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INSIGHTS Alert: Reported Spending Total Shows 9 Percent Drop for Q2

With seven major DTC brands cutting $40 million or more from their consumer budgets in the first half, the total “reported” spend for DTC dropped 9% in the second quarter and 4.8% for the January-June period, according to Nielsen Monitor-Plus. The total “reported” spending fell by roughly $130 million in Q2 after a flat “reported” spend in Q1. (Note the Nielsen Monitor-Plus totals do not include online promotion in either period.)

The seven brands that significantly reduced first-half spending (and the amounts of “reported” cuts) are: Lunesta ($99.2 million), Rozerem ($88.5 million), Requip ($78.7 million), Lipitor ($62.9 million), Zetia ($50.6 million), Nexium ($48.8), and Vytorin ($44.9 million). Total spending in the first half was $2.6 billion.

Marketers also significantly cut back on disease education advertising in the first half, trimming roughly $51 million (or 30.6%) from their unbranded marketing budgets in the period. Among the campaigns with the steepest cuts in reported spending were Roche's ads for the flu virus and ads about depression sponsored by Wyeth.

"These declines show that big pharma will start looking to do more with less and that will require more analysis and understanding of how to squeeze media value," said Bob Ehrlich, chief executive of DTC Perspectives and chairman of the upcoming DTC in the Era of Consumer Choice Conference. (The conference is scheduled for Oct. 29-30 in Livingston, N.J., and, among the modules, several presentations will address media mix and improving ROI in a new consumer environment.)

Among media channels, network TV reversed a sliding trend and gained market share in the first half, capturing roughly 35% of the total “reported” DTC spend.

This is the second time in the past three quarters that DTC advertising has recorded significantly “down” results, according to Nielsen Monitor-Plus data. While DTC spending fell less than 1% in Q1 of 2008 (or less than $1 million on a base of roughly $1.3 billion), the drop in last year's Q4 was a more daunting 15.2%.

MORE INFORMATION: The September issue of DTC INSIGHTS will publish a more detailed analysis of the Q2 and first half spending trends, including an analysis of the media mix. For information on subscribing to the INSIGHTS newsletter, please send an e-mail to Jennifer@DTCPerspectives.com

DTC INSIGHT: The market decline is temporary and will recover with new-brand introductions. There is no indication companies are abandoning or rethinking DTC as a key promotional device. The fact that Lipitor came back to DTC is a good indicator of its value.