As regulations and costs erode face-to-face sales in the pharmaceuticals industry, direct marketing has shouldered its way to the fore, with big gains logged and impressive ROI forecast for the years ahead.
In a new study from the Direct Marketing Association, pharmaceutical companies are projected to generate $10.6 billion in 2008 sales through direct marketing. Further, that figure is expected to hit $15.2 billion in 2012, according to the DMA.
“Readers of our pharmaceutical report will certainly find that the American pharmaceutical industry employs direct marketing extensively and successfully,” said Michelle Tiletnick, DMA research manager. “This report will help pharmaceutical marketers benchmark their current direct marketing efforts against the entire industry, as well as prepare themselves for the coming years.”
Pharmaceutical direct marketing is enjoying a powerful return on investment, according to the DMA report. That $10.6 billion in anticipated direct-marketing revenue this year will come on estimated marketing spending of more than $1 billion, representing an ROI of $10.27 for each $1 spent.
“One reason for the great interest in direct marketing within the pharmaceuticals industry is because of cutbacks in sales forces,” said Kolby Barbera, VP of the pharmaceutical and health care practice of marketing consultancy Quaero Corp. Barbera said that previous efforts to achieve “share of voice” within the sector, with some 100,000 territory reps calling on an estimated 1 million physicians, reached a point of diminishing returns, resulting in an effort to do more with less.
Barbera also indicated that more crowded schedules have forced doctors to trim face-to-face time with reps, prompting an increasing reliance on direct marketing by pharmaceutical companies in turn.
Strong direct marketing sales
According to the DMA, between 2007 and 2012, direct marketing-driven sales are projected to compound 9.4% annually, driven in large part by a b-to-b outreach to physicians. Direct mail spending during this time is forecast to grow 7.1% each year.
E-mail is getting hotter for direct marketers as well. Commercial e-mail spending in the pharmaceuticals industry is projected to increase 21.9% each year from 2007 to 2012. And the payoff is significant; with direct marketing driving potential customers to company Web sites, Web-driven sales in 2008 will total $1.9 billion. By 2012, that will double, reaching $3.8 billion, according to the report.
Another reason for the robust health of direct marketing within the pharmaceuticals industry may be the rise of consumerism. Today, patients have more say than ever about products they use, and the industry is going after them in a big way.
“A lot of the pharmaceutical companies have elected to go to the consumer directly to influence their brand preferences,” said Peter Koeppel, president of Koeppel Direct, a direct-response media buying firm with an emphasis on medical- and health-related products. A particularly powerful outreach is daytime TV, Koeppel said, often pushing products aimed at seniors, or male-enhancement treatments.
“This isn’t an effort to get someone to respond directly but rather to have viewers become more educated about the product, and then in turn to influence their physicians,” he said.
Paralleling the rise of consumerism are increasingly restrictive regulations about how pharmaceutical companies can influence physicians directly. Reaching out to physician influencers, in the form of their patients, is a logical alternative.
In addition to direct mail, e-mail and call-to-action ads, many pharmaceutical companies are using specialty call centers staffed by nurse practitioners, for informed discussions with patients. This, Barbera said, is indicative of a more “holistic” marketing approach, bridging the gap between b-to-b and b-to-c marketing.
“There are multiple constituents all impacting the purchase of pharmaceutical products,” he said.
The DMA report, “Direct Marketing Facts and Figures in the Pharmaceutical Industry,” is available for $135 for DMA members and $240 for nonmembers. It is available for downloading at DMA’s online bookstore. See www.the-dma.org.