Here is my forecast for 2013 DTC spending by channel. I project that spending will be down in most categories as drug makers are forced to cut back spending because of changes in the Affordable Care Act and the continued loss of some big name drugs coming off patent. The formula I used was a five year history with regression analysis and modified to indicate the number of drugs advertised and cost in consumer healthcare index. While I project that DTC spending will be down in all channels I do agree with Accenture’s report that indicates that investment in digital marketing will increase as a way to help control costs. However I also believe that pharma executives think that digital marketing is less expensive than traditional marketing and that is not necessarily the case. In fact the dollars needed to invest in digital marketing capabilities could quickly eat through a lot of budget dollars.
Factors in determining DTC spending forecasting:
(1) $8.3 billion in products coming off patent in 2013 and $11.8 billion in 2014. (see below)
(2) The new fiscal budget asking for an additional $150 billion in give backs from drug companies.
(3) The challenge of proving ROI for every product is going to challenge a lot of DTC marketers.
(4) The FDA continues to take their time in issuing updated Internet marketing guidelines.
(5) The higher cost of national TV along with data that shows consumers “turning off” DTC commercials.
(6) The ineffectiveness of banner ads when mass targeting is used.
(7) The decline in hard copy readership of newspapers and magazines.
(8) The increased cost of new drug development along with generics available for almost every chronic health condition, also insurers demanding that new drugs be tested along generic medications to determine outcomes.
(9) When it comes to survival of the “corporation” R&D is going to get first in line ahead of marketing. This continued trend will drive more DTC marketers to look for ways to do more with less (get ready to hear that a lot if you’re on the agency side).
(10) I also factored in the last five years of DTC spending by channel using a regression formula in relation to the number of drugs being advertised for these numbers.
-Spending on digital marketing will increase but not in terms of media. More dollars will be spent to develop and test digital marketing, to HCP’s and consumers, but that will not translate into more online media spending.
-The biggest decline in Internet spending I believe will be in paid search and marketers will rely more on organic search.
-TV is great for building awareness but with more and more consumers multi-tasking and time shifting TV watching DTC marketers are going to look for other ways to build awareness. In addition research has shown that more and more consumers are “tuning out” when it comes to DTC TV ads.
-The decline in newspapers and magazine will continue decline and dollars will be shifted more to targeted health magazines.
-Plavix is a great example of a drug that didn’t invest mega dollars into DTC and still became a blockbuster through aggressive messaging to physicians. Look for more to follow their example.
As for the decline in TV spending “Networks are expecting, again, to see TV ad spending rise. CBS chief Les Moonves is bullish, and analysts expect the network may get 7-9% price increases. Some believe more than $10 billion will get spent. Oddly, the networks want those increases even as the viewing audience itself dwindles. Goldman Sachs estimates that 17% of the 18-to-49-year-old demographic simply stopped watching broadcast TV in winter 2012-2013, the New York Times notes.”