The growth of DTC ad spend – where is the money going?

From 2012 through 2016 direct-to-consumer (DTC) ad spending by pharmaceutical companies grew 64 percent, or $2.5 billion. As budgets in the category expanded, which media reaped the benefits?

TV reigns supreme

The main beneficiary of increased ad spending has been TV. Since 2012 the medium has captured an estimated $2.0 billion or 81% of incremental category ad expenditures. Magazine spending has risen by almost $475 million which is a 19% share of the increment. Digital spending is up about $100 million which exactly offsets a $100 million reduction in radio, newspaper and out-of-home media.

TV now accounts for 63% of all pharmaceutical ad spending, a 10 point gain since 2012. Magazines have lost five share points. Even though magazine dollars have increased, print spending has grown at a slower pace than the total category leaving publishers with a smaller slice of a larger pie.

Another way of visualizing the impact of higher DTC spending in TV and magazines is shown in the chart below.

In 2012, the pharmaceutical category accounted for 3.7 percent of all national TV ad spending and 5.1 percent of consumer magazines. Skip ahead to 2016 and these proportions have increased sharply. It’s now 6.7 percent of national TV ad revenue and nearly 9 percent for magazines.

Narrow distribution of new budgets

Even as TV ad spending has swelled, the allocation of money has been very concentrated. In 2016 pharma marketers placed commercials on 84 different broadcast and cable networks – 61 percent of these monies were earmarked to just THREE channels.

On the print side, our monitoring identified 118 different publications with DTC advertising in 2016. The top 8 magazines received 49 percent of all print spending and 23 magazines controlled three-fourths of the aggregate investment.

While pharma advertising has been increasing as a whole, the incremental dollars haven’t been distributed as widely as some media owners may have hoped. A select group has been receiving the majority of the new spend, making ad space on these properties a hot commodity for pharma brands.

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