Pharma ad spending up just 1% this year as the slow move away from TV into digital continues

The pharma industry spent just 1% more on all product ads for the first half of this year compared to the same period in 2021, while prescription drug ad spending actually fell.

That’s according to new figures out by the Standard Media Index, which found that for the first six months of 2022, the pharma industry spent $5.5 billion on all ads for its products, most of which was on its drug products.  

While that’s a huge figure, it actually represents a slow drop in growth from previous years, with only a slight 1% lift during January to June 2022 versus the same time last year.

Ad spend for prescription drugs, which accounts for 88% of pharma category dollars ($4.8 billion), in fact fell 2% year on year. On the other hand, ad expenses for over-the-counter medicines and remedies jumped 23% during the same period.  

But those OTC versus Rx figures alone do not show the whole story, as COVID has likely skewed the growth and decline of both. “Prescription ad drug spend grew so fast during the worst of the COVID era [2020 and 2021], that it has retracted while continued strong growth in OTC has kept the category even with the same period last year,” explained Rick Bruner, head of insights and analytics at SMI, in an interview.

The fight for pharma dollars between linear TV ads, print and digital also continues, the report found, but pharma is still hesitant to walk away from TV as quickly as other industries.

Digital dollars

“Pharma has been lagging compared to the rest of the advertising industry, in its having spent more than half its ad budget on linear TV even as recently as the first half of last year,” Bruner said.  

From January to June 2021, pharma advertisers invested just over half (52.4%) of their ad budget on linear TV, and that is only down to 46.6% during the same period in 2022.

But Bruner said that, looking at the total ad market across all categories, advertisers were spending only 44% of their mix on linear TV during the first half of last year and are now down to 39% in the year-to-date period.

But the move away from TV for pharma is still clear. “Pharma is following the long-term trend of the decline of linear TV ad dollars following the decline of audience consumption of TV in favor of TV content via digital channels instead,” Bruner said.

He added that linear TV ads “are still important to pharma,” with the linear TV audience decline being “ongoing but gradual.”

“There are still viewers, particularly older ones, who presumably are a foundational part of the pharma customer/patient group,” he said. “Linear TV spending in pharma also remains larger than any of the components that make up digital, including search, social, video, programmatic and so on.”

He adds that linear TV is not only still relevant but may “even represent a relative price bargain to reach core segments of the target audience overall.”

Overall, pharma shifted about 6% of its overall budget from linear TV to digital this year.

But Bruner said that within digital, the movement “has been a bit less dramatic.” Looking at the first half of 2021 versus 2022, the biggest pieces of the digital mix are display at 42%, digital video at 30% and search at 25%, “shares which changed very little in that time frame.”

What stands out more, he said, is comparing those shares to the overall pool of industry ads, where search is lower than pharma— only 17% in the first half of 2022—but digital video is a larger at 37% for the average advertiser.

“However, this difference in media mix makes sense for pharma marketers given their target audiences’ age skews older and the natural complement of search ads to the pharma research process,” Bruner said.