Pharma digital spending ticks upward slowly but surely

Print 25 April 2016
Beth Snyder Bulik / FiercePharmaMarketing

Digital spending is expected to overtake TV media spending in the advertising industry this year, but for the pharma industry that’s not nearly true yet. Drug marketers are beginning to shift, however, if only at the slow speed customary in the pharma world.

Leerink Partners analysts say that pharma marketers, consultants and agencies are “strongly upbeat” about ad spending on digital channels, including mobile, for the next year. And that growth will come mostly at the expense of TV and print, the analysts said in a recent investor note.

Pharma industry representatives interviewed recently at the Digital Health Coalition spring summit “predicted that pharma will continue to cut back on sales reps in future years due to the reduced availability of physicians to sales calls, with that budget savings additionally passed on to digital marketers.”

The pharma types also agreed with eMarketer’s recent estimate of a 13% compound annual growth rate over five years in pharma spending on digital marketing. That was an increase over its 2015 estimate of 12% CAGR.

When the analysts asked about social media, they were interested in best practices to reach customers, with an emphasis on Facebook, Leerink reported. However, the traditional industry caution regarding regulatory challenges prevails, leading Leerink to cast social media as “a relatively small part of the digital advertising budget for the next two years.”

Drug prices were also discussed, but gauged to have little effect on digital marketing spending over the next two years. Participants agreed that neither drug pricing pressures nor economic slowdowns would change those plans.

Kantar Media estimated $5.4 billion in pharma ad spending in 2015, which was an increase from $4.53 billion in 2014, but those numbers only include some types of digital media--digital display and paid search. EMarketer estimated last year that pharma and healthcare marketers spent $1.64 billion on online and mobile advertising, which it projected will increase to $2.55 billion by 2019.

Leerink specifically follows WebMD and Everyday Health and said reps were divided on the current controversy about WebMD having too much pricing power in the pharma ad market. Some saw plenty of other options in the space, while others noted WebMD’s “rare and valuable asset of the trust and attention of its audience," which gives it the ability to raise prices without concern of ad volume loss.

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