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INSIGHTS ALERT: Reported Spending for DTC Ads Falls by Almost $1 Billion in 2008

The expectations of a down year for DTC advertising in 2008 were correct. But few, if anyone, expected the decline in "reported" ad dollars to exceed 18%, or roughly $1 billion – which is the result now reported for 2008 by one ad-tracking firm.

According to preliminary data issued by The Nielsen Company today, the spending for DTC ads fell dramatically in Q4, which led to an 18.4% decline for full-year 2008 results. The "reported" dollar total for 2008 is $4.344 billion, compared with $5.325 billion in 2007. The 2008 total for DTC ads is comparable to the level of DTC spending in 2004.

The decline in spending was severe in Q4, with roughly $800 million less "reported" spending in 2008 than in Q4 of 2007, which was a fairly strong quarter for DTC activity ($1.4 billion in "reported" spending). No data on specific brands or pharma companies was available today. (For more details, order your copy of the March Issue of DTC INSIGHTS.)

Ad spending overall in the United States in 2008 fell 2.6%, according to Nielsen. The general ad market was boosted by the presidential election and spending for ads during the Summer Olympics. Among the leading national advertisers, Procter & Gamble and General Motors reduced their ad spending in 2008 by 19% and 15%, respectively. Johnson & Johnson trimmed ad spending by 5.4%.

DTC INSIGHT

* Our previous forecast for a 10% decline in reported DTC spending for 2009 seems likely, given the falloff in spending late last year. It's becoming a cliché, but "doing more with less" is going to be the theme for marketers throughout 2009 and into 2010 – and media companies will be asked to provide more evidence of their effectiveness.