Doom, Gloom or Opportunity
“There remain massive opportunities for consumer advertising.”
I know the Nielsen spending numbers for latest 12 month DTC spending went down over 20%. We can attribute much of that to drugs going off patent as well as fewer new blockbusters appearing. On the other hand, the decline is in no way a decline in use of DTC for brands wanting to achieve blockbuster status. Most new large brands launched used DTC. The overall decline is not an indication that drug companies are abandoning the idea that DTC works.
While no one, particularly media outlets, thinks of 20% declines as good news, we must keep the latest decline in context. New brands and new categories will use DTC. Most will get a payback of $1.5-2.5 dollars to each one invested. Some will fail badly. Some of those should have not done DTC because it does not work well for all brands or categories.
DTC will be critical in a future health care environment constrained by cost control. New brands will have to make their case for formulary coverage and particularly those later in class entries will need to justify their existence. Me-too brands that so many drug companies rely on for low risk launches are going to need DTC to say why they are worth discussing with their doctor.
Of course that means drug companies must develop me-too products not to be me-toos. By that I mean some unique consumer attribute is critical. That could be price, dosage, ease of use, packaging, follow up support, side effects, and just more creative advertising.
We also can hope that drug companies will have a new golden era using biologics, genomics, and better use of chemical entities. We have no shortage of diseases and chronic conditions. We also have increased threats of viral pandemics needing vaccines or treatments. DTC will be needed to increase awareness of disease or conditions leading to disease. Government has a renewed budgetary interest under Obamacare to succeed in making us healthier.
While we all would like to see a thinner, more athletic prototypical American, we all know we are much more likely to see a fatter and sedentary one. That population will need earlier diagnosis and treatment. Most likely pills will be used earlier. DTC will be used to push earlier awareness.
Our upcoming DTC National is dealing with many of the future needs of DTC advertisers. I hope those of you who think there is nothing new in DTC attend the meeting, and see how many things are changing. Based on interest in attending we see no gloom and doom in the industry. What we do see are many new companies entering with innovative ideas. While the overall DTC media pie has shrunk lately, that does not mean it cannot grow again. DTC, as I define it, is quite broad. To me it means marketing health products and services directly to consumers. That includes providers such as hospitals, clinics, test centers, as well as drug and medical device companies. In a 2.4 trillion dollar industry there remain massive opportunities for consumer advertising and promotion.
Can DTC media once again be $5 billion? Absolutely it can and may reach $10 billion by 2020. Government needs to encourage more cost competition and nothing breeds advertising faster than competition. Cost does not only mean price competition. Cost can come down with better and faster positive outcomes. So I have never been more encouraged by the DTC opportunity. I characterize the last two years as a mere lull, not a persistent downward trend.
Bob Ehrlich, Chairman
DTC Perspectives, Inc.