Pharma's $6 billion annual ad spend targeted by media publishers

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Condé Nast, Time Inc., and Vice Media have all recently launched health content businesses, in a bid to meet the growing demands of health-conscious consumers and also take a slice of the roughly $6 billion pharma advertising pie.

The healthcare market isn't a new one for the publishers. Their editorial teams often write about health issues, and drugmakers already spend big on advertising with companies like Time, where pharma makes up the largest advertising category.

“It doesn't surprise me that media companies are getting into pharma advertising, given the total value at stake in pharma sales,” said Brian Fox, senior partner at McKinsey.

See also: Some brands thought to shift online ad dollars, creating uncertainty for WebMD

What exactly is at stake? Well, pharma spending on digital ads was flat, at $515 million in 2016, according to data compiled by Kantar Media. But total pharma spending on advertising in the U.S. market rose 4.6% in 2016, to $5.8 billion, driven by a 6.4% jump in spending on magazines, to $1.7 billion, and a 4% increase in TV spending, to roughly $4 billion.

This may be one reason Time Inc. in July launched a point-of-care magazine as part of the February kickoff of Time Health, a brand focused on video and digital editorial content, among other offerings. Plans for the magazine, however, prompted a lawsuit filed in April by WebMD. The suit accuses a former WebMD employee of taking trade secrets concerning WebMD's own point-of-care magazine to Time Inc.

Spokespersons for WebMD and Time declined to comment on the lawsuit, which highlights the competitive nature of the slower growing but still profitable pharmaceutical advertising market.

“By using this information WebMD's competitors can avoid the time and expense which otherwise would be required to develop their own business models and methods, and can jump to the front of the competitive pack,” WebMD said in the lawsuit, filed April 11 in the Supreme Court of the State of New York County.

See also: Infographic: What's next for the point of care market

These further investments by traditional media publishers into the healthcare and pharmaceutical space may mean several things. Publishers in general are facing a broad advertising slowdown and looking for new revenue options, while consumers are demanding more health news and content. And the move away from banner ads and toward data-driven strategies has created opportunities for highly trafficked consumer sites to market their reach.

At the same time, drugmakers and other types of healthcare advertisers, including health systems and insurers, are looking for smarter ways to engage with consumers. That could well be through consumer-friendly and trusted media titles like Time and Vogue.

Media executives agree that consumer demands are changing. They want more information about health and wellness, those execs say, and they don't necessary want to go to health-specific sites like WebMD.com to get a daily fix of health news.

During the 10 months during which all three media properties launched, companies like WebMD and Everyday Health — traditional sources of online pharma advertising — have struggled. WebMD CEO Steve Zatz told investors earlier this year that the company expected to see a more significant decline in growth for its pharma advertising business during 2017 than it had originally anticipated. More recently, following the news that WebMD will be acquired by private-equity firm KKR, a WebMD executive told The Wall Street Journal that it plans to evolve beyond a content-focused model.

“What we're seeing is leading pharma companies — leading commercial thinkers  — are getting a deeper understanding of the patient, the caregiver, and the physician,” Fox said. “There's an interest in more media vehicles and greater targeting of messages to ensure that people are encountering the right messages at the right time.”

See also: Patients are taking on DTC ads. How will drugmakers respond?

Drugmakers used to spend more money targeting patients before they visited the doctor, with the hope that patients would request a specific drug during their appointments, Fox added. Now, data is showing that people search for information more intently after they've visited the doctor and also throughout the course of their daily lives. 

It's also worth remembering that people with chronic diseases and conditions are still interested in in travel, sports, and fashion. “As consumers, now more than ever, we specifically want engagement from brands that fit into [our] lives,” said Matt McNally, chief media officer at Publicis Health.

Publicis Health worked with Condé Nast on a media program for Xiidra, Shire's new treatment for dry-eye disease. The campaign was unique for Shire for several reasons: It featured one of the drugmaker's few consumer-facing products, and actor Jennifer Aniston served as a spokesperson, a rare pharma appearance by an A-list celebrity, for the unbranded campaign. Ads were featured in titles like Bon Appetit, Condé Nast Traveler, and Vogue.

Condé Nast's new health marketing division, which launched in April, is multifaceted. The group gives its advertisers with access to its predictive data optimization platform and also develops branded and sponsored content. In addition, Condé Nast has promised to increase its editorial coverage of health and wellness —- primarily through the now online-only Self magazine, which published its last print issue in February. On June 29, Self launched a section that aggregates stories about 30 different conditions and diseases affecting women.

“We can find people suffering from these conditions and populate content to them where they are,” said Jen Mormile, chief industry officer for health at Condé Nast and a former EVP of sales for Everyday Health. “There is a shift from search to find. People want to find content personalized no matter where they are.”

See also: As users move to mobile, Google says they made 200 million queries for info about cancer drugs

Tonic, Vice's new editorial health site, takes a slightly different approach. The site, which bills itself as “real wellness advice for imperfect humans,” recently featured editorial news stories about counterfeit skin-whitening creams and virtual STD testing.

While the privately held Vice works directly with healthcare brands to create branded and sponsored content, it does so with the understanding that the Vice voice — described as “engaging and human” by John Duncan, Tonic's associate publisher — is present. Vice's perspective is that much online health content is presented or written in a way that is disconnected from the consumer. By contrast, Tonic features“trustworthy information that you can access, and it cuts through the industry-specific language,” Duncan said.

Tonic recently worked with Sutter Health, a health system in Northern California, to develop partner content about parenting. In November, it also worked with Oscar Health, the rare insurer popular with millennials, as a sponsor of Tonic's Guide to Healthcare during the 2016 open-enrollment season.

“It's not surprising that you're seeing more and more media companies going into that space,” Duncan said.  

Correction: An earlier version of this article incorrectly described Jennifer Aniston's role in the Shire campaign. She served as a spokesperson for the unbranded campaign. 

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