Health Sites Aim To Stave Off Economic Ills

medical peopleHealth information sites have continued to show growth even as more and more players crowd into the category. Data released earlier this month by comScore showed that traffic in the segment increased 21% in the last year, four times the growth rate of the U.S. Internet audience.

Driving that surge have been newer properties such as Revolution Health Network--launched by former AOL chairman Steve Case, which nearly tripled traffic to 11.3 million as of July, the rebranded AOL Health, almost doubling to 11 million, and Everyday Health Network, jumping 63% to 14.7 million.

Longtime category leader WebMD grew only 3%, but was still comfortably on top with a monthly audience of 17.2 million. The site also boasted the biggest share of views for display advertising, at 18.6%--compared to almost 13% for Revolution Health, 12% for AOL Health, and about 10% for Everyday Health.

But as the wider economic weakness spreads to online advertising, will health sites be immune to the downturn? The health-care sector, and pharmaceutical companies in particular, have long been viewed as more impervious to economic turmoil because people still need medicine and health services during difficult times.

In that light, advertising in the category is still showing vital signs. While total online display advertising fell 6% during the first half of 2008, health-related spending increased 15% to $142 million from $124 million a year ago, according to Nielsen Online.

Within the health industry, pharmaceutical companies accounted for the biggest chunk of online ad dollars at $50.2 million--up from $40.8 million in the year-earlier period. The next-biggest advertisers--weight-loss programs--were down slightly to $47 million from $49 million.

Health spending made up about 10% of the $1.1 billion in display advertising in the first half of 2008.

Everyday Health, for its part, is confident of continued ad growth despite the growing economic gloom. Michael Keriakos, co-founder and president of Everyday Health parent company Waterfront Media, said he expects ad revenue to at least double again in 2009.

Among pharmaceutical advertisers, "most have indicated increasing spends next that they've seen the results of ad programs," said Keriakos. The company's bullish outlook was underscored by a lavish rooftop bash it threw last Thursday during Advertising Week.

Everyday Health may soon grow more rapidly through a rumored merger with Revolution Health. The deal would potentially allow the combined company to overtake WebMD in traffic to become the category's top site--and top draw for advertisers. It would also help insulate both from a deteriorating ad market.

Both companies so far have declined to comment on any merger talks.

With half of its ad dollars coming from Big Pharma, Keriakos acknowledged seeing some falloff in spending from consumer package goods marketers and other types of advertisers that make up the balance of ad dollars. "In those other categories, we're definitely getting dinged a little bit," he said.

So instead of getting 10% to 15% of ad revenues from CPG companies, it will only get 5% to 7%. That reduction is more than offset by higher-than-expected pharmaceutical ad spending, which will help the company approach "nine figure" revenue this year, according to Keriakos.

And because pharmaceutical companies have been slower than others to embrace online advertising, Internet spending is still a small portion of their marketing budgets. "They're just starting to learn how to make online a major part of the media mix now," he said.

That echoes comments made by WebMD CEO Wayne Gattinella last month during the company's second-quarter earnings call. "It is clear, at least to us now, that online is going play a more fundamental part of their go-to-market strategies," he said of pharma advertisers.

After seeing ad spending slacken in early 2008, he also noted: "Our sense now is that we are seeing a different outlook from big pharma as they are planning for '09." For the quarter ended June 30, WebMD's sponsorship and ad revenue increased 19% to $62.4 million over the year-earlier period.

Gattinella further suggested that overall cutbacks in marketing spending by Big Pharma as a result of expiring drug patents would not affect online dollars. "We do not expect that we are going see that impact the online spend in any significant way," he said.

With the fallout from the financial crisis still unfolding, however, it's not hard to imagine spending plans being disrupted in 2009, including dollars earmarked for the Internet.

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