Behind the Numbers: Pharma Seeks Marketing Rx

As drugmakers up their online dosage, they refine their diagnostics

by Lynn Russo

Pharmaceutical marketers are frustrated with heavy-handed legislative regulations, a lack of consumer trust, and the ineffectiveness of mass marketing techniques. After a relatively flat marketing spend in 2005, pharma companies planned to increase their online ad spending by 25 percent this year, to $780 million, according to a report by IMS Health and eMarketer, "Pharmaceuticals Online: Direct to Patient Becomes a Reality." The growth represents a shift from branded mass media to more targeted, relationship-building techniques via online channels. Drugmakers hope to use online media and marketing, including keyword search, to make their communications more relevant to consumers.

"In August 2005, Pharmaceutical Research and Manufacturers of America (Phrma) came to an agreement with the Food and Drug Administration on a new ruling over advertising guidelines, and drug companies began signing up," explains Lisa E. Phillips, senior analyst at eMarketer. "Most of the guidelines pertained to mass media, so they started pulling back from TV, radio, and print."

Also, Phillips says, "So many people get a prescription and then don't fill it, or they take it for a while until they feel better. So drug companies are putting more money into compliance-building, and the Internet gives them a way to have that relationship."

Last year, just 20 new drugs were approved by the FDA, compared to 36 the previous year, a near-record low for the decade, according to The New York Times. That should change in the near future: IMS Health reports that 2,300 products are in clinical development worldwide, a 31 percent increase over the past three years.

In the first quarter of this year, prescription drugs represented the third-largest category of online spending at $1.05 billion, a 6.6 percent increase over the prior year, Nielsen Monitor-Plus reports. This year Yahoo has already booked more pharmaceutical advertising than it did in all of 2005, says Jack Barrette, Yahoo's category development officer for pharma.

But trust remains a huge issue. Fewer than 18 percent of consumers believe that prescription drug ads can be trusted "most of the time," according to a Kaiser Family Foundation survey. That figure is down from 33 percent in 1997, the year direct-to-consumer advertising was first permitted. And a JupiterResearch study showed that just 16 percent of consumers who conducted a health-related search found what they were looking for.

To address these challenges, health-focused portals focusing on specific diseases such as depression, diabetes, and weight loss are likely to constitute the next big online vertical market, according to ClickZ. These social network sites "emphasize the medical condition, not the drug," Phillips says, and include chat rooms, message boards, and information on support groups.

The growth of online pharma advertising, says Phillips, depends on trends in health and treatment. "If we get a rush of oncology therapies, for instance, there could be an explosion of advertising. Otherwise, I think it's going to stay very steady."

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