We had two speakers last week at the DTC National who gave us significant new data on ROI.  I am happy to report they both concluded based on numerous brands studied, that ROI is still in the range of $1.60-2.00 per dollar invested. Of course there were failures, 16% producing negative ROI, as there were also 4% of ROI’s above $4.00. The bulk of brands fell in the positive range with averages at $2.04. ROI was about the same for television and print according to one study.  Non mass media also did well, near $3.00 return per dollar spent.

Most of our speakers were from new media such as the Internet or other non-mass vehicles. They all made the case for using more new media, even with an older Rx user target. Most of the media gurus were speaking in general terms as they did not have specific DTC expertise. In Q&A and panels, the issue of why pharma is lagging in Internet spending came up several times. There seemed to be a consensus that it is still easier to execute and present mass media plans to management, and given the good ROI, it is understandable.

What the ROI studies show is that drug marketers are not wasting their money on mass media as is sometimes passionately but incorrectly stated by many bloggers and new media authors.  That being said, it is clear that drug marketers can better use the Internet and other targeted media such as point of care. If they put in the effort to explore these media they can improve ROI significantly. This will take more time looking at media alternatives and having agencies that are willing to dig deeper when constructing plans. Clearly the consensus among all media experts was that a good big brand media plan requires both mass and non-mass to get both awareness and depth of information so critical to proper Rx use.

One of our media speakers made an excellent point that the best investment that can be made to enhance ROI is creating better ads. This should be a lesson to all marketers who spend so much time on pre-research to get the perfect strategy that they end up rushing their final executions. The consumer only sees that 60 second execution and one page print ad, not your brilliant strategy.  In a recent DTC National, marketing legend Kevin Clancy presented a study that concluded that copy that tested in the top range produced sales results twice as high as copy that tested only average.

My conclusion is that we are not seeing the death of mass media as it relates to DTC. What we have over the next few years is the opportunity for optimizing both media mix and copy effectiveness. In the era of a pharma recession this should be a priority. The gurus will eventually be right in their view of mass media. Consumers one day will have all media when they want it, with traditional commercials reduced or eliminated. That will not happen to the primary drug company target audience of 50+ anytime in the next 5 year planning horizon. On the other hand, just relying on a traditional mix is also taking the easy way out given the vast array of new media alternatives.

One of our delegates from CBS made an excellent point that the networks are not blindly watching their audience disappear. They are integrating the Internet into viewing options recognizing the time shifting. They know there will be erosion in viewing the traditional prime time shows. Expect them to be active buyers of alternative media companies.

Based on everything presented there is no reason to expect major cuts in DTC. It still works to profitably generate incremental sales. The cuts in detail forces reflect the diminishing or negative returns from an over expansion of sales forces in the 1990’s. There is no such evidence for DTC over use.  While there is much angst in drug companies over sales and profits, DTC is part of the solution to creating better profits.

Over the weekend I saw Vytorin using new DTC print ads to promote its effectiveness and safety. This was not a defense of the timing of disclosure of its clinical studies or other explicit reactions to the controversy. No, this was basic DTC. This ad challenges consumers to ask their doctor if Vytorin could help reduce their cholesterol.

The issue of using DTC when under mass attack is an interesting one. Can DTC help change consumer and physician attitudes for a troubled drug? Vytorin has gotten massive negative publicity and has provoked Congressional and media investigations. It has opened the broader issue again of the wisdom of allowing DTC for new drugs.

Celebrex is another example of using DTC to counter bad publicity. In this case Celebrex is defending the entire Cox 2 class. Its approach is not standard DTC. Instead Celebrex wants consumers to know that Cox 2’s are not any different from other anti-inflammatory drugs in terms of safety. It has the interesting approach of making all of the treatments seem risky. Basically they say, we are no more risky than anyone else who is used for inflammation, so why exclude us?

Using DTC when under a massive public attack has some advantages over the behind the scenes approach. It shows investors, employees, physicians, and of course consumers that the drug company stands behind the efficacy and safety of its drug. It says they are going to support it and fight for its rightful place as a treatment. It is also fast in getting the message out. Trying to work through the physician channel only takes time through individual detailing. Buying a national newspaper/Sunday Supplement/weekly magazine media plan covering major markets can take only days to execute. The value of a DTC counter attack is it shows existing users that there is another side to the story. It can hopefully allay some unfounded fears that current users may have.

So is it a good idea to do what both Vytorin and Celebrex did? It is like taking chicken soup for a cold; it couldn’t hurt. I do not think either ad is going to win awards. Both, however, do make the needed points. These drugs are available and do benefit a subclass of people. Schering, Merck and Pfizer needed to do something to tell consumers there is another side to the negative media stories. DTC happens to be a good way to tell that counter story to consumers and control the entire message without media interpretation. I do not know if there will be a positive payback for either campaign, although Celebrex has been running this campaign for over a year so I assume Pfizer is seeing value.

A decade ago, drug companies would have tried to let the negative stories die a natural death. They would have not done defensive DTC, choosing a low key approach instead. Today, bad stories do not die easily. They get posted, blogged and rehashed. Rumors abound and consumers get misled. That is why DTC needs to be a defensive tactic when drugs get attacked. Expect the PR departments to continue using the paid media when one of their blockbusters faces tough times.

The latest Nielsen DTC spending numbers for the full year 2007 show a 3.1% overall decline. Is this the beginning of a downturn in DTC spending? Is 2008 going to be a bad year for media companies that are so dependent on DTC ads?

A look inside the numbers shows that the decline is concentrated in a few major brands that cut spending and not a broad indication of cuts across most brands. A few major brands cut spending enough to cause the overall decline which was $173 million out of over $5 billion in 2007.

We had the generic switch of Zyrtec which caused their branded ads to drop $50 million. The pulling of Zelnorm caused a loss of $90 million in spending. Crestor dropped significantly in 2007 by $134 million but looks like it will be up in 2008 capitalizing on Vytorin’s problems. Nexium is down $80 million. Neulasta dropped $66 million. Lamisil cut $95 million.

On the other hand many brands increased spending significantly to balance these decliners. Cialis was up $92 million, Gardisil in its early launch stage was up $56 million. New brand Enablex was up $52 million, Caduet was up $53 million and Cymbalta spending increased $27 million. Of brands spending more than $10 million in media, 36 were cutting spending in 2007 but 34 were increasing their media.

My point here is that there is no general downtrend. That would take far more brands reducing spending than we saw in 2007. This is not the start of a major spending decline. Some analysts will likely talk such a trend but a new brand launch or two could quickly reverse it. I am sure DTC brand spending is under careful watch by management. They are indeed reviewing marketing expenses in these tough times. Sales force expenses are being cut. DTC Marketers will be under pressure to continue to prove ROI. A 3% decline, however, is not indicative yet of any long term drug industry dissatisfaction with DTC.

In 2006 we had 17 bands spend over $100 million, in 2007 there were 18. Big brands are still spending huge sums. Based on the 2007 data, one could say we are in a flat period, where it is anyone’s guess whether we will be down 5% or up 5% in 2008. The fact is, spending decisions of one or two brands will determine if we are up or down in 2008. I imagine some brands will realize that DTC is just a bad investment for their category while others will see the favorable ROI. The balance in the number of up and down spending brands shows how brands are constantly evaluating their spending and coming to very different conclusions about the wisdom of DTC. That is the lesson of the 2007 data.