Back in August 2021, when we last checked in with the heads of Bayer’s U.S. pharma media team, they were well on their way to building an in-house media capability and data infrastructure. They had begun planning and buying digital media on Bayer-owned platforms eight months prior and had drawn up a road map to hire a wealth of in-house digital media people by August of the following year.
Fast forward to 2023, and the company has largely made good on that blueprint, having onboarded all necessary media roles as either full-time employees or key strategic partners. In the process, the team has grown from three to 15 members and the company has weaned itself from its bridge agency and from other outsourced roles.
“We have no legacy media agencies supporting digital media,” VP, digital strategy and operations Brian Cantwell says emphatically. He adds that every one of the company’s pharma unit brands and franchises is tapping into the in-house media function.
Meanwhile, Bayer’s media budget has doubled over the last two years to support U.S. growth and keep pace with two current launches: prostate cancer med Nubeqa and Kerendia, a drug for patients with both chronic kidney disease and Type 2 diabetes. And newer channels and functions, such as online video, connected TV and addressable TV capability, have been added along the way.
Adds Glenniss Richards, the senior director overseeing Bayer’s digital media activation team: “Rounding off Q1, we are looking to activate addressable TV” — a digital, middle-of-the-road type of video format designed to supplement linear TV. “We believe that’s a first in the industry.”
Cantwell, for his part, is most impressed by the mindshift that has been effected within the company: “The perspective of brand teams has shifted from a default ‘I go to my agency’ to a default ‘I go to my in-house team,’” he says.
But two years into Bayer’s in-house transition, that mindset is anything but entrenched across the industry. In fact, the company remains alone among its large-pharma peers to have in-sourced all media.
“It’s more the exception than the norm,” says Jerry Luciano, VP of omnichannel marketing for TGaS, a division of Trinity Life Sciences. “Most pharma organizations today have an internal media team that is responsible for setting the strategy and overarching management, but they still integrate with a media agency for buying and flighting.”
To understand why, journey with us back to 2021, when Bayer’s pharma unit took the in-housing leap. At the time, this reporter’s hot take — admittedly less than prescient in retrospect — was that it marked the birth of a new pharma model.
On one hand, the effort seemed at least partly justified. There was the impending retirement of third-party tracking cookies from Google’s Chrome browser as well as Facebook’s push to curtail much of the health-related targeting brands had been doing on its platform. Those ballyhooed moves put marketers on the clock to come up with alternatives to third-party ad targeting.
“The value of having first-party data has become extremely important with the deprecation of cookies,” which Google delayed until late 2024, notes CMI Media Group EVP, product strategy and transformation Jose Ferreira. “Big Tech has forced everybody else to think, ‘What’s my first-party data strategy?’ Which means at the client level, the need to collect data at scale about customers, because it’s the lifeblood of downstream media, is a macro-level force impacting every industry.”
The evolution toward omnichannel marketing is another health-specific force driving companies to bring functions like media in-house, Ferreira says.On the other hand, there were (and still are) numerous hurdles involved in building an in-house media capability and data infrastructure
Let’s deal with what is perhaps the biggest one upfront: simple economics. Industry-wide, pharma’s direct-to-consumer media spend rose 5.6% in 2022, to $7.6 billion from $7.2 billion in 2021, according to Nielsen Ad Intel. Pharma companies spent most of their budget on TV, which grew 1.6%, to $5.8 billion. Digital — encompassing display, video and social — surged 45.2%, to nearly $1.2 billion. Print advertising plummeted 35%, to $375.9 million.
It takes buying power to negotiate competitive rates. “There are obviously efficiencies in buying at scale that you can achieve through some of the bigger media conglomerates,” Luciano explains. “But where it seems to have stalled is that while there are noticeable internal media teams, they manage the media agency, taking some of the roles and internalizing them.”
Most mid-tier and small pharma firms have neither the infrastructure to manage the spend nor the buying power to make it economically feasible. While it doesn’t rank among the top five pharma advertisers, according to Nielsen data, Bayer achieves added scale when its consumer health business, maker of Claritin and Aspirin, is factored in.
“Our consumer colleagues have gotten sophisticated in negotiating specific supply-side platform rebate structures,” Cantwell notes, “Because we are ‘one Bayer,’ we can piggyback on those agreements. This gets us more bang for the buck for our media budgets.”
Thanks to the broader Bayer synergy, Cantwell’s team has been able to negotiate strategic joint business plans with its OTC brethren, thus benefiting from friendlier rebate structures to get discounted pricing.
With Bayer’s pharma unit making the in-house shift two years after its consumer health division undertook a similar journey, the experience of OTC colleagues directly informed pharma-side execs. But as of 2023, Cantwell stresses that his team “is standing on our own two feet. We no longer need to stand on the shoulder of Consumer Health.”
Bayer is driving additional efficiencies by optimizing its campaigns. “In some areas, our costs for a particular type of tactic have dropped 24% year-over-year simply by our team putting forth best practices and global guidance,” Richards says.
Nor is the company paying A-list agency rates for its internal media work. Cantwell says Bayer is able to operate at “less than half the cost structure of an agency,” in terms of the percentage of non-working media dollars it puts toward media. It does lean on some external partners — among others, PulsePoint, Trade Desk and Flashtalking — when it needs flexibility.
The only organizations that could conceivably compete based on size would be Pfizer and AbbVie, both of which spent north of a billion dollars on DTC media last year, per Nielsen. Yet even they have not completely in-sourced media, sources say. Which brings us to two other big reasons for staying on the in-housing fence: talent and technology.
Finding the right talent is a herculean challenge, with these kinds of roles being in high demand. “Because everyone places an emphasis on doing media, you have AORs, media agencies and clients all trying to hire,” Luciano explains. “So that’s another obstacle to trying to bring this in-house at scale.”
Retention is another. Big agencies have a pronounced edge in that particular battle, because their people can work across different accounts and channels if they so choose. At the same time, Cantwell says he’s starting to see talent from Bayer’s consumer health and pharma teams pursue opportunities with one another. “That creates talent pathways that you wouldn’t think an in-house team would be able to offer.”
FInally, there’s the technology piece. “You’d have to have a lot of runway to develop the cutting-edge capability that you could easily just buy from someone else,” Ferreira says, noting that nearly every medium- and large-size pharma company is in some stage of onboarding a customer data platform (CDP). This basically enables people to have a signal source of “truth” about specific customer affinity.
Downstream, that CDP data becomes a series of signals or directions to a media agency to discern “the makeup of this specific customer and the action we want to serve to them,” Ferreira adds.
So yeah, the big media shops have built the technology that enables clients to plug into dozens of healthcare-specific publishers and partners, as well as to orchestrate next-best actions across those suppliers. It’s hard to imagine clients, individually or en masse, taking the steps required independent of the actual technology connection (media setup, contracting and what Ferreira calls “all the dirty work of media management”) because of the massive investment it requires in people and technology.
Bayer says it meets this particular challenge by creating “triple-threat talents” on its team — individuals who know programmatic as well as paid social and search. “Our digital media professionals are upskilled to activate strategies across multiple platforms,” Richards says.
The reason talent and tech are such an impediment to in-housing in the healthcare space has to do with the cyclical nature of biopharma clients’ business. Molecules remain marketable for a finite period before going off patent. Teams have to be spun up to support products before they lose exclusivity.
Cantwell acknowledges that his biggest challenge is enabling flexibility and scale with a team composed of full-timers. “We’re just like every other pharma company, and most of the industry, in that the way you plan your full-time equivalents is a cyclical and annual process,” he says. “We don’t get new head count approved on a whim.”
Indeed, media expertise is so easily outsourceable and so flexible that outsourcing makes more sense from a practical business perspective. Perhaps it’s little surprise, then, that none of the other majors has replicated the Bayer model.
Then again, all clients need to be thinking like Bayer to a certain extent. While others may not have completely followed the company’s lead, many have taken a page out of the German drugmaker’s playbook.
We’re in a moment where people are vocalizing the fact that they want to do more in-house and in some cases are actually doing so. But the discussion ebbs and flows, as does the progress.
“My sense is other organizations weren’t ready to make that significant investment and change in processes,” says Luciano, “It was more, ‘Let’s observe what happens before making that determination.’”
Speaking of which, has the lack of copycats diminished the perceived value of the approach? When asked that question, Cantwell points to the competitive advantage he believes it confers.
Nevertheless, it’s never easy being first. Cantwell says this has led internal colleagues to question why their company remains the only one to have traveled the in-housing path.
“I was asked that same question by our divisional CFO:’‘Why do you think more have yet to follow suit?’” Cantwell acknowledges.
There are two answers: First is the pharma unit’s ability to piggyback on Bayer’s consumer health franchise to achieve economies of scale, which makes it something of an outlier even as more companies have spun off their consumer divisions. The other involves the risk-averse nature of the drug industry.
“Most companies depend on their media agency and adopt an ‘if it isn’t broken, don’t fix it’ attitude,” Cantwell says. “We aren’t satisfied with just OK. We think we can be better.”