Tuesday, January 31, 2012

The Coming Pharma Digital Depression Caused by Facebook

P&G Discovers It's "Free" to Advertise on Facebook!

That's the gist of an article written by Jim Edwards over at Business Insider - Advertising (read the article here).

Of course, advertising on Facebook is not really free, but it's pretty darn close when compared to TV. According to the article, "P&G said it would lay off 1,600 staffers, including marketers, as part of a cost-cutting exercise."

Interestingly, P&G CEO Robert McDonald had some interesting comments about the cost-effectiveness of digital advertising, including:
"I believe that over time, we will see the increase in the cost of advertising moderate. There are just so many different media available today and we're quickly moving more and more of our businesses into digital. And in that space, there are lots of different avenues available. In the digital space, with things like Facebook and Google and others, we find that the return on investment of the advertising, when properly designed, when the big idea is there, can be much more efficient."
If a packaged goods company like P&G is "moderating" its cost of advertising by shifting to digital and laying off marketers, then the pharmaceutical industry can't be far behind. A "recession" in pharma digital marketing is even more likely considering the well-known "patent cliff" that's currently in progress; ie, blockbuster drugs with a combined $170 billion in annual sales will go off-patent by 2015. That means even less mass media advertising and more digital advertising.

But "more digital advertising" does not mean that much more money will be spent in the digital arena. That's because of social media, where it's virtually free to advertise!

Today, I will present a webinar on this topic as part of a BrightTalk "Digital Marketing & Pharma Summit" series of webcasts. The title of my presentation is "The Coming Pharma Patent Cliff and 'Recession' in Digital Spending."

According to BrightTalk's Quoc-Thai Dang, "At this summit, we'll be exploring the realities of how Pharma is spending it's budgets on digital. Experts will critically evaluate the impact of social media and mobile marketing, and if this has had an impact on their business."

My webinar will be at 10:00 AM this morning (January 31, 2012). You can go here to attend live or listen afterward or use the widget below.

I admit that my ideas are only half-baked and invite your comments.


  1. John an interesting spin on this news item. I'm curious how you see this playing out given what's been happening at WebMD. Their CEO said pharma digital spend is "stuck" at 5-10%, which is crunching WebMD's bottom line. Do you see that digital spend getting unstuck? Or are you saying that all pharma marketing could be in jeopardy?

  2. Jeff,

    I don't see the spend getting "unstuck." A couple of trends are at play: (1) it's always been stuck, and (2) it's getting cheaper and cheaper to do digital (ie, FB and Twitter & repurposing video for YouTube). Maybe (2) is the reason for (1) because the percent you are talking about relates to dollars spent. On top of that is pressure to reduce costs and marketing is a big cost. It may happen that cuts are made to marketing in terms of TV spend, for example, which would make the % spent on digital rise above 5% or so. But that won't mean more money being spent on digital.

    So, the best case scenario is the spend stays more or less "stuck" :-(


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