Media hurts as drug ad spending is seen less effective

NEW YORK -- This could make media owners sick: Pharmaceutical ad spending they count on to exceed $5 billion a year is losing its potency.

Two recent reports say drugmakers cut Rx ad spending in the first six months of this year. TNS Media Intelligence puts the drop at 3.9% to $2.4 billion. Rival ad tracker Nielsen Monitor-Plus calculates the decline at 4.8% to $2.7 billion.

The reports follow a well-publicized Harvard Medical School study that found consumer ads had little effect on prescription drug sales.

Researchers focused on ads for three drugs: Enbrel (for rheumatoid arthritis), Nasonex (nasal allergies) and Zelnorm (irritable bowel syndrome). Results showed that direct-to-consumer (DTC) ads "probably aren't as effective as widely perceived," says Michael Law, lead author of the study published in the British Medical Journal last month.

That bodes ill for the magazines, newspapers and radio and TV outlets for which the ads have been a prescription for profits. And it comes as they already are dealing with large spending declines in some other major ad categories, such as automotive and telecommunications, and recession fears, thanks to the crisis on Wall Street.

Magazines and radio stations have seen the most drug ad decline. Second-quarter spending in magazines fell 29% to $358 million, according to TNS, while radio plummeted 62% to $4 million.

Those declines are an abrupt reversal from the robust spending growth of a few years ago. "Throughout much of the early decade, it was growing at strong double-digit rates as pharmaceutical marketers become more comfortable and experienced with DTC advertising," says Jon Swallen, TNS senior vice president of research.

Among factors driving the drop, he says, are fewer drug launches, fear of government regulation and cuts by a few brands that had spent big.