• by September 14, 2000

By David Cotriss

Despite a recent Jupiter Communications report stating that pharmaceutical companies are experiencing poor short-term ROI from online advertising, it appears they should continue, and in fact increase, their online advertising activity immediately if they are to remain competitive in the long run.

Although pharmaceutical companies are dumping billions of dollars into offline advertising efforts, industry executives say online budgets will remain limited in the near future. This correlates with a Q4 1999 Media Metrix report indicating that online pharmaceutical advertising is lagging other online advertisers as a whole. The report also indicates that online pharmaceutical advertising accounted for less than 1% of their total media budget during the fourth quarter.

Despite the fact that health and fitness sites saw the number of unique visitors grow by 8% compared to just 2% growth for overall Internet traffic (according to the Media Metrix report), pharmaceutical companies have good reasons for holding back their online ad spending. Jupiter found that poor ROI was the largest factor among health industry executives. Other factors include the fact that online consumers are reluctant to share personal information with or trust pharmaceutical sites and the fact that many manufacturers will see their patents expire within a year or two, leading to many lower-cost generic drugs that will make competition difficult.

"To create the greatest impact on consumers, pharmaceutical marketers must let go of their heady dream of controlling all consumer data, and instead reach consumers where they want to engage in ongoing health relationships online," said Claudine Singer, an analyst with Jupiter. A Jupiter Consumer Survey found that less than one in five consumers indicated an interest in sharing any personal information with pharmaceutical sites. The survey revealed that consumers express interest in getting a wide range of information from pharmaceutical sites -- on everything from drugs they are currently taking to brands they are considering switching to, to information about a condition itself. However, they regard the information with skepticism. Jupiter research finds that only one in ten online consumers trusts pharmaceutical sites.

However, within these findings is all the more reason for them to increase online spending. While people may be reluctant to share information, the branding element cannot be ignored. Advertising that builds trust and consumer confidence online will likely become crucial to drug makers. The focus does not have to be on gathering data, but rather about building awareness and familiarity (and a certain "comfort level") with a brand. Not only that, but many people are likely to be more comfortable dealing with certain health issues through the anonymity of the Web.

The patent issue is significant also. Within one to two years, Eli Lilly Co.'s Prozac, Schering-Plough's Clarit