Iffy Future for Drug Ads Has Some Feeling Queasy

Big pharma marketers and magazine publishers are both feeling a little feverish these days as they face an uncertain future frought with everything from tighter restrictions on advertising to game-changing competition from new media.With healthcare now a burning national issue, lawmakers are taking aim at the tax deduction on ad expenses for prescription drugs, while TV ads for drugs like Viagra are coming under scrutiny. Even before President Obama took office, magazine publishers noticed a falloff in pharma spending, which some took as a harbinger of a stricter regulatory climate. Some pharmaceutical brands—including Pfizer, Johnson & Johnson and Merck—declared a moratorium on advertising for new drugs last year.Direct-to-consumer drug advertising has long been politically sensitive, but since the Food & Drug Administration relaxed its rules for drug ads on TV in 1997, spending has ballooned, much to the delight of consumer magazines. Between 2003-’08, the drugs/remedy category soared 58 percent to $2.2 billion, per the Publishers Information Bureau, making it second only to toiletries and cosmetics in terms of money spent buying magazine space.“It’s still a very robust category for us,” said Stephanie George, president of Time Inc. ad sales and marketing, and evp, Time Inc. “Print is considered…educational. You can still tear out that page and bring it to your doctor. It’s a top-of-funnel medium. And that’s not going away. With patent windows closing, [drug-makers] have to spend.”But along with worrying over a potential rash of new ad restrictions from Washington, publishers find themselves fighting to keep the share of advertising dollars still out there. Pharma’s relative reliability has meant stiffer competition from other media, including the Web, whose search capabilities make it ideal for products like erectile-dysfunction remedies. The Internet has long been fertile ground for drug ads, of course. While total DTC ad spending declined 11.3 percent for the first half of this year, the share that went online—4 percent—was unchanged, per data compiled by eMarketer.“DTC brands are looking at how you can behaviorally target on the Web,” noted one print-media buyer for a major drug brand. Added a media executive who requested anonymity: “In this kind of economy, any media type is willing to accept pharma, and pharma spending on the Web has been a major growth space.”Meanwhile, print’s share of pharma-ad revenue growth has come with a catch. As the ad category grew in importance, media agency negotiators dangled the guarantee of huge numbers of pages through book-of-record deals to publishers. The effect was to drive pricing down to make pharma one of magazines’ lowest-priced ad categories. “It’s fair to say no one gets lower rates than pharma,” the executive said. Part of the reason: The required disclaimer pages that list a drug’s complications are deeply discounted, if not free, to the advertiser.“The net revenue per page is typically lower than a display page,” said Martin Walker, chairman of Walker Communications, a magazine consultancy. “You’ll call any publisher, and he’ll take any pharma page he can get. It’s still a page. Everyone would like to get more per page, but that’s not a battle that can be won.”Maybe not, but it has spurred some publishers to offer multipronged deals in an effort to woo drug marketers. Meredith’s National Media Group, for example, has created cross-platform packages that involve print, online, doctor’s office and pharmacy presence. According to the company, such efforts have helped to fill the hole left by the departure of auto advertising.Nielsen Business Media

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Iffy Future for Drug Ads Has Some Feeling Queasy

Lucia Moses

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Lucia Moses