Unbranded Ads Also Unpopular

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.

Deborah Armstrong, an svp at Norwalk, Conn.’s Mediaspace Solutions, which buys print ads for drug companies, agreed: “We have had very limited unbranded [spending]. Building the category is a very noble aspiration, but I just don’t know if that’s the way we make our numbers.”

Wyeth, Roche, Merck and AstraZeneca have all reduced their spending. Pfizer, however, is one company that is actually  increasing its education budget. It launched an unbranded campaign for anti-smoking drug Chantix (themed “My time to quit”). Chantix stands mostly alone in the prescription quitting category, so it doesn’t risk promoting its own competition.

Plus, the ads don’t talk about Chantix’s side effects, which include suicidal thoughts. A Pfizer rep said that doesn’t factor into the company’s decision making. “The goal of the ‘My time to quit’ campaign is to encourage people to quit smoking. It would be grossly irresponsible to suggest we do not comply with FDA regulations.”

But dozens of smaller companies have gone the other way, bailing out of TV and print. Instead they are focusing on building  Web sites dedicated to educating consumers because it is less expensive. An added bonus is the fact that these sites offer a longevity that TV ads do not.

Roche, for one, is still running its unbranded FluFacts.com Web site in support of its Tamiflu antiviral brand even though it was developed for the 2006 movie Happy Feet. “We drove a lot of volume to the site. Once you see that in year one, you don’t have to promote it aggressively in year two,” said Brian Heffernan, CMO of GSW Worldwide, Columbus, Ohio, which is the agency behind the effort.

Overall, Jay Carter, svp-director of client services at AbelsonTaylor in Chicago, which handles Abbott and Eli Lilly, said unbranded campaigns are becoming a luxury that firms can’t afford.

“The reason why [budgets are down] is there’s a lot of competition and unbranded doesn’t work in a competitive environment,” he said.