Directed Advertising Relationship Marketing

Direct Marketing yes, Direct to Consumer (DTC) no!

Direct To Consumer (DTC) prescription drug ads don’t work according to an article this morning in the Washington Post. The Post reported on a five year study of Direct to Consumer advertising by prescription drug companies which concluded that those ads had little impact on sales. The study was pretty clever — it looked at Canadians who were exposed to US ads in English, and used French-speakers in Quebec as the control group. DTC advertising is illegal in Canada (According to the Post, only the US and New Zealand allow it), but English speaking Canadians are exposed to the ads through US media. They looked at 3 prescription drugs:  Enbrel, for rheumatoid arthritis, Nasonex for nasal allergies, and Zelnorm, for irritable bowel syndrome. In the first two there was no difference in patterns. In the third, after an initial spike, usage leveled off between the two groups. The Post article quotes a Harvard Med School professor and principal investigator in the study, Steven Soumerai:  ‘Advertising prescription drugs is “not line popcorn, cereal and hair sprays.”‘

I agree with Professor Soumerai, and this study makes sense to me. The study tests the impact of Direct To Consumer TV and print advertising, the ultimate shotgun approach to interruptive advertising. Shout your message out to the widest possible audience (in this case, so loudly they hear you all the way in Canada!). Then hope that some percentage of them are your targets.

Even worse, no matter how loud you do shout, people eventually start tuning you out. This article about consumer recall of prescription drug ads in AdWeek says that over the last year, Nielsen IAG has determined that those ads are getting less memorable. The article places the blame on slashed budgets, stale creative and other woes, and says that those that remain wouldn’t have made the top 10 based on last year’s recall scores.

My agency doesn’t do any pharmaceutical advertising, but in 2006 we did do a direct mail customer acquisition campaign for a legitimate nutritional supplement (for joint pain) that happened to target a similar group to one of the drugs. We had an overall response/conversion rate of 0.75% and our best cells had response/conversion rates as high as 1.81%. (For response rate here, we mean paid product trial, but since it represents an actual order, I’m equating it to a conversion rate as well. For you internet-only types, direct mail response is different than a click thru, since by definition it actually means an order!) We had a first refill rate of 16.82%, meaning 16.82% of those initial customers ordered a second time. Of those, 68.1% became long term customers, ordering over and over. In other words, our direct mail worked to drive increased sales where big pharma’s DTC seemingly did not.

Why? Because we applied solid direct marketing principals to our client’s product. We found the right groups of people, people who through a variety of means told us they were interested in what we had to offer. We tested the lists, the offers and the messages to find the right mix, and then maximized our learning to achieve solid results. This is why direct marketing often succeeds where other forms of advertising fail, and works especially well for companies with smaller budgets that have to work harder.

Since 1997, when the FDA began allowing DTC advertising, the pharmaceutical companies have thrown a ton of money at consumers — $5 Billion in 2006 alone, again according to the Post. Now, to be fair, some of it has also gone to direct marketing in one form or another. Pharma has been a pioneer in building online communities, providing information and educational resources online, all in an effort to get consumers to request their drugs from their doctors. But as we all know from watching TV, much of it has gone into the airwaves. (I can hear that darn Antonio Banderas sounding Nasonex bee buzzing around as I write this. Oh wait, according to Wikipedia, it is Antonio Banderas!)

So in the face of dwindling budgets, shrinking attention and studies like these, can someone please explain to me why big pharma continues to throw billions of dollars at consumers by trying to interrupt them when it could spend far less just connecting with them?