical companies lose their patents on drugs that had been popularly advertised brands, ad spending will fall or be shifted to over-the-counter, or OTC. The pace of new drugs in the pipeline to be introduced is expected slowed, which will affect DTC spending.

"In 2004, it will be positive, 2005 not quite as much," Grueneberg said. He wasn't as optimistic beyond 2005.

The executives were bullish on magazines, which has benefited greatly from DTC spending in recent years. Pfizer, for instance, is among the top 10 advertisers in magazines. Campanella was also positive about newspapers, which she said held possibilities in the geographic targeting that is interesting pharmaceutical companies.

Campanella said another possible emerging category could be radio, which drew a cheer from some radio executives in the back of the ballroom. She said the challenge is the creative, since DTC advertising has to have so-called fair balance disclaimers and there's a question whether those disclaimers are as appealing or as effective as TV advertising.

"I am very hopefully that we will be making major inroads on radio with one or two brands come 2004," she said. She said if good results come back, then the "floodgates" could open.