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DTC Always On the Bubble

One of the common concerns of DTC marketers is the constant need to justify DTC spending to their management. After more than a decade of use, DTC is still apparently not seen as something that has become routine spending. I call DTC a bubble expenditure because some senior manager at big pharma is always considering cutting it out.

 There are several reasons for DTC to be in this precarious state each budget season. First, Mr. CEO is always worried that DTC angers legislators, physicians, consumer advocates, insurance companies and managed care. In fact DTC may only be popular with advertising agencies and the media companies' sales departments. CEO's wonder if it is worth the hassle. Will DTC cause a tipping point in legislation, they ask.

Second, since detail forces are now being cut, internal sales management is going to be aggressive in insisting DTC be ROI justified. Budget cutting is increasing and DTC is a nice pot of dollars to grab.

Third, DTC ROI's are good, but not great. DTC generally does not create blockbusters. DTC returns are usually acceptable, about 2 to 1, but that means an average budget of about $50 million gets you $100 million in sales. That is only 10% of a blockbuster sales level.

I am afraid that every year DTC marketers will face the threat of being considered obsolete. The fact is, however, that almost all major brands have continued their DTC and cuts have been modest. That being said, DTC managers do not usually need to take out a 30 year mortgage. It is unlikely there will be too many DTC managers working for the same company for a career. The good news is that when one company cuts, others start using DTC. I have seen no evidence that DTC is undergoing a major reassessment industry wide. Individual companies may decide to lower their DTC investment, but most will accept the nice 2 to 1 returns.

I suspect that DTC managers feel like fishes out of water explaining DTC to their management. Clearly the typical senior executive is not consumer or technology savvy. Their ears will perk up discussing an R&D project, but DTC discussion causes them to get that uncomfortable feeling. There is no easy fix for this since few CEO's will have been raised in a consumer products environment. The best way to present DTC plans is to have clear, quantitative measurement criteria that management understands and buys into. It is also important to present DTC for what it is; the best use of incremental spending versus other promotional alternatives.

I am still very bullish on the future of DTC as a promotional tool and as a career. There will be ever increasing consumer co-pays for newer drugs. Therefore, drug companies are going to need to directly convince the end users that expensive new Brand X is worth more than cheaper old Brand Y. There will also be more lifestyle drugs that have no reimbursement, requiring innovative consumer marketing. American consumers are information junkies and that also bodes well for those companies that can reach them in terms that are consumer friendly. Will DTC always be on the bubble? Yes, that is likely as long as former R&D managers, lawyers and detail reps run drug companies.

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