Pharma throwing money away on digital ads

SUMMARY: Digital ad spend in pharmaceutical brands is up 111% so far in 2020 and 80% of that money is being thrown away by fraud and the popularity of programmatic advertising.

While popular, digital advertising wasn’t an immediate hit in the pharmaceuticals arena due to the strict regulations. Pharmaceutical advertisers have traditionally been slow to join with the latest trends simply because it’s more complicated for regulated industries.

Analysts predicted that pharmaceutical ad spends across digital would increase this year, but they had no idea how much it would increase with the unexpected pandemic. It appears that advertisers are shifting dollars—as digital ad spend is up, print numbers for the sector are down. The number of brands advertising across print decreased by 17% and spend decreased by 30%.

The largest brand in terms of spending so far in 2020—GlaxoSmithKline—occupies 14% of the total ad spend in the category, suggesting that the market is saturated with many brands making small placements.

A Waste of money?

Bob Hoffman had some great insights into the online ad fraud problem…

In May, the ISBA (UK’s equivalent of the US Association of National Advertisers) released a study conducted for them over a two year period by PwC that unambiguously laid out the absurd wastefulness of the hideous adtech “ecosystem.”

Highlights of the report:

  – Fifty percent of all online media dollars are being siphoned off by the adtech “ecosystem” before they reach publishers.
   – According to the Financial Times, of the 50% of the budgets that are siphoned off, about 1/3 of the dollars “were completely untraceable.” In some cases, the untraceable costs were as high as 83%. This means the money just evaporated into the adtech black box without a trace.
   – Only 12% of the ad dollars were completely transparent and traceable. An astounding 88% of online ad dollars could not be traced from the buyer to the publisher.

But wait. It gets better. The researchers only studied results from the most sophisticated, most demanding advertisers like Disney, Unilever and Nestlé. “It’s important to realise that this study represents the most premium parts . . . the highest profile advertisers, publishers, agencies and adtech,” said the leader of the study from PwC.

Forbes said it best.  In recent years, ad fraud has gotten far easier to pull off and vastly more scalable due to programmatic technologies that automate the buying and selling of trillions of ad impressions every month. Not only are the dollars spent in digital advertising the highest it’s ever been – $125 billion in 2019 in the U.S.; the dollars flowing to cybercriminals is also at its highest point ever. The vast majority of those dollars come at the expense of the biggest brands, spending heavily in digital to get “reach and frequency.”

I have analyzed three client spends on prpgrammatic and found:

1ne: 80% of clicks were attributed to BOT sites and thus were fraud.

2wo: Online media agencies took hefty commissions regardless of performance.

3hree: The bounce rates for programmatic were extremely high, well above 85%.

4our: Pages viewed and time on site via programmatic ads was dismal.

In other words, the money that pharma is throwing into digital is largely wasted. They don’t have in-house analytic people to provide metrics that matter, and too many managers are signing off on programmatic ad spending that has too much fraud.

Pharma DTC. Managers and digital agencies have to take a lot of the blame for boring online ads and lack of creativity that could actually lead to better metrics. Right now, programmatic ad servers are wetting their chops at the free money floating their way.

Pharma throwing money away on digital ads