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Ad Spending Trends in the Healthcare Sector

We frequently examine macro-level spending trends in the ad industry, but it’s just as important to understand differences in investment and strategy between various advertising sectors. That’s why this week we’re taking a closer look at healthcare, a massive industry made up of pharmaceutical brands, hospitals, healthcare systems, insurers and clinics, a group that collectively spent close to $10 billion in 2015. How will the industry allocate their dollars between TV and digital in the year to come? What areas of healthcare are likely to be the biggest spenders? What challenges may impact investment? We take a look at some of the data available from  Kantar, BIA/Kelsey, eMarketer, and Nielsen to highlight the industry’s most important trends. Here are some takeaways:

Top drug brands account for a significant portion of the industry’s ad spend
According to Nielsen, pharmaceutical companies spent more than $5.6 billion on ads in 2016. One of the main reasons for this level of investment was high levels of spending on direct-to-consumer awareness campaigns for best-selling drug brands. Consider the example of Pfizer, one of the healthcare and pharmaceutical industry’s top spenders. In 2016, Pfizer spent close to $1 billion on just six of its best selling drugs —  Xeljanz, Lyrica and Chantix among them.

Healthcare’s shift toward digital has been slow
While consumer attention has moved rapidly to digital channels, digital ad spending in healthcare has lagged behind that of other industries. eMarketer predicted that healthcare advertisers would rank last in digital ad spending among all industries they studied for 2017, with the industry investing just over $2 billion in digital ad formats. “We’re urging clients to shift more resources to digital media, because their customers are there, and even after a TV ad generates that initial awareness, they are making medical decisions based on the information they find online,” said Matthew Arnold, a principal analyst at the consulting firm Decision Resources Group, in an interview with Kantar. “But digital spending remains a pittance at most pharmaceutical companies.”

Privacy and regulatory rules add to the ad spending challenge
Another healthcare-specific challenge, particularly for brands in the pharmaceutical category, is the industry’s high degree of regulation and consumer privacy rules, which add complexity to marketing campaigns. Consider the growth of programmatic ad spending. While many healthcare brands are interested in the technology, this type of automatic campaign buying can cause privacy issues, or lead industry advertisers to run afoul of brand safety rules. “When you get to healthcare, there are a few extra layers of concern,” said Brad Rosenhouse, Group VP of programmatic for healthcare media agency Publicis Health Media, in an interview with Digiday. “On top of that, there is the ethics and responsibility to not do things that are too creepy or invasive.” All challenges aside, some industry observers note that new techniques like proxy audiences are making it easier to experiment with programmatic technology.

The healthcare industry certainly faces some unique challenges when it comes to ad spending. But thanks to a growing roster of blockbuster drug brands, and an increasing push to boost consumer awareness, ad spending in the sector continues to climb. Will more of these dollars shift to digital in the years ahead? Or will regulatory and privacy concerns continue to play a factor? It’s hard to know, but Healthcare seems poised to invest more heavily in advertising in the years ahead.