Procter & Gamble was one of several big consumer-packaged goods firms to pare back marketing spend this past year, part of an effort to end ineffective advertising. Drugmakers have stepped up vigilance, too, with a few instituting cost-cutting.
It’s unlikely that these moves are a direct response to anything done by P&G, said Andrea Palmer, SVP, Publicis Health Media. “I don’t think that the pharma industry…[has] made a wholesale change,” she said. “I will say antennas go up whenever a major advertiser like P&G has findings similar to that.”
What the consumer products giant did was chop $100 million out of its digital marketing budget in the second quarter of 2017, and then it trimmed about $40 million in agency and ad-production fees. P&G saw sales pick up during the same quarter.
That wasn’t the only thing that raised antennas. As P&G’s finance chief, Jon Moeller, explained in an earnings call, the discontinued ads were “ineffective, where either we were serving bots as opposed to human beings, or where the placement of ads was not facilitating the equity of our brands.”
Pharmaceutical companies, too, have struggled with serving ads to bots. According to DMD Marketing, as much as 40% of pharma website traffic is bot traffic. The firm reported those findings last year, based on an analysis of individual website visitors using DMD’s tagging system.
As to Moeller’s latter point about placement, it’s likely he was referring to a well-publicized CPG brand exodus from YouTube that occurred last spring in the wake of an investigation conducted by The Times of London into ads appearing next to extremist content on YouTube and Google’s ad display network.
GlaxoSmithKline and Johnson & Johnson were among the U.S. companies reportedly to have pulled their YouTube advertising. Similarly, Novo Nordisk joined a group of advertisers that fled alt-right website Breitbart News in late 2016 over concerns ads were being placed next to stories supporting misogyny or homophobia, according to The Washington Post. Other drugmakers including Gilead Sciences and Astellas Pharma suspended advertising on “The O’Reilly Factor” following news reports of sexual-harassment allegations against Bill O’Reilly, the host of the Fox News show.
Since then, GSK in some markets has mounted a cost-reduction program that’s chipping away at media and marketing budgets across its consumer healthcare portfolio. And Eli Lilly, which has a new CEO in David Ricks, who has launched a restructuring, has also reportedly moved to a “new marketing model” that involves bringing certain erstwhile agency services in-house.
These moves are probably not a sign of a broad industry pullback. For one, drugmakers use marketing to help people with some of life’s most important decisions, Palmer pointed out. “Digital does that better than other channels like TV or print,” she said.
And as live interaction between sales reps and doctors has decreased in response to health system clamp-downs, companies have increasingly turned to non-personal HCP promotion, like custom content, native ads, and social media, with banner ads perhaps doing less of the heavy lifting.
According to Charles Benaiah, CEO of social-media startup Watzan, the industry is seeing ad technology, including programmatic ad buying, taking a backseat to marketing technology – which offers tools designed to help customers get to data that supports product use, such as peer-to-peer and influencer networks. “It’s become apparent [from] just about everyone we speak to [that the pharma industry] is changing their perspective on ads,” he said.
Have banner ads fallen out of pharma’s media plan? Yes and no. Pharma’s digital media spending was flat at about $515 million in 2016, compared to 2015, Kantar Data showed. Yet banners, Palmer noted, remain essential as they allow advertisers to do brand or category reminder messaging. “I don’t think any one part of the digital mix is getting kicked to the curb,” she added.
Pharma marketers can expect to hear more about cleaning up the digital supply chain, whether it’s trimming the number of programmatic ad exchanges they work with or ensuring they know where ads run and who views them. “The future, the very immediate future, is about accountable media,” Roger Korman, president of DMD Marketing, noted in an email.
P&G’s move, Korman subsequently explained, “will raise the significance of demonstrating more than, ‘Is your ad viewable?’ The far more significant question is, ‘Who’s seen your ad?’ Presumably, it’s someone you have targeted, and it’s presumably not a bot.”