KEY TAKEAWAY: While TV DTC ads show no sign of declining television-advertising sales in the U.S. fell 7.8 percent to $61.8 billion last year, the steepest drop outside of a recession in at least 20 years, while sales at cable networks slumped for the first time in almost a decade. And there’s no sign of a pickup in 2018, excluding cyclical events like the Olympics and the midterm elections, according to data from Magna Global.
Media companies have relied on TV advertising dollars for more than 60 years, using money from commercials and sponsors to fund variety shows, sitcoms, dramas and news-gathering. Advertising constitutes about 41 percent of sales at CBS Corp., owner of the most-watched TV network in the U.S., and almost 30 percent at Fox.
Viewership of all four broadcast networks slipped by more than 10 percent last year among people age 18 to 49, the demographic most important to advertisers, according to MoffettNathanson. Cable networks, which once stole viewers from broadcast, are also suffering. Even Boomers, who rely more on prescription drugs, are turning off TV in favor of the internet. But pharma companies have slowed their spending on TV advertising. so, where is the money going to go?
While most CPG brands are increasing their digital spends JPMorgan Chase made waves when it told The New York Times in March that it saw little change in the performance of its display ads after cutting back to 5,000 preapproved websites from roughly 400,000 sites a month.
There are more reasons to be concerned if you’re a pharma marketer. We just concluded some research that showed that people, exposed to pharma DTC ads, were not likely to go online right away to learn about advertised drugs, but later and, since drug names today are so hard to remember, they start with Google where they are often hijacked by competing products.
Will the decline in DTC TV ads continue? My guess is yes. I’m already hearing from clients who are pulling back budgets for TV. The correlation, it seems, between TV ads and new Rx’s is being challenged at all levels of the organization and it’s getting harder to justify TV.
Where will DTC marketers turn? DRTV, at the point of care ads and integration with future EHR’s and physician portals are on the radar, but as we all know pharma is so conservative that they conduct market research on how much coffee they should drink in the morning. One thing is for certain, DTC marketers are going to be held more accountable for every dollar they spend.