Drugs Kick Consumer Ad Habit: No. 2 Ad Category Flat During First Half

Ad spending in the media tracked by Nielsen Monitor-Plus shot up 5.7 percent during the first half of 2005, a faster rate of growth than some forecasters had been predicting. The growth came despite a pronounced downturn in spending by one of the biggest stimulants to the national advertising scene, especially TV: direct-to-consumer prescription drug ads.

"For the first half, we're reporting spending as flat," Jeff King, managing director of Monitor-Plus, emphasized Tuesday during a conference call on the first half ad results.

The prescription drug downturn was especially dire for TV. As the major pharmaceutical marketers attempt to demonstrate restraint in the face of growing criticism over consumer marketing of certain drug brands--particularly newer ones--TV appears to be an early casualty. King said prescription drug marketers slashed spending on syndicated TV by 40 percent, on spot TV by 25 percent, and on network TV by 7 percent during the first half--although cable TV appears to have been a beneficiary, with direct-to-consumer ad spending up 29 percent.



King said the downturn is significant, noting that at $2.4 billion in first half spending, the prescription drug ad category is now the second largest after automotive. While total DTC category spending inched up 0.4 percent, the slowdown was evident among some of the biggest marketers and brand in the category. Pfizer, the largest prescription drug advertiser, slashed consumer ad spending by 35 percent during the half, dropping out of the top ten U.S. ad spenders. King noted it pulled back ad support for many of its highest-profile brands. Viagra, for example, dropped by 43 percent.

Despite the prescription drug cutbacks, King said there was enough stimulus among other major--and some emerging--advertising categories to sustain the overall growth in the ad economy. Even the controversial food marketing category, which has also come under pressure to demonstrate restraint, particularly with ads and products aimed at children, has seen little sign of ebbing. In fact, the fast-food restaurant category grew by nearly 12 percent during the first half, making it one of the fastest rising ad categories.

We haven't seen a drop off in fast food activity in kids programming," acknowledged King, adding forebodingly, "Perhaps that's coming in the future. But we have not seen that as of yet."

In other category ad battles, heavy year-end incentive advertising by domestic automakers pushed spending up at double-digit rates for General Motors and Ford. A corresponding cutback by packaged goods marketer Procter & Gamble, dropped it behind GM as the nation's largest advertiser during the first half.

Interestingly, while overall ad spending is growing at healthy single-digit rates, the fastest-rising medium during the first half was not the Internet--at least not online display advertising (see related story in today's MDN, but Spanish-language TV, followed by cable TV. While Internet ad spending turned in a 12.6 percent growth rate over the first half of 2004, that rate is much lower than what has been tracked by trade groups like the Interactive Advertising Bureau, and a number online ad forecasters.

By comparison, ad spending on Spanish-language TV networks such as Univision and Telemundo rose 15 percent over the first half of 2004, while spending on cable networks shot up 13.1 percent, according to Monitor-Plus, which physically monitors advertising occurrences in the major media and ascribes an ad dollar value to what actually runs. The Internet ad spending data was derived from Nielsen//NetRatings' database.

As strong as the first half results are, Jeff King, managing director of Monitor-Plus, said they are continuing to strengthen. He noted that the rate of ad spending growth actually improved during the second quarter.

"In particular, spending for the top 100 spot television markets was down in the first quarter, but bounced back to a 3.1 percent gain in the second quarter," said King, in a release issues prior to a midday conference call scheduled for today.

By comparison, network TV lagged the overall growth of Nielsen measured media, rising just 4.9 percent over the first half of 2005. That comparison, however, reflects the inclusion of the Winter Olympics during the first half of 2004.

Local and national magazines (up 8.7 percent and 7.9 percent, respectively), and outdoor (+6.9 percent), paced ahead of network TV in terms of first half growth.

Business media, national and local newspapers, and radio all trailed the market.

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