At first I thought the pharmaceutical industry would escape the recession altogether.
Then came a troubling sign: Drug sales in the U.S. grew at their slowest pace since 1961, said IMS on March 12 (see “Drug Sales in U.S. Grow at Slower Pace“).
OK, that was NOT a decline, but a slowing pace of growth AND it was attributable to competition with generic drugs, demand for which spiked as the U.S. Medicare program for the first time offered prescription drugs to the elderly.
Then, eMarketer rethought its forecast for online spending across all industries (see “Online Ad Spending Predictions Dip“).
“Last fall, eMarketer said U.S. advertisers would spend about $27.5 billion online in 2008, but now they’re predicting about $25.8 billion will be shelled out on the Web. There’s a silver lining: interactive advertising will still grow by about 23% from 2007 — and will survive much better than other forms of traditional advertising. The healthiest sector of interactive advertising? Search – it should account for the about 40% of online spending this year.” (ADOTAS)
Again, this is a decrease in GROWTH, not an absolute decline. Also, the numbers refer to ALL industries, not just the drug industry, whose online spending is so minuscule it could hardly decrease!
Also, eMarketer projected that annual growth in US pharmaceutical online ad spending is rising again after a dip last year (2007), and that it will hit 28.6% in 2009 (see figure, left). Again, talking about dip in GROWTH, not absolute numbers!
Whew!
But wait! There’s more!
Nielsen Monitor-Plus tracks measured media ad spending. This includes TV, magazines, radio, outdoor, newspapers, and the Internet (excluding search). The latest numbers I have come from the March 2008 issue of DTC Perspectives magazine. These numbers compare the first nine months spending in 2007 with the same period in 2006. While there is an overall increase of 2.6%, there was a absolute drop of 14.7% in Internet ad spending by pharma in Q1-Q3 2007 vs. 2006. That is, whereas pharma spent $58.1 million in Q1-Q3 2006, it spent only $49.5 million in the same period of 2007! (see pie chart).
That’s a real recession/depression in the online pharma marketing segment!
It is clear that pharmaceutical marketing executives are NOT putting their money where their mouths are. A March 2007 survey of 68 executives/subscribers to Med Ad News claims that the importance of the Internet as a marketing channel rated 8.1 on a 10-point scale according to these executives. The Internet, they claimed, was higher in importance to them than traditional media!
Something must have happened between March 2007 and the end of September 2007, because pharma Internet advertising declined 14.7% whereas magazine advertising increased 7.2%! There was a non-significant decline of 0.3% in network TV advertising, but that was more than made up by a hefty 21.5% increase in cable TV pharma advertising.
Here’s what I think happened: When there is doubt about the future or when cutbacks are demanded, that is no time for out-of-the-box thinking or for betting on new technologies. Better to stick to the “tried and true” channels. You can’t be faulted for making the same bet your predecessor/boss made. If TV and print fail, then it must be a problem across the board for all brands and all companies — no one could lay the blame on you. On the other hand, if you took a leap of faith and spent more on the Internet and less on traditional media and sales dipped, then you would be tarred and feathered! Who would take that chance?
Reader Poll Results So Far
At best, there are mixed signals out there about whether or not the pharma industry is in a recession. Results so far from my little poll — see the left sidebar — show that 60% of readers of this blog believe the industry in a recession (51%) or soon will be (9%). Another 17% say it’s not a recession, but the industry is hurting. Let me know what you think.
BTW, you can find part une of this story here.
