Pharma TV ads are good for the business bottom line, study says

While pharma critics often complain about too much TV advertising, a new study says it might be money well spent--for companies and their shareholders, at least.

The Video Advertising Bureau (VAB) looked at the correlation between TV ad spending and business performance between 2011-2014 across 100 parent companies, including pharma companies. Almost all of the 60 firms that increased TV ad spending also saw increases in revenue, earnings and stock price. The 40 companies that spent less "vastly underperformed" the overall average, according to VAB's "Question of Impact" analysis.

But what about pharma specifically? VAB analyzed the 16 drugmakers in the study for FiercePharmaMarketing and found those results mirrored the overall findings.

Ten pharma companies boosted their spending on TV between 2011 and 2014 by an average of $91 million, while 6 cut TV spending by an average of $69 million. The companies that socked more money into TV averaged revenue gains of 12% and earnings per share gains of 2%, and saw stock price gains of 113% versus the S&P 500 index. The decreasing spenders averaged revenue losses of 12%, were down 15% in earnings per share and underindexed the S&P 500 by 48%.

VAB's Jason Wiese

Jason Wiese, VP of strategic insights at VAB, said the pharma findings were similar to the larger multicategory study and noted that overall, 81% of the pharma companies saw a correlation between TV spending and domestic revenue. He calculated that the pharmas with increased TV ad spending added more than $2 billion in annual revenue from 2011 to 2014, while those that decreased their TV investment lost more than $2 billion in revenue during that same time.

Overall, the general study "supports the notion that TV is the primary mover of goods within a company's media mix," according to the white paper.

The paper does note that many factors influence business and financial metrics, which makes a direct line between media spending and business results difficult to draw. For instance, in the pharma world, companies with new products tend to spend more on marketing than those with aging drugs.

The report also indicated that the analysis should be considered "directional." The purpose of the study is "to inspire conversation among marketers and their agency partners on the right media mix to achieve the greatest business results," the VAB reports.

The 16 pharma companies included in the study were Boehringer Ingelheim, Novartis ($NVS), AstraZeneca ($AZN), Allergan ($AGN), Pfizer ($PFE), Roche ($RHHBY), Takeda, Eli Lilly ($LLY), Novo Nordisk ($NVO), Otsuka, Amgen ($AMGN), AbbVie ($ABBV), Genomma, GlaxoSmithKline ($GSK), Bayer and Sumitomo.

- read the VAB white paper

Special Reports: The top 10 advertisers in Big Pharma | The top 10 most-advertised prescription drug brands