Marketers Trend Report 2018: Relief after one year of Trump doesn't mitigate all concerns
When respondents pondered last year's MM&M Healthcare Marketers Trend Report, they likely had quite a bit on their minds. President Donald Trump isn't exactly the model of predictability and emotional constancy now, but in February 2017 he was an unknown entity compounded by an enigma.
Would he dive into the drug pricing debate? Loosen the rules around importation of medicines from Canada? Press to ditch the tax deduction for marketing expenses? Give his thumbs-up for direct negotiations between drug manufacturers and Medicare?
Respondents to our survey had no idea what to expect, which muted their reaction to the finding that marketing expenditures were on the upswing. The general sense was that nobody should get comfortable with the status quo — and that this mentality would likely suppress marketing spend.
Fast-forward to this February. The president installed industry-friendly execs atop the FDA and the Department of Health and Human Services. He's been all talk and no action on drug pricing. His tax bill left untouched the marketing-expenses exemption. The first year of Trump could not have gone more swimmingly for pharma.
That sense of relief or euphoria informs the findings from this year's Healthcare Marketers Trend Report. They appear to have eased the level of worry among survey respondents that bigger-picture trends could cut into marketing spending in 2018 and beyond.
“Things are looking good,” says Eric Pluckhorn, immunology director at Octapharma USA, which develops and produces human proteins from human blood plasma and cell lines. “Financial performance and approvals through the FDA are strong. Some important therapeutic advances are gaining traction, particularly in oncology.”
Jeff Rummer, director of global marketing operations at Medtronic, agrees. “Payers, providers, and patients still have the same need: How do I deliver or support healthcare products and services in the simplest and most cost-effective manner for patients that results in optimum wellness?” he explains.
“That patient focus should ‘trump' any political or other market factors and drive our industry to continue to innovate our products, services, partnerships, and go-to-market strategies.”
Respondents have their share of concerns. Matt Ruth, Adapt Pharma's U.S. chief commercial officer, doesn't buy the team-Trump-hearts-pharma narrative: “The pressure we feel is the administration targeting the pharma industry,” he notes.
Rummer points to “the marketing-skills gap” as a challenge, while Pluckhorn says speed bumps “will arrive in the form of tougher access from payers and insurers. You can expect to pay more in terms of time and money for support of hub services if you're in a targeted therapeutic area to ensure access for patients.”
Those and other issues may temper budget outlays going forward, but they haven't significantly impacted spending in recent months. Marketing budgets are up across all constituencies that responded: execs with pharma companies, biotech firms, device manufacturers, and diagnostics makers.
Fifty-one percent of respondents worked for companies with less than $500 million in annual revenue, while 13% worked for $500 million to $1 billion firms and 28% worked for $1-billion-and-up organizations.
The approximately 130 marketers who chose to respond to the question about fiscal year budgets reported a mean sum of $8.43 million, up just under 7% from the 2016 mean of $7.88 million. Among those who shared budget figures, 63% reported an increase against the year-ago period, versus 16% who reported a decline.
Respondents reported increases in their budgets targeting physicians and specialists, as well as patients and consumers. Budgets targeting payers and managed care, nurse practitioners and physician assistants, pharmacists, NGOs and advocacy groups, and shareholders and investors were up slightly less.
Budgets for branded campaigns enjoyed more lift than those for unbranded ones. Asked about the factors that prompted them to increase their budgets for the latter, respondents pointed to new product launches (64%), new indications (27%), and new categories (24%).
However, branded comms seem to outperform unbranded ones. Asked to rank their effectiveness on a 1-to-5 scale, with one representing “ineffective” and five representing “very effective,” respondents gave them high marks in changing market share and increasing ROI. By contrast, they were less bullish on the effectiveness of unbranded comms.
Marketing dollars found their way into traditional channels. As in years past, the largest percentage of respondents' budgets was devoted to sales reps (17%) and professional meetings or conferences (14.8%). Given that those channels have held the top two spots for some time — and with their percentages of budget allocation relatively unchanged — their resiliency during an era of profound fragmentation is noteworthy.
So, too, are the shifts in budget percentage versus the year-ago period for several other channels. Industry wonks have been trumpeting digital's ascendance, even though most evidence suggests the shift away from traditional channels has occurred gradually.
The three channels with the biggest surges were paid digital advertising, social, and search engine optimization and marketing.
On the other hand, all the chatter about the rise of point-of-care programming didn't translate into higher budget allocations: A mere 11% of respondents said their POC marketing budget increased during 2017. Another buzzy channel, video, saw similar results.
Despite proclamations about the surging importance of marketing to or communicating with payers, their budget share lagged other audiences. Payers claimed 11.2% of their marketing budgets in 2016 and 12% in 2017. HCPs still rule the budget roost, with 60.9% of 2016's marketing budget and 58.2% of 2017's devoted to them.
However, the channel mix used to reach HCPs shifted. While respondents said most of their channel usage didn't change much between 2016 and last year, 33% of respondents said they lessened their use of journal print ads.
We've read thousands of eulogies for print during the past decade, but this may represent the first statistical evidence of a decline. It's not an apples-to-apples comparison, but respondents also decreased their usage of print ads targeting consumers and patients during the same time span.
Respondents affirmed physicians and specialists remain their most crucial constituency. Asked to rank seven audiences in order of importance to their organizations, respondents ranked them first and everybody else behind.
Consumers and patients finished a distant second, just ahead of payers and managed care and nurse practitioners and physician assistants.
But when the survey presented healthcare marketers with a list of potential challenges for the months ahead, payer-related dread revealed itself once more. Asked to rank challenges on a 1-to-5 scale, with one representing “not challenging” and five “extremely challenging,” pressure from payers and managed care received the “best marks.”
Not surprisingly, customer behavior change was singled out as a huge opportunity for healthcare marketers: On the 1-to-5 scale, with one representing “no opportunity at all” and five representing “significant opportunity,” it received either a four or a five from 57.9% of respondents.
Close behind was social media, that supposedly terrifying channel that's an FDA disciplinary action waiting to happen for every brand team.
Healthcare marketers didn't respond definitively when asked about the incursion of consultancies onto the turf historically claimed by healthcare-first agencies. Thirty percent of respondents said they increased their use of AOR-type agencies, while 27% increased their use of consultancies.
The latter attributed their decision to an increase in the available budget or resources for outside partners, a desire to shake up existing thinking or teams, and a desire to avail themselves of the scope or scale of consultancy offerings.
Respondents who increased their use of traditional agencies pointed to an increase or decrease in the available resources for outside partners, the addition of services such as data science, and a longstanding relationship with an agency or network.
Survey link was sent in an email to approximately 15,000 healthcare professionals who reside in the U.S. Respondents were offered either a $25 or $50 Amazon gift card for their participation. A total of 176 healthcare professionals completed the online survey between late November 2017 and early January 2018. Results are not weighted and are statistically tested at confidence levels of 90% and 95%.