Digital marketing captures a greater 'share of mind' among pharma marketing, says Cutting Edge Information

January 11, 2012
Nicholas Basta

Pharmaceutical Commerce, Pharmaceutical Commerce - January/February 2012,

Pharma companies are beginning to staff up internally—in part out of dissatisfaction with the capabilities of outside marketing agencies they employ

Digital communication channels are all the rage in marketing programs at pharma companies, even as the industry watches guardedly for new regulatory actions from FDA’s Office of Prescription Drug Promotion (OPDP; formerly DDMAC). The industry is not standing still in anticipation of future DDMAC activity—but is proceeding with more caution than other consumer-goods marketers.

That’s one of the general conclusions of a new study from Cutting Edge Information (Durham, NC), which published Pharmaceutical Digital Marketing and Social Media: Managing Growth, Mitigating Risk and Mastering Strategy late last year. Cutting Edge typically does syndicated research and publishes aggregated data; in this case, 31 companies were involved.

In 2011, for the first time, digital media has exceeded traditional media in 2011 (Fig. 1), constituting 54.7% of the media “mix.” Cutting Edge is careful to define “mix” not as a measure of where marketing dollars are spent (which, generally, they did not analyze across all media), but in terms of the number of projects or activities that a pharma marketer engages in. It further distinguished “traditional digital” (mostly, developing and operating a website) from social media and mobile communication platforms. Mobile is the far-and-away leader in recent growth, up 288% over 2009 (but coming from a very small base). Social media is showing 99% growth over the three-year period.

In digging into the objectives of mobile communication channels, Cutting Edge found that nearly half (46%) of applications were for physician marketing—including sophisticated mobile apps for analyzing medical conditions that are available through iPhone and other online app stores. Another 17% were for medical affairs, including MSL programs, thought leader management and the like. Only 14% is currently directed to consumers.

Overall, however, “Pharma is in the process of deciding which part of the mobile app fray it wants to join,” says Cutting Edge, which views the situation as choosing between clinician-directed apps, patient-directed ones, or both—with the latter option being the most common. Cutting Edge sees this as a reflection of industry evolution. “If Pharma 1.0 was the blockbuster business model and Pharma 2.0 is the current model of diversified drug portfolios, … then Pharma 3.0 represents a greater emphasis on health outcomes.” Pharma will be competing in the outcomes-oriented apps field with other sectors, including healthcare providers, payers and retailers. “Instead of the DTC model of marketing drugs, apps will reflect the growing importance of offering health solutions.”

Staffing is growing

Pharma companies are building up their in-house capabilities, but it is still very much a work in progress. “In general as newer functions—89% of surveyed companies’ digital marketing groups have been in place for less than three years—they are neither fully staffed nor fully funded. In fact, many groups have only a single dedicated FTE” [full-time equivalent employee], says Cutting Edge.

In looking at actual digital media budgets, the biggest companies have an annual budget in excess of $2 million, while the average for all companies surveyed is $733,000. But there are exceptions—when analyzed at a brand level at product launch, digital marketing activities averaged $1.66 million, and one company spent nearly $10 million on its campaign.

Despite OPDP guardrails on social media activities, “The fact is that pharma is doing social media—and the demonstrable change in such a short amount of time is quite remarkable,” says Cutting Edge. The survey found that 56% of companies are actively monitoring social networks; a like percentage is targeting physicians with social media tools, and 52% are using social media for corporate communications and public relations. The biggest challenge to use of social media, according to survey participants, is the regulation of off-label communications; demonstrating an ROI, and adverse-event monitoring and reporting followed closely behind. Some 57% of respondents note that the lack of effective FDA guidance in social media is affecting their strategy.

Most pharma companies (indeed, most large companies of any type) employ outside advertising, marketing or market research organizations to assist in developing and operating their marketing plans; but in the case of new digital media, the pharmacos are struggling to identify their own goals and overall strategy. When they look to outside agencies, the frustration continues; Fig. 2 shows the responses to questions about the quality of services available from outside agencies. Interestingly, apparently no one rated agencies performance as “very good;” and the one category with the best scores, “executing a digital strategy,” rated only 30% as “good”.

Niche players

Cutting Edge says that pharmacos have two options to improve this situation: develop the digital capabilities in-house—with a dedicated digital marketing group; the other is re-evaluate outside-agency capabilities. “Many marketing groups find it convenient to delegate digital marketing responsibilities to the same firm that handles traditional marketing such as print, television and radio,” but these companies either have fumbled their responsibilities, or have simply outsourced the digital function itself to a third party. Cutting Edge says that there is a growing niche of digital marketing agencies specializing in “navigating pharma’s complicated regulatory landscape … with this specific skill set comes a price tag higher than a standard digital agency.” But this avenue might be the preferred direction to get “the peace of mind that the niche agency has a track record of compliance and success.”

The full 180-page report, PH161, is available for purchase, for $7,695, here. PC