For the next 12 to 24 months, the media landscape is set to drastically change and pharma marketers can’t miss this hidden opportunity. If you are a challenger brand in the midst of defining yourself, leap-frogging your competition, and cementing yourself as king of the jungle, this is the type of opportunity that comes around, once, maybe twice in a career.
Right now, and for the foreseeable future, TV (both linear and streaming), has lost 60 to 120 minutes of consumer attention per day, per viewer. So, what channels are reaping the benefit and where should marketers shift their promotional ad dollars during this window? First, let’s look at how we got here.
During the pandemic, we witnessed a dramatic uptick in streaming that surprised even the most bullish of analyst estimates. For every linear cord-cutter, a streaming service somewhere, was signing up that consumer. Amidst major travel restrictions and global lockdown, there wasn’t much else to do but stream. For this reason, the start of the pandemic largely ignited the, “Golden Age of Streaming,” where services such as Paramount+, Peacock, Disney+, CNN+, Discovery+, and HBO Max all launched.
Fast forward two years and a very different narrative is unfolding. Quantitative tightening is now well under way and interest rates are up to levels not previously seen in decades. In 2023 Q1, the party was essentially over as Netflix reported the first ever decline in subscribers, prompting Wall Street to force a complete strategic pivot for all streamers, the emphasis now firmly placed on profitability over driving subscriber growth. This one change sent major ripples across the media industry. Streaming services that once seemed to be launching on a monthly basis, were now discussing cost cutting and consolidation.
Further compounding challenges for these streaming companies, along with the rest of Hollywood and TV, is the SAG-AFTRA strike (which had yet to be settled at press time). The details of the strike come down to several major negotiating points. The first involves the use of AI in actor likeness, while the second pertains to residuals, which are payments made to credited actors once the show enters syndication.
The AI deal point seems to be close to resolution, but residuals will be a challenge as much of the budgets needed to pay out these residuals, which could be many times more than an actor’s base salary, are underwritten by the money networks make from carriage fees. Streaming services do not make carriage fees, only revenue derived from each subscriber, and now more recently, advertising.
The Problem with Steaming’s Business Model
The bedrock of the linear TV business model revolves around carriage fees. These fees totaled over $12 billion in 2021 and are paid by cable companies such as Comcast, Spectrum, and Dish to the television networks. Each network negotiates individually based on the popularity of their content. ESPN, for example, gets $9.42 per subscriber and will generate over $8.1 billion in 2023 from these fees. As linear TV wanes, these fees are eroded and less money is available to pay residuals. Less is still more however, because streaming, which doesn’t have billions of dollars to tap from carriage fees, pays out residuals that are pennies on the dollar when compared to linear.
Post-pandemic streaming is not growing at nearly the same rate as it was amid the lockdown. It was recently reported that streaming just reached an all-time high, but that statistic incorrectly includes YouTube viewing. YouTube is a social platform that doesn’t produce its own content like Netflix or Max, making it an apples-to-oranges comparison. In order to reach profitability, streaming services are slashing costs, which includes jettisoning licenses to shows that viewers thought were synonymous with certain platforms. This means significantly less content will be on each service, a fact only further exacerbated by the SAG-AFTRA strike. With a production backlog of over 18-months, post-strike, it could be two years before the content machine starts rolling again.
Two Hours Are Up for Grabs
This brings us back to the 60 to 120 minutes per day that our research shows are up for grabs. This time that consumers used to spend watching either linear or streaming video is now spent consuming content on social platforms. Make no mistake, this isn’t a manifestation of second screen viewing. This is a cord-cutting, linear subscription cancelling revolt. Will it last forever? No. But for the next 18 to 24 months, platforms such as TikTok and YouTube are reaping major rewards. Both platforms are reporting increases in monthly active users.
Even platforms such as X are seeing benefits. X CEO, Linda Yaccarino, said that major advertisers like Coke, Visa, and State Farm have all returned to the platform with significant ad buys. Elon Musk has mentioned the pharmaceutical industry several times, stating his desire to work more closely with brands. To pay off this point, X has introduced a rollback feature that allows brands to toggle off new platform updates if they run afoul of currently implemented processes or spark regulatory concerns.
Threads on the other hand is the spitting image of brand safety—if pharma developed an industry-centric platform, this would be it. Predictably, the scorching hot user growth trend has tapered, but the platform is still getting between 30-50M daily active users and it’s still in its infancy. As Threads evolves, major opportunities will become available to connect with a more tech savvy, younger user base, not currently duplicative to X.
Reddit has also improved its brand safety protocol, while daily user activity is up 58% since 2020. Even Google’s CEO has acknowledged Reddit saying, “users don’t want blue links…they want more comprehensive answers.” Sundar Pichai was referencing the uniquely searchable, person-to-person interface, and Q&A style of the Reddit platform—meaning a canned search result is one thing, but it’s an entirely different thing to get a timely, hyper-relevant answer from a peer. This is especially true when searching for health information.
The Opportunity for Pharma
The three platforms currently offering the greatest opportunity for promotional brand marketing are TikTok, YouTube, and Facebook Reels. TikTok shockingly hasn’t lost any steam coming out of the pandemic. On TikTok, one in five users consult the platform before seeing their HCP for a condition. In addition, 4.5 million active HCPs are on the platform, representing one of the fastest growing and most engaged segments. This includes specialties you would expect—dermatology and plastic surgery are among those active—but so too are oncologists and immunologists. While we are all too familiar with Dr. Google, for a younger and even middle-aged audience, we need to acquaint ourselves with Dr. TikTok.
YouTube Shorts and Facebook Reels, much like TikTok, make use of vertical video to capture viewer’s attention on the couch, or in bed, where they can easily scroll one-handed. The biggest hurdle for clients is a lack of video assets for use in video advertising, but because audiences are both comfortable and familiar with YouTube and Meta, even audio-only content, such as podcasts, are migrating to these platforms. Further, new generative AI tools are morphing static images into video content. This will be an enormous boon for pharmas with limited budget looking to expand into video.
The Window Won’t Be Open for Long
For the next 12 to 24 months, the time is now for smart pharmas to shift promotional ad dollars to social platforms and away from linear and streaming. Will streaming evolve? Absolutely, but right now there is a content problem, a data problem, and a measurement problem.
Meanwhile, TikTok, YouTube, and Meta all have very mature products, measurement capabilities, and support teams to match. Plus, all of these platforms are doing more to bring pharma into the fold to address regulatory concerns and to create more compliant environments in which pharma ads will not only shine, but also reach audience hand-raisers who are genuinely interested in hearing about a product and can take action right within the platform.
It was hard enough to convince pharmas to invest in CTV and ad-supported subscriptions (AVOD), but they’ve started to. Now asking pharmas to pivot yet again, during this period of flux, is going to be no small feat. But for those pharmas brave enough to buck conventional wisdom in order to meet their audiences where they truly are, this is going to be a major win. Smart money says Dr. TikTok still has a whole lotta runway.
