Pharma Drops Search Advertising After FDA Warning

Sponsored Links Fall 84% Following Dressing Down for Violating Marketing Guidelines

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NEW YORK ( -- Pharmaceutical companies, fearful of running afoul of the U.S. Food and Drug Administration's marketing guidelines, have virtually abandoned search ad marketing in the wake of the FDA's online ad crackdown earlier this year.

According to a study from web metrics measurement firm ComScore, paid search ads by pharmaceutical companies dropped a whopping 84% between March 26 of this year and the end of June.

March 26 was the date the FDA's Division of Drug Marketing, Advertising and Communications sent warning letters to 14 drug makers identifying 48 different brands as being in violation of the FDA's fair balance guidelines. The letters stated that sponsored-link advertisements for specific drugs were misleading due to the exclusion of risk information associated with the use of the drug -- even though the regulatory agency's guidelines are for print and broadcast, not online or social media. The FDA is holding public hearings next month to begin the process of establishing internet advertising guidelines.

Pharma companies that believed they were in compliance with the unwritten "one-click rule" -- taking the consumer from the ad to a site that offered fair balance and the risk information by clicking on the ad -- immediately began pulling paid search ads, according to the study. ComScore said sponsored link exposures (paid search) to U.S. web users dropped 59% in the first week alone after the warning letters were issued, from 10.5 million paid search ads to 4.3 million between March 29 and April 5, the most recent date ComScore has tracked.

"It wasn't surprising," said John Mangano, VP at ComScore. "A lot of the big pharma players had to pause and say, 'Hey, we have to figure out what makes the FDA happy here.'"

By the end of June, the fall-off hit 84% -- a percentage likely to put a huge crimp in pharmaceutical company internet spending, which was up 36% year over year in 2008 to $137 million.

"We can sit here and complain that there are no current guidelines for online and social media, but we can't afford to open ourselves up to another warning letter," said an executive for a top 10 pharma company who asked not to be identified.

According to ComScore, vanity and unbranded link exposures also experienced a decline during the same three-month time period, although these methods of marketing were not under scrutiny in the FDA letters. Unbranded sites, which give additional information on the condition and treatment but do not directly promote the brand drug, declined 35% between March and June to slightly more than 1 million exposures. Vanity URLs, which make no mention of a specific brand while generically describing a health condition -- but then redirect to the brand or drug's website -- declined 11% in June to 3.2 million average exposures versus March.

"Here's a perfect example," Mr. Mangano said. "When the swine flu was at its peak in the spring, if you searched for 'swine flu' there were a lot of pharma brands that didn't come up – but Clorox did. Go figure."

Pharmaceutical companies and ad agencies are hoping the FDA hearings are able to set down some internet advertising guidelines, but the process is lengthy. The public hearings are Nov. 12-13 in Washington, and comment letters will still be accepted through February 2010, after which it will take up to a year to publish draft guidelines, accept more comments from the public, and then publish final guidelines. That means marketers and agencies are likely looking at 2011 before having FDA internet and social media rules in place.

"The guidelines will provide some clarity around what pharmaceutical companies can and cannot do," said Dorothy Wetzel, co-founder of New York-based health-care ad agency Extrovertic. "Everyone is being cautious right now. Whether you believe drug companies were within the guidelines or not [with paid search ads], it still looks bad when it's flashed on the TV or the New York Times that they got a warning letter."

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