2017 DTC spending first projections

unknownKEY TAKEAWAY: In talking to clients from over 15 pharma/biotech companies we predict that 2017 DTC spending will be flat or down when adjusted for increased costs.  Companies will continue to experiment with digital but the disconnect between spending and ROI will hamper efforts.

My colleagues and I contacted several high level pharma marketing people to inquire about DTC spend levels in 2017 and it seems that the rule of thumb is going to be “spend less and what we spend has to have a direct link to brand objectives”.  Especially hard hit will be TV budgets with most opting for “bundles” offered by their media agencies.

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When we asked “why?” the consistent answers seemed to be “unknown external environment for prescription drugs”, especially around prices and insurer copays.  As one VP told me “we are expecting approval of our drug in 2017 but we can’t commit to any one spending plan because there are too many issues in play”.

Numerous studies have shown that TV DTC ads are becoming less effective and too many pharma companies just don’t understand the development of digital initiatives in an empowered patient environment.  However, it seems a lot of money is going to be spent to convince insurers that certain medications provide better value via better patient outcomes.

Among other areas being hit are R&D since it’s cheaper to buy startups with promising new drugs than develop new molecules.  One area that is not going to see a decrease, however, is CEO compensation.  It’s projected that pharma CEO’s will still be among the highest paid of any industry.

Insight..

We have seen this coming for over a year now.  When developing new initiatives for clients there as been a lot more emphasis on ROI than ever before and we’re talking hard ROI not soft metrics.  There is also a rising level of concern about online ad fraud in conjunction with programmatic buying, more specifically proof that traffic is actually real and achieving brand objectives.

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With ratings on NFL games down a lot of companies and industries are questioning the real value of TV ads and instead are looking for new ways to reach today’s time strapped consumers.  Prescription drugs, however, are different in that you don’t research them until you need them.  Will we see a shift from “selling” to “helping people”?  I doubt it because it’s hard to convince senior executives that we need to spend money when it doesn’t directly contribute to the bottom line.

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