Pharma ad spend soared in 2021 as marketers ramped up to meet consumer concerns. But in the first half of 2022, the sector came back down to earth, with spend increasing 1% over the same period last year, according to the SMI Pool. The data pool, from Standard Media Index (SMI), reflects billing records for the biggest ad agencies representing about 95% of U.S. ad spending by the largest national advertisers.
But pharma marketing is still evolving. Digital is displacing linear TV. And while ad spend for prescription drugs is cooling, the OTC category has been surging. What do these trends mean for the future of pharma marketing?
Digital Takes Center Stage as Linear TV Slips
Linear TV has been especially dominant in pharma marketing relative to other industries. The traditional TV channel accounted for about 52% of pharma ad spend in the first half of 2021, while that figure dipped to almost 47% this year. Meanwhile, digital jumped from roughly 44% to nearly half.
The linear TV audience decline is ongoing but gradual. There are still viewers, particularly older ones, who presumably are a foundational part of the pharma customer/patient group. But longer term, it appears pharma advertisers are replacing linear spending with various forms of digital.
Twenty-eight percent of digital spend is going to digital ad networks, 21% to search, and 18% to digital content sites. With third-party cookies and mobile IDs going away, pharma advertisers may be relying on networks to fill the gaps. Another approach is to adopt contextual targeting. Marketers will turn to healthcare publishers and related content to connect with audiences who are likely in the market for pharmaceutical products—no audience data required. Ten percent of pharma spend went to Google, which is working to replace third-party cookies with contextual solutions such as Topics.1
Prescription Spend Cools While OTC Grows
Another striking trend is a shift in ad spending from prescription to OTC drugs. While prescription marketing grew 24% YOY in H1 2021, it dipped 2% in the same period this year. But OTC spend, which increased just 2% in H1 2021, jumped 23% this year.
Spend shifted to digital for both prescription and OTC drugs, but digital commands 56% of OTC ad spend while only 49% of prescription dollars. Plus, the digital allocations vary. Ad networks account for 41% of OTC spend, and social is the secondary channel with 23%. Ad networks take only 26% of prescription spend, and social is fifth.
Pharma marketers seem more comfortable promoting OTC products on younger channels such as social, perhaps believing consumers will trust ads for readily available medications on platforms like Facebook, whereas they might need the legacy halo of premium publishers or linear TV for prescriptions.
Digital’s prominence among OTC drugs will probably shift to prescriptions. As is happening in other categories, digital—and premium digital video, such as Over the Top and Connected TV in particular—will become central to pharma marketing as consumers move away from linear TV and digital natives age into pharma’s prime demographics.
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