Advertising Investment Trend Report: Direct-To-Consumer Pharmaceutical Industry.
February 12, 2010
After the Food & Drug Administration loosened its rules in 1997 on direct-to-consumer (DTC) drug ads, pharmaceutical companies ramped up marketing budgets to promote their products through media advertising. Category spending expanded at 40-50% annual rates over the next several years, raising the profile of the industry on both Madison Avenue and Main Street, while also helping drive growth of the overall advertising economy.
With measured ad spending now topping $5 billion annually, the pharmaceutical category is closely watched within the ad industry for indications of the health and direction of marketing budgets. When drugmakers sneeze, ad buyers and sellers worry about catching a cold.
As the leading provider of strategic advertising intelligence, TNS Media Intelligence is well positioned to report on developments in DTC advertising. From our rich database we’ve identified five significant trends that are defining the current landscape and bear watching.
#1 Pharmaceutical Ad Spending Has Slowed
After peaking in 2006, direct-to-consumer (DTC) ad spending by pharmaceutical companies has fallen back in the face of weakening sales growth, fewer blockbuster drugs coming to market and the ongoing public policy debate regarding marketing and advertising restrictions. In the first eight months of 2008, total measured DTC ad spending was down 6.3 percent to $3,175.7 million. This comes on the heels of a 3.1 percent decline in 2007. The cutbacks were most pronounced in non-branded advertising by pharmaceutical houses which includes their corporate promotion messages and ads to promote awareness of specific conditions. The annualized rate of spending for this segment has plummeted by 63 percent since 2006.
Prescription drug advertising, which accounts for over 90 percent of DTC spending, slipped 3.6 percent in January-August 2008, offsetting a modest 3.5 percent gain during 2007.
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