The money pharmaceutical companies are spending on ads is in decline for the first time ever.
This has caused a dramatic collapse in an area that companies have always proudly backed: unbranded health education campaigns. Spend in the first half of the year for all drug ads fell 3% to $2.4 billion, according to Nielsen Monitor-Plus.
While that decline was expected, the numbers mask a surprise: Unbranded campaigns have been cut by more than half in the last two years.
In 2006, drug companies spent $660 million on health education and corporate image ads. In 2007, they spent only $341 million. In the first half of this year, companies spent just $138 million, a 22% nosedive behind last year, per Nielsen Monitor-Plus. Companies have even reduced unbranded buys online, per TNS.
The sharp drop is unexpected for two reasons. First, the major drug companies signed a pledge in 2005 to make their advertising more educational. Second, some companies have expressed interest in unbranded campaigns because they're not required to list all the risks and side effects that their drugs have.
"In a period of contraction, where these companies are under such pressure to maintain profits in the short-term, marketing budgets get scrutinized pretty carefully," said Matt Giegerich, CEO of CommonHealth in Parsippany, N.J., an agency which handles GlaxoSmithKline and Ortho-McNeil.
Unbranded ads, designed to grow the category as a whole, are less closely tied to sales because consumers may walk out of the pharmacy with a competitor's product, said Giegerich.
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