Big Pharma Will Up Web Ad Spending by 25%

Expected to Spend $1.3 Billion Online by 2008

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NEW YORK ( -- More than most industries, pharmaceutical companies have wised up to the web's ability to target unique audiences with specific needs. As a result, the industry will increase online spending by about 25% this year, to $780 million, according to an eMarketer report released this week. And web publishers are already lining up to take their money.
WebMD operates the most popular health site online, with about 30 million monthly unique visitors. Advertising revenue has helped narrow quarterly losses.
WebMD operates the most popular health site online, with about 30 million monthly unique visitors. Advertising revenue has helped narrow quarterly losses.

The gain is being attributed to marketers' shift from consumer mass marketing to more targeted opportunities online. By 2008, online spending will rise to $1.3 billion, according to eMarketer. The rise in spending is all the more dramatic considering internet advertising declined in 2005. But for the first quarter of 2006, online display advertising by the top 12 pharmaceutical companies rose 11.2% to $39.6 million, according to TNS Media Intelligence, which doesn't measure search advertising.

The spending increase is spurred by federal regulatory crackdowns on pharmaceutical advertising, according to eMarketer, as well as the fact that 31.6 million Americans now turn to the web first for health-care information.

'Shift in focus'
"The result is a shift in focus from direct-to-consumer to direct-to-patient, from mass marketing to relationship marketing," said Lisa Phillips, senior analyst at eMarketer and author of the report. "So instead of advertising particular medications, marketers are focusing more on providing information and a place for communities to gather on websites geared to specific conditions and questions about treatment."

Responding to the influx of money from Big Pharma, websites are aggressively building up their health-information resources. Take, which just reported another strong quarter, with ad revenue rising 34.4% in July. To establish itself as the premier health site online, About is growing its editorial review process and amassing in-house and third-party audio and video.

For Scott Meyer, CEO of About, the decision was simple. "There's a very fast-growing market on the advertising side," Mr. Meyer said. "Health is not the only vertical we want to build out, but it's the biggest opportunity for ad revenue."

32.7 million monthly visitors
Last month, About drew more than 32.7 million unique visitors, about 5 million of whom visited its health and fitness section, according to comScore MediaMetrix. When the New York Times Co. acquired About in early 2005 for roughly $400 million, the site had 22 million monthly users.

Roughly 48% of the revenue About generates comes from its search partnership with Google, Mr. Meyer said, while about 46% is generated by exclusive and straight CPM-based display advertising. Mr. Meyer said the display business shows the greatest promise thanks to the strong ad market.

Marjorie Martin, general manager for About Health, is leading the charge in custom-branded content with exclusive advertisers. "There's huge interest from advertisers to closely associate themselves with a particular issue."

Sponsored podcasts
The latest example is a six-part podcast series devoted to heartburn sponsored by AstraZeneca and its Nexium brand. Each podcast will be about three to five minutes long and will be distributed monthly on Older podcasts will remain available to visitors throughout the series.

About also launched a content area for Forest Pharmaceuticals' anti-depression drug Lexapro about two weeks ago. The section is a blend of content from About's various guide pages and content created for the branded section.

Earlier this month, WebMD Health Corp. -- which operates the most popular health site online, with about 30 million monthly unique visitors -- posted a smaller loss than expected thanks to advertising. Ad and sponsorship revenue increased 36% to $36.2 million, while private portal licensing revenue jumped 49% to $12.3 million.
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