DTC agencies, clients clash

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The tumultuous relationship between agencies and pharmaceutical companies, at $2.5 billion one of the country's largest and few surging advertising categories, is reaching a boiling point.

A continuing rash of account reviews, unraveling agency loyalty and the involvement of consultants and procurement executives by Big Pharma to whittle down agency costs has dramatically shifted the landscape for drug advertising. "I started saying this three years ago and I'm still saying it," said Margaret Shumel, senior director-group leader-marketing operations for Pfizer. "Our pressures are now your pressures, partners."

Diane Harri, CEO Americas for Havas' Euro RSCG Life Worldwide, speaking at the Pharmaceutical Marketing Partnerships Conference last week in New York, said she is concerned that client-agency relationships fail to last the life of a prescription product.

"The reasons," she said, "are all too familiar. Pharmaceutical manufacturers are under pressure for price reductions and government demands, from the competition from generics and the re-importation of drugs."

Ms. Harri presented a David Letterman-like Top 10 list of signals that the client-agency relationship is deteriorating. It included being directed to the Internet for bidding instructions on projects; dealing with procurement agents; having the review process delegated to less-experienced management; being forced to work with outside consultants; and having your ideas shopped around for a better price.

The list not only drew chuckles from the attendees, it also drew knowing nods of approval from the pharmaceutical representatives.

where credit is due

"Give her credit for saying it," said Stu Klein, president of WPP Group's Quantum Group. "She said things that we all agree on but probably wouldn't go public with."

"I wouldn't use the word `crisis,"' said John King, director-marketing and sales strategic sourcing team for Wyeth. "But we can't continue with the same relationship we've had."

One health-care agency president said the inclusion of procurement agents and cost consultants can be a positive when it comes to transparencies. But he also agreed with Ms. Harri that the culture has changed.

"They don't care if you've met the goals, or if you've won awards for your work," he said. "Now they just want to know if you can do it, and do it cheaper. If you can't, they're quick to change agencies."

Indeed, Pfizer's 6-year old Viagra, a $100 million account, is up for grabs. Bristol-Myers Squibb last month awarded its $70 million Plavix account to Publicis Groupe's Saatchi & Saatchi, the third agency for the blood-thinning medication in the last 24 months.

"We need to get to the point where we're comfortable with saying to our clients, `Look, all is fair and everyone has a right to earn an income. But you need to know that as your procurement guys come in and crush your partners, we're to the point where we're close to a zero margin,' " said Andrew Schirmer, president of McCann Humancare.

Wyeth's Mr. King said priorities within pharma companies can sometimes change and not be communicated to the agencies, a fault of the drug makers. But he also said that "it's good to keep your agencies on their toes."

"It may be in their best interest," said another health-care agency president. "But as pharma tries to compete in advertising prominence amongst the sea of ads, if you want the quality of advertising you see out there you have to pay for the quality of people. The more you squeeze, the more difficult it is."

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