Wednesday, June 04, 2014

Globally, Pharma's Digital Spend is (Still) Only 6% of Total Promotional Budget

According to Cegedim Strategic Data (CSD) -- a provider of healthcare promotional audits -- in the last 6 months of 2013, the global pharma industry spent nearly $2.5 billion on all digital channels  including pharma company websites, social media, web banner advertising in professional online journals and mobile apps.

That works out to be approximately 6% of the total audited marketing expenditure, which includes "traditional, personal promotional channels;" i.e., sales reps.

NOTE: I am uncertain if this CSD audit includes direct-to-consumer (DTC) promotional spending, which is only legal in the U.S. Also, keep in mind how CSD estimates these numbers; i..e., by polling thousands of physicians.

While the total expenditure remained flat, spending on some digital channels -- i.e., e-detailing, e-mailing and e-meetings -- was up over 14% in 2013 versus 2012. The total spend for these channels in 2013 was $1.9 billion, according to Cegedim Strategic Data.

Every year, audits like this one claim that digital spending by the pharmaceutical industry is increasing in absolute dollars (see, for example, "Will 2013 Be the Year of 'Digital Pharma?'"). Yet expressed as a percentage of the total promotional spend, digital's share always hovers around 5% or 6% -- even when spending as a whole remains flat as in this case! How can that be? [See comments to this post from Christopher Wooden, VP Global Promotion Audits, Cegedim, for his explanation.]

In any case, let's look at the breakdown of the total digital spend by pharma according to CSD. The following chart tells the story:

Click on chart for an enlarged view.

When CSD talks about "e-Detailing," it means live online activities such as virtual reps performing online informational sessions and linking field reps with doctors via webcams (see Annual Pharma Investment in "eSales," "eDetailing," "Virtual Detailing" … Whatever!).

A reader asks: "Have you seen any stats on pharma spend for HCP email?" My answer: "Maybe."

The CSD chart above indicates that 15% of pharma's $2.5 billion digital spend in Q3-Q4 2013 went to "e-Mailing." That comes to $750 million per year. I assume that this includes only promotional e-mails sent to physicians. I say that because I don't think Cegedim's physicians can estimate the amount of e-mail pharma sends to consumers. I'll have to get clarification regarding that.

UPDATE: Christppher Wooden, Vice President, Global Sales at Cegedim Strategic Data, responded via email (and comments to this post) that these data DO include U.S. DTC promotion (which CSD "sources from Neilsen in the US") and "e-Mailing" only includes e-mail promotions to physicians, nurses, and pharmacists - no consumers.


  1. I cannot see how polling physicians can produce any kind of accurate estimate of spend across channels. That seems like quite a leap to me.

    1. Steve -- I believe that is the methodology used for estimating physician-related promotions. For DTC, CSD uses Nielsen data -- see Christopher Wooden's comments in the UPDATE I just published at the end of the blog post.

    2. Dear Steve, I understand your scepticism. I would be pleased to explain our methodology in detail for you - perhaps we can set up a TC. Let me know. In brief, we have been doing this for over 30 years and our data & analysis are used by nearly every major pharma company. We have recruited panels of roughly 30,000 HCPs worldwide completing daily diary audits based on their exposure to pharma industry marketing channels. Our panels are representative and the collected results are projected to the relevant universe. The costs attributed per channel/interaction are validated averages. We also audit advertising, social media and other channels where we collect the data directly from the source and include that in our analysed mix. We do not claim to track all promotion or all HCP targets so there is no doubt that our figures do underestimate total expenditure. However, it is in relative terms , for competitive benchmarking and performance monitoring that our data are most often used - the absolute values being less important. Hope this helps. Feel free to reach out to me on Linkedin if you wish to discuss further. Thanks again. Christopher

  2. John - as always thanks for your interest in and comments on the Cegedim audited marketing investment figures.First I can confirm that the figures do include DTC in the USA. Meanwhile, the audited emailing is to HCPs - it does not include emailing to consumers. Regarding your question on how digital spend can be hovering around 6% of the mix "every year" while it continues to increase in volume? Simply put, Cegedim data do not show that. Very roughly it was around 3.4% in 2012 and 2.4% in 2011 according to our methodology. Granted we do not capture all channels but even if it is double this - for arguments' sake - it is clear that there is a long way to go before the industry is fully exploiting the new platforms. I believe traditional channels will continue to decline - especially in mature markets - but personal detailing, face-to-face, is not going away any time soon.

    1. Christopher - thanks for the clarification. Yes, I should have mentioned that we cannot compare apples to oranges when it comes to market mix methodology. Meanwhile, what do you think of Steve's comments?

    2. One further thought. You say digital spend was 2% in 2011 and 3% in 2012 then jumped to 6% in second half of 2013. What level was it at for ALL of 2013? Also 6%?

    3. Hi again John - probably more like 5%. We are also expanding what we track - that's why we focussed on H2 when we had added more channels. CW


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