What’s behind online ad spend drop?

These trends are indicative of the ongoing maturation of the pharmaceutical industry’s use of interactive media.  At the same time, online search and sponsorship spending continues to expand. Without exception, our clients are leveraging online media for a broader range of communications throughout the product life cycle. In our view, aligning relevant content with the information needs of healthcare professionals and consumers is the key to creating impact and establishing enduring relationships. Online media enables true micro-marketing, employing a targeted approach that creates greater efficiency over  time. The underlying versatility of online communications allows marketers to facilitate a timely and tailored information exchange with individual customers, and to continually optimize spending. Budget allocations are reflecting this shift in focus and expectations.

The year 2005 was one when pharmaceutical companies started to measure response from Web display ads. By developing, tracking and making decisions based on metrics, companies began to understand that even cursory media optimization can dramatically reduce the required media spend needed to deliver results. Three factors drive down the cost of Internet marketing over time. First, the Net is a great testing ground, so all media buys should be preceded with a short test period to demonstrate that the placement and message will perform. Second, media buys allow for a short cancellation period, giving marketers the ability to cancel a buy if it starts to fail.  Finally, new pay-for-performance models are dramatically reducing the cost of acquisition, making year-over-year spend lower despite increased performance.

While online media spend declined slightly in 2005, we also notice increasing demand for more timely, meaningful and digestible results reporting for online media spend. Clients are frustrated by contradictory reports and reports that are not meaningful or actionable. They seek greater clarity and are willing to pay for this analysis. Many question their online media buyers, who simply negotiate the buy and do not provide any meaningful strategy or long-term plan behind their methods. We see a trend toward viewing online media spend as part of a longer-term integrated play, rather than as a stand-alone marcom element. Firms want to understand how their online presence grows and matures over time and want to deploy the tools available to them—not simply online advertising or search but all online media, with each tactic informing and building upon the other.

The decrease in online dollar spend belies the amount of effort allocated to the online space. In 2004 and early 2005, greater acceptance of online drove an increase in spend. Dollars in-creased as larger media agencies entered healthcare and applied a mass-media model to the online channel. Mass impressions were purchased as companies trolled for patients. In 2005 MBC focused its efforts on engaging the appropriate patients via more cost-effective tactics like paid search and content syndication programs. We were able to spend less while engaging patients across the continuum and providing them with tools and content to aid in the healthcare decision process. Picture a funnel: Online enables us to target the thinner areas more cost effectively.