Pharmaceutical marketing: the industry adland forgot

Mainstream media businesses, including the likes of Google, Facebook and many of the mainstream ad agencies and media buyers don’t understand how real pharmaceutical media and marketing work, writes Medical Republic's Jeremy Knibbs.

The pharmaceutical industry is a $26 billion enterprise in Australia, one which is subsidised directly by Australian taxpayers through the Pharmaceutical Benefits Scheme (PBS) to the tune of over $7 billion.

Despite this, the industry remains largely misunderstood by mainstream media buyers and adland in general. Sometimes embarrassingly so.

A couple of months ago, armed with a rack of significantly distorted and inaccurate data generated by Standard Media Index (SMI) about the sector, several specialist media groups started writing stories about spending trends in pharmaceutical marketing.

They all arrived at alarming conclusions, backed, in many instances, by quotes from key personnel in large-media buying groups who appeared to be talking largely nonsense.

Two of those articles, one in Ad News and another in a specialist pharmaceutical industry newsletter Pharma in Focus, not only used the flawed SMI data, they conflagrated and confused that inaccurate data with parts of the sector that are restricted significantly in advertising directly to consumers and those parts that aren’t.

They also added product lines which aren’t pharmaceutical company products into their reporting mix – such as vitamins – and drew conclusions about the sector which, to marketers who are actually in the sector, would make no sense at all.

Some of the claims made included that pharmaceutical companies were:

  1. Rapidly shifting their focus to programmatic and social media spending using trading platforms
  2. Shifting their marketing strategy towards FMCG marketers (not explained why or how though)
  3. Wanting to use programmatic far more in order to specifically target audiences better against content
  4. Lifting their spend in search, programmatic and social year-on-year by 46%, 93% and 160% respectively

The articles implied the pharmaceutical sector had finally woken up to the utility of digital channels and the magic that is programmatic and social media spend.

Among other things, conclusions like this suggest pharmaceutical marketers are some sort of backwater flunkies, who don’t understand digital. They aren’t. They’re as sophisticated, and at times more sophisticated, than many mainstream marketers.

They have to be because they work in a highly regulated sector, which causes a lot of things to be different about how they go about their business. And those things can kill them and their businesses in an instant if they get the simplest of things wrong.

The Pharma In Focus article quoted SMI managing director, Jane Schulze, as saying that “digital channels have become an attractive and effective advertising medium for pharmaceutical companies looking to communicate with their target audiences and also perhaps personalising their marketing for savvy digital audiences”.

Schulze went on: “Pharmaceutical brands have moved more of their digital expenditure into search social and also programmatic advertising which shows they are continuing to test new digital channels and see it as a strong option for many consumers when they are researching and purchasing products.”

Schulze: Pharmaceutical brands have moved more of their digital expenditure into search social and also programmatic advertising

Schulze is very clearly an intelligent, successful and, usually coherent, operator. But she and SMI do not have a clue about how the pharmaceutical sector works.

That is made clear by their characterisation of the sector as including products which are not pharmaceuticals, such as vitamins and beauty products. If you are going to have a category that lumps drugs in with vitamin E ointment or Krill oil, then be sensible and call it a health and wellness category, not a pharmaceutical category.

This may seem to be nitpicking, but drugs are not vitamins and they are not beauty or well-being products either. How you market them, whether to healthcare professionals or to consumers, is vastly different to marketing vitamins or beauty products.

Why these things have been clustered as one data set of the same sector is anyone’s guess. The ad industry should understand that making the distinction between a drug – a pharmaceutical – and other types of healthcare and wellbeing products, is critical to an understanding of the pharmaceutical sector and marketing.

Getting things so wrong can have detrimental impacts on businesses.

For instance, the SMI data included figures on the trends in specialist trade advertising to the healthcare sector. SMI got this data woefully wrong. It underestimated the spend on print journals in the sector by a factor of more than of 500%.

Worse, they published data which suggested that the print component of the trade sector was in some sort of decline – the implication being that, like all media markets, finally digital was killing print. Again, the implication was that the sector was somehow backward, slow and didn’t understand digital.

To suggest that pharmaceutical marketers are backwards in digital is demonstrably inaccurate. One well known major specialist pharmaceutical strategist and media buyer was the first marketer of any sort to comprehensively get on top of segmenting and targeting in Facebook for consumer-based pharmaceutical products. This group cut their client’s TV spend at the time, which was many years ago now, by a figure which was to the client at that time almost inconceivable.

The SMI data and these stories make it appear that pharmaceutical companies are only just waking up to digital marketing and are only now shifting money.

Which is wrong.

The healthcare-professional media sector, dominated by Cirrus Media which owns one of the key brands, Australian Doctor, is not in decline, and specifically, the print sector is not in decline. The SMI data and these stories all suggested this.

That media organisations who are steeped in print and revenue are still going strong is anathema to most people in marketing. Most consumer marketers just don’t believe it when you outline print readership data, which is comprehensive and longitudinal over 30 years, and which says that readership of medical publications has hardly dropped over that period, despite quite significant engagement by professionals of digital channels starting a long time ago. After a while you give up trying to explain the data, because people outside of the sector simply don’t accept it.

Print in this very specialised corner of the pharmaceutical marketing industry, remains, for very logical reasons, the most-effective tool of most pharmaceutical marketers in terms of ROI. Yes, digital is in there. Even some social, very carefully managed, is there. But the cornerstone of most media spend that isn’t education, or sales-force based, is still print.

The fact that print has a better ROI than digital in this sector is one possible reason mainstream media, and groups such as SMI, consistently suggest that pharmaceutical marketers don’t understand search, programmatic, or, in particular, social media. The truth is they can’t get their heads around a sector which is, quite strange in how it works.

Another common misconception about the sector is that doctors are digital laggards. This would explain less digital marketing than normal in a mix, hence, that must explain why print still works. Wrong again.

Doctors, especially younger ones, are probably the most digitally engaged group of professionals of any sector. Two Australian doctor groups, one which links emergency-care physicians and other professionals, called SMACC, and another, which joins nearly 5,000 general practitioners and GP registrars on a private Facebook group, called GPs Down Under, lead the world in social media professional interaction. The engagement stats in these groups far outstrip any interaction you will see between professionals on LinkedIn. Do these people sound like digital laggards?

SMACC, which stands for Social Media And Clinical Care, is a group started some years back, and is now a leading global free-access learning organization, run mostly through social media channels. Try to get into a SMACC conference. It attracts nearly 3,000 delegates every year and it sells out in hours when tickets are released – on social media.

The idea that doctors are digital laggards is a myth. We get this idea from our outdated image of GPs. Mainstream marketers don’t understand doctors. Pharmaceutical marketers and some specialist strategists and buying groups do.

Pharmaceutical marketers understand all the marketing channels, and they’ve done much with their specialist agency and buyer strategists to work digital into the mix, given just how digitally savvy doctors are. They are often better at understanding the channels than their mainstream cousins. It’s just that they can’t use them in the manner they’re used in FMCG and other direct-to-consumer markets.

Pharmaceutical companies are huge and sophisticated global entities spending billions on medical research – and marketing. When they market a drug, they sometimes start up to 10 years before they estimate their drug will actually be on the market.

They start seeding universities for doctor learning, and medical reference sites and key opinion leaders in specific fields. These companies are among the most sophisticated – some would say, too sophisticated – and detailed marketers in the world. Why do we sit back and accept the idea put to us that they are backwards in some way?

Social media in particular, which is actually used by pharmaceutical marketers highly effectively in consumer markets, especially instead of TV, and tactically very cleverly in professional health markets, is an extraordinarily dangerous and complex tool to be using in this sector. This is due to the complex regulatory issues that have to be addressed when marketing drugs to healthcare professionals and to consumers. But they still use it.

Even straight digital advertising to doctors isn’t easy. You have to follow a lot of rules and unfortunately for the pharmaceutical marketers, but fortunately perhaps for those in professional medical media outfits, digital is complex and print remains very simple. And you don’t actually have to go to many people, so one print ad in Australian Doctor, or its direct competitor, The Medical Republic, is highly effective.

That doctors are digitally savvy and highly engaged online, including professional media channels, but still read avidly in print, is a phenomenon that most consumer marketers find hard to accept. It does seem strange.

But it is explainable, albeit a complex explanation which includes a very small target market, a highly unforgiving but necessary regulatory regime around advertising and marketing, and the quality of the print vehicles that remain in this market, which is very high by global standards, and these, days by local newspaper journalism standards.

Much like you will find that in an island ecosystem cut off from the mainland for long enough evolves a separate and distinct ecosystem, so the pharmaceutical sector has evolved a quite unique ecosystem.

Some parts of the pharmaceutical marketing ecosystem are fascinating and might inform some issues which occur on the “mainland” of digital marketing. Like, in some markets, and in some circumstances, print is still an effective cut though media vehicle in a buying mix, but it’s become so unfashionable, that buyers, strategists and so forth have become afraid to use it.

They think they’ll look stupid. So they trundle out the usual suspect digital solutions and pass up some potentially very effective alternative channels. This doesn’t happen in the pharmaceutical sector generally.

Pharmaceutical marketers, of course, also market a lot of drugs that aren’t prescription, directly to the public. Panadol for instance. But they still have to take a lot more care than most marketing professionals, even when doing this.

Drugs kill people if people form the wrong ideas about how to use them. They kill people even despite this sometimes. Or ruin their lives. And they can do the opposite. That is a an emotionally charged marketing environment.

Changing drugs can change your life, quite substantively, for better or for worse. Most other consumer products marketed in mainstream marketing, don’t have this power to affect a person’s life. Changing banks will never be a life-or-death decision for a consumer. That is why the government will often mandate that a doctor must be involved in the decision to take some drugs.

In the US, deaths from prescription drugs per year have now outstripped deaths from illicit drugs. And opioid-based drugs have been identified as a major gateway into illicit opioid addiction. Based on ill-informed marketing of opioids in the early 2000s, the US and many other countries now face an opioid-addiction epidemic. And it’s among a demographic that never had the problem in the past – mostly well to do middle class professionals. That sort of issue makes pharmaceutical marketing complex and unique.

One issue is that some parts of the SMI data are probably close to being correct. For instance, the data on analgesics, at least as marketing applies to those that can be sold directly to consumer, seems to be reflecting trends properly. That data, which suggests programmatic and social media are escalating rapidly in the marketing mix is likely mostly correct.

The reason, however, isn’t likely to be that dumb-ass pharmaceutical marketers have woken up to programmatic and the power of social media. There will be something else likely driving this shift. Something more complex and subtle.

Like, for example, some strategy being executed prior to a major part of the opioid analgesic market being shifted by the federal government next year back into the far more-regulated world of “doctor only” marketing.

This is going to occur as the opioid part of this market, brands such as Nurofen Plus and Panadeine are taken off pharmacy shelves and put back into the hands of doctors to prescribe as a restricted product. That will likely mean that next year much of this data, which might be correct today, will be corrupted next year, based on how little SMI currently understands this data and market.

Should we continue to go blithely along not understanding what the pharmaceutical marketing sector really is, or how it really works? Should we casually be lumping in vitamin companies and beauty product companies with pharmaceutical companies when very clearly the two groups do not belong in the same marketing category? We’ve done it for decades now. Does it harm anyone?

Quite feasibly, these inaccurate stories did cause some damage to reputations of people and businesses.

Certainly, those articles added to the pressure on young marketers in the sector to “follow trend” and shift some spend to digital. Unfortunately, “following trend”, in this instance, is doing the wrong thing by clients. You do wonder how much of this effect is occurring in the outside world of mainstream marketing.

Returning to the island ecosystem analogy, the pharmaceutical marketing sector might be likened to the classic, “the land time forgot” genre of movies.

For very logical reasons – isolation created by a different and rigorous regulatory framework – the sector has not been able to follow the norms of media evolution, particularly with respect to things such as search and social media. Like these movies, some things have remained stuck in time. Print media effectiveness, for instance. It’s quite simply got a better ROI for clients generally than, say, search or even straight digital advertising. And social media can hardly be used in this part of the sector, for obvious reasons.

Like in these movies, as the rest of the world has evolved into very structured civilisations all similar to each other, the pharmaceutical marketing sector has evolved along a quite different pathway into an ecosystem with some very fundamental differences to the rest of marketing civilisation. It has done this in order to survive what is a very hostile and fraught regulatory environment. And in order to better serve the needs of the ultimate client, consumers of legal drugs.

Unlike these movies however, the pharmaceutical marketing sector is not prehistoric and inhabited by dinosaurs which don’t understand modern digital marketing. If you ever visit this “strange land” and you see some of the marketing work done, I’m certain you’d be surprised at how complex and sophisticated these marketers can and need to be. And you’ll see how creative they are in an ecosystem which can kill them and their companies like a velociraptor might an unprepared visitor to the island in the Jurassic Park.

As with most hostile environments, the other thing about the sector is that there is a sort of camaraderie and humility among its professionals, that comes from being isolated from the rest of the world, often misunderstood, and always being in imminent danger of being killed by the regulatory system if you aren’t on your game.

Which makes most of them fun to work with.

Jeremy Knibbs is publisher at The Medical Republic, having previously been the CEO of The Moose Republic and Cirrus Media.


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