HEALTHCARE: Home Remedies

Direct-to-consumer medical marketing has exploded into a nearly $5 billion industry in recent years. The growth, however, has come in large part at the expense of established industry vehicles such as medical journal advertising, as pharmaceutical companies sought flashier channels such as office visits and direct-to-consumer campaigns.

But a study called ROI Analysis of Pharmaceutical Promotion released in May by American Medical Publishers, Westfield, NJ, suggests that medical marketers may just want to revisit the older marketing strategies that lately have been gathering dust.

Conducted by Dr. Scott Neslin, professor of marketing at Dartmouth College, the study focused on four marketing tactics: detail dollars, which include one-to-one physician meetings and rep-driven group meetings; direct-to-consumer efforts; medical journal advertising; and physician meetings and events. It examined the spending habits for medical brands with revenues of at least $25 million in 1999, and covered 391 brand drugs and 127 generic alternatives, compiling 16,696 monthly observations from 1995 through 1999.

Not surprisingly, direct-to-consumer spending lead the pack in overall growth, posting an average annual increase of 53.7 percent. (The segment includes dollars spent on magazine and newspaper ads, and TV and radio spots.) Spending on physician meetings and events was next with an average annual increase of 23.6 percent, followed by detail dollars at 10.7 percent and journal advertising at 9.8 percent. “Most of the growth in journal advertising took place by 1997, then leveled off,” Neslin says.

However, the study also found that return on investment was highest at the bottom of the spending curve. The median ROI was highest for journal advertising at $5 (per dollar spent), followed by meetings and events at $3.56, and detail dollars at $1.72. The new darling of medical promotion, direct-to-consumer, came in last at a paltry 19 cents (although it rose to $1.37 among brands with more than $200 million in annual sales).

“We’re not saying [to take everything] and put it into journal advertising,” cautions Neslin. “Advertisers may be inclined to make major changes in their budgets when they see an immediate effect, but be careful,” because it can take up to two years to realize the full return on a marketing investment, he suggests. “Results may be smaller and less noticeable in subsequent months, but the overall effect will be greater.”

For example, half of total ROI for detail dollars and journal advertising is often realized in the first month after activity, but it can take up to 10 months for the full effect to emerge.

Cures Vary

New brands benefit the most from detailing because the tactic allows them to sit with physicians face-to-face and convey advantages in a way that isn’t possible through a less-personal medium. Meanwhile, meetings/events and journal advertising are underutilized in general. “Physicians don’t seem to be overloaded by journal ads or meetings,” says Neslin.

When it comes to direct-to-consumer, marketers should take extra care in the planning process due to the low ROI, Neslin suggests. Such efforts tend to work better for large brands that can leverage existing awareness levels, or for new launches that need to make a big splash in the marketplace.

DTC also can be successful beyond the scope of typical ROI measurement, because it’s “effective at building brands and line extensions,” says Dr. Neslin. “As competition increases, generics emerge and high brand quality pays off.”

Direct-to-consumer marketers need to be patient as well. “A lot of DTC promotion pertains to chronic conditions that don’t need immediate care,” says Neslin. “I’ve got allergies, and I see ads for allergy medication. But I also say, ‘Oh, I can tough it through this season.’”

Based on the study’s results, medical marketers should learn to tough it through, too.

The Marketing Diagnosis