Pharma marketing: here's where the drug money goes

Arvind Hickman
By Arvind Hickman | 29 June 2017

Pharmaceutical companies are shifting more of their digital budgets towards programmatically-traded advertising to better contextually target campaigns. 

The move coincides with a push into newspapers, at a time when the channel is more broadly in decline, and a huge increase in outdoor.

A comparison of Q1 agency booking data between 2016 and 2017, supplied to AdNews by the Standard Media Index (SMI), shows that pharma media budgets increased YOY by 6.2% to $34 million, but the lift in programmatic increased by more than 100 times that rate, albeit from a relatively low base.

The figures show that within pharma digital, programmatic media buying via agency trading desks moved from the third-largest area of spend in Q1 2016 to the largest in Q1 2017, accounting for just under $2.5 million. This is followed by search (about $2 million) and direct sales with publishers ($1.5 million).

A year ago, the order was the reverse – with direct sales to digital publishers leading, followed by search and exchanges.

This doesn't mean pharmaceutical companies are withdrawing from news brands. In fact, across the same period there has been a lift in media spend on newspapers – up 89% to $446,168.

Magazines, which includes trade titles that focus on the pharmaceutical industry, are down 33% to $1.18 million across the same period.

TV advertising remains the largest area of spend by some distance; Q1 spend this year was down 1.8% to $24.3 million.

Outdoor advertising has made the most significant leap across all channels with YOY spend up 233% to $2.7 million, while digital, the second largest channel, increased by 32% to $5.58 million.

A welcome programmatic headache 

Pharmaceutical has three distinctly product areas of marketing: branded products to consumers; branded products to healthcare professionals, and unbranded campaigns to consumers.

Analgesics (pain killers) is the pharma category that has shown the most dramatic shift towards exchanges in the past year, SMI data reveals.

Media buyers booked $511,602 of media for pain killers through media agency trading desks compared to just $65,085 in the first quarter of 2016. That's an uplift of 686%.

Across the same Q1 comparable periods, the amount of digital inventory booked via direct sales with professionally-curated media websites decreased 89% to $161,241.

Another category that had a significant lift in programmatic was the 'other pharmaceuticals category', up 279% to $456,193.

This category includes pharmaceutical products that are marketed to healthcare professionals (HCPs) such as vaccines, eye drops and other medicines.

Unlike pain killers, this category increased its spend in direct publisher sales, booking $301,267 in Q1, an increase of 26% on Q1 2016.

So what does this mean?

AdNews approached media buyers and marketers to make sense of the figures.

Anelida Pardini, a group business director at PHD, who is the media agency for GlaxoSmithKline (GSK), says that part of the sharp uplift can be explained by the recent YouTube brand safety scandal.

Another reason is that marketers are trying to better target campaigns to specific audiences, which programmatic trading desks can help achieve by overlaying contextual data to how ads are served. This is particularly important in health awareness campaigns.

Pardini says there is also a broader trend where pharmaceutical companies are evolving their marketing strategy more in line with FMCGs, particularly for popular over the counter medicines.

“A lot of the pharmaceutical companies are broadly moving towards FMCGs. You look at a product like Panadol, it's sold in grocery as well as pharmacies,” Pardini explains.

“We also buy a lot of AV. Those video assets are run through the programmatic exchange where you have display, as well as video and paid social, which all run through programmatic.

“You have to also remember that in Q1, there's been a shift in what's happening because of YouTube. There could be an artificial increase as well because you are going from a lower CPM on YouTube TrueView into possibly higher CPM formats like catch-up TV or premium video inventory.”

Pharmaceutical companies are restricted in how they market products to consumers. For example, they cannot run e-commerce-led campaigns or directly target individuals. Any targeting that is done on programmatic trading desks are contextual, not to specific named individuals.

Angela Swayn, Zenith's group business director of pharma client Sanofi, tells AdNews the shift towards programmatic provides media buyers and marketers with more flexibility and less wastage.

“Programmatic is growing across the board, however with pharma the source of growth is coming from video given its ability to educate and tell a story through sequential short form messaging in a cost-efficient manner,” Swayn says.

“In the past we would buy site-specific buys, with our trading desk, Audience on Demand, we have so many options, given we are restricted with Google in terms of re-targeting.

“The way we are approaching programmatic is building out private marketplace deals where site lists are tailored to where our audience is, providing us with beneficial re-targeting options and as a by-product we reduce wastage with frequency capping. Clients want real-time optimisation and insights, this approach provides us with that.”

Interestingly, there's one traditional media channel that Swayn says is delivering better results in terms of ROI.

“Through sales results, we are finding that outdoor is driving a stronger ROI than other traditional channels in this category,” Swayn says.

“Outdoor is experiencing a ‘coming of age’ in driving digital messaging, data capture and opportunities to target our consumer close and closer to the point of purchase whether it’s in a chemist or a supermarket.”

A marketer, who has worked within pharmaceutical companies for several years, provided a client-side perspective under the condition of anonymity.

The marketer said that part of the reason why budgets are shifting more into programmatic is to reduce blended CPM

"What's been happening is that you've got organisations that have historically paid money to TV and magazines and professionally-curated websites, but the cost of TV has increased if you look at it from a cost-per-thousand point of view," the marketer says.

"You are given a certain budget, let's say it's $1 million to spend, and it's usually the same as last year with a slight increase or decrease based on your KPIs. You go back to your marketing director and you say, 'I've got a million dollars this year and I want to advertise on TV, but the reach is less than it was last year and we would have to pay more for it'.

"So what we would propose to do is reduce the amount we would spend on TV or other professionally-curated media and we will supplement that with more highly-targeted media. That's digital."

In this scenario, the spend on traditional media may drop marginally to accommodate a lift in digital. The CPM across all channels is then blended and presented as a single CPM. 

The marketer told AdNews that digital investment heavily leans on the advice of media buyers because there is a general lack of understanding within marketing teams about how digital media works.

As the SMI figures illustrate, however, media buyers are still advising clients to invest in traditional channels that they believe will deliver the best results for one of the most restrictive categories of marketing.

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