Healthy Skepticism Library item: 14631

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Duttge W.
Prescription for a Magazine Migraine
Yahoo Finance 2008 Nov 13
http://biz.yahoo.com/portfolio/081113/tag_www_portfolio_com_2008_2_15585.html?.v=1

Full text:

Warning: Pharmaceutical advertising may cause further problems for the magazine industry.

Pharmaceutical companies are spending less than they used to on advertising, a new report by TNS Media Intelligence says. Total direct-to-consumer ad spending by pharmaceutical companies was down 6.3 percent to $3.2 billion in the first eight months of 2008.

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Yes, in general advertiser’s media budgets are dropping — but not by nearly as fast or as far as this. In the second quarter of 2008, advertisers spent 3.7 percent less on U.S. media than they did during the same period the year before, TNS reported in September.

Magazines are taking the big hit. In the first eight months of the year, pharmaceutical companies spent $905 million advertising in U.S. magazines. That’s a 19.5 percent drop from the same period in 2007 when the pharma houses spent $1.1 billion on magazine advertising real estate. That’s a big loss for magazine publishers.

TV, on the other hand, didn’t get hit quite so hard. In the same period of time, television ad dollars went up about 3.6 percent. “Magazines ads perhaps aren’t as effective at driving sales as TV commercials are,” says Jon Swallen, senior vice president of research at TNS Media Intelligence.

Andrew Schirmer, executive vice president and managing director of McCann HumanCare, the health practice of ad agency McCann Worldgroup, says TV is still the best medium to reach a mass audience.

Why pharmaceutical companies prefer TV to magazines isn’t totally clear. Why drugmakers have curtailed their total ad spend is much clearer. Both Swallen and Schirmer say the industry’s maturation is the culprit.

Pharmaceutical companies ramped up marking of prescription drugs in 1997 after the Food and Drug Administration loosened its rules. But since the explosion and the launch of hugely popular drugs, the introduction of blockbuster products has slowed down.

At the same time, pharmaceutical companies virtually stop advertising for drugs once other companies can make generic versions of them. Just one blockbuster can account for hundreds of millions of advertising dollars and therefore quite a large percentage of total spending.

“The radical growth you saw for almost 10 years straight has almost certainly stopped,” Schirmer says.

Swallen says growth now depends on new drugs and defining new indications for older drugs. “That puts the media sellers really at the mercy of the drug companies and the drug companies’ product development cycle,” Swallen says.

If only they could come up with a remedy for this…