For pharmas, online video, ad exchanges are the future (for everybody else, they're the present)

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Advertisers ramped up investment in advertising exchanges and video last year as spending recovered, said digital agency Razorfish in its 2010 Outlook Report.

The shop saw a 4% increase in media spend for 2009 – following a 13% decrease in 2008 – and said clients generally stuck to their media strategies, unfazed by the economic distress. Those that did switch were more likely to shift toward brand-focused messaging rather than direct response, and spending on both ad exchanges and ad networks grew, while spending on portals slid by around 4%, year-on-year. Spending on search slid 12%, due mostly to normally-high income verticals like financial services and healthcare pulling back.

While these trends have not yet hit pharmas, they portend similar shifts for the drug industry, said Debrianna Obara, VP, media at Razorfish Health, which parent Publicis spun-off as a standalone shop in February.

“Generally, healthcare is about 18-24 months behind the rest of industry in terms of uptake and adoption,” said Obara.

Advertising networks and exchanges are increasingly popular because they allow advertisers to use third-party data to reach their target audience more cheaply. Pharmas, said Obara, “have a higher bar to clear in terms of making sure their ads are running against the right audience with appropriate content, and the exchanges often can't guarantee that.” Exchanges might make sense for more mature brands using downloadable coupons or other direct response appeals, or for brands looking to beef up their CRM database before they go off-patent.

“For other pharma clients that are building a brand or are in the earlier part of their lifecycle, they're more likely to be in the vertical or healthcare-type sites where they can have exclusivity or high share of voice, and they know exactly where their ad is going to be appearing,” said Obara. Nonetheless, exchanges and networks are beginning to incorporate insurance claims data to identify patient populations.

Similarly, the network's non-pharma clients are investing much more in video advertising and sponsorship of video through Hulu or YouTube, while pharmas continue to focus on long-format educational videos housed on brand.com sites. Obara anticipates that will change as pharmas seek to extend their reach through YouTube channels, partnerships with health portals and video delivered through banner ads.

The Razorfish Outlook Report found little evidence of greater investment in mobile and social media marketing, but that's partly because many of the costs – labor, app development and infrastructure – are below the line. The iPad could change that, though spending by pharmas is also hindered by difficulty of measurement and a lack of clear guidelines on social media.

“The view is not yet worth the climb in terms of investment,” said Obara.
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