Online Pharmaceutical Spending Far Behind Offline

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Spending by pharmaceutical companies on Internet marketing remains "woefully inadequate," and their goal of gathering detailed online data about consumers is a "pipe dream," according to a study released this month by Jupiter Communications, New York.


While pharmaceutical firms spent $1.8 billion on direct-to-consumer efforts and $7.7 billion on direct-to-physician marketing in 1999, spending online barely showed up on the radar, Jupiter said. Online spending represented just 0.3 percent of overall marketing expenditures.


Many executives are unsure about return on investment from online advertising and prefer to stick to proven offline advertising, said Rachel Terrace, health analyst at Jupiter. Most drug-company Web sites designed to support specific drugs remain little more than glorified brochures.


"The little money they have, they're using to drive traffic to sites which aren't very compelling," she said.


Some 90 percent of the executives surveyed said they planned to increase spending on online ads, according to the study. But almost 60 percent said they would increase spending only by 25 percent or less.


Although many pharmaceutical executives cited lack of funds as the reason for the dearth of online advertising, spending on offline ads has grown rapidly and does not appear to be slowing down.


"It's not that they don't have money (to increase online advertising)," Terrace said. "It's that they're not allocating it."


The study found that 80 percent of pharmaceutical executives surveyed plan to increase investment in developing consumer databases online to support future customer relationship management.


But 20 percent of surveyed consumers said they would consider giving personal data directly to a pharmaceutical company, the study found. Furthermore, healthcare consumers generally go online only to find information about a drug they or their family members have been prescribed or to research specific conditions, Terrace said.


Consumers tend to distrust information they receive from pharmaceutical companies, preferring health sites run by trusted third parties, Terrace said. The dream of gathering extensive online consumer information will probably not happen, she said.


Instead, pharmaceutical companies would find their money better spent on developing programs with third-party sites, Terrace said. Successful online marketing efforts will involve a combination of strategies that will vary depending on the drug, the study found.


Companies can overcome consumer reluctance to give personal data by offering rewards, such as coupons, the study said. Pharmaceutical firms also can offer regularly refreshed content on their sites along with tools such as online self-assessment programs to encourage consumers to return to the site.


Smart companies will invest online now for long-term gains and will not look for a quick fix, Terrace said.
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