Standard Media Index Finds Pharma Advertising Holding Strong Despite COVID-19

By SMI Spend Trends InSites Archives
Cover image for  article: Standard Media Index Finds Pharma Advertising Holding Strong Despite COVID-19

The pandemic and ensuing economic slowdown have impacted ad spend of most product categories, with one exception; pharmaceuticals. According to ad spend data we compiled, pharma has been a bright spot in the U.S. ad market during the pandemic. This continues to enforce the notion pharma is a "recession proof" ad category.

Pharma Ad Dollars: From March through June, when the ad market bottomed out, year-over-year ad spend across all platforms for pharma was +8%, and the only category showing growth.

The pandemic, with many shelter-in-place orders, had negatively impacted ad spend for travel, retail, restaurants and, with movie theaters shut down, even entertainment. On the other hand, pharma ads offering consumers information on life threatening illnesses and other health information were less likely to cut ad spend. Additionally, besides building awareness, several pharma advertisers used the pandemic to salute frontline healthcare workers while some offered financial support to recently furloughed and laid off workers.

One trend we found during the pandemic was marketers allocating a greater percentage of ad spend on digital media. With an older target audience, who are heavier TV viewers, pharma advertisers continued to allocate more dollars to national television. From October 2019 to June 2020, national TV pharma ad spend was $3.6 billion compared to $2.1 billion for digital media. Nonetheless, year-over-year national TV ad spend declined by -5% while digital media grew by +17.7%.

Television: During the pandemic, with sports on hold and production studios closed, the TV ad market became very soft. The ad spend for pharma compared to other verticals proved to be resilient. In May, with the pandemic raging, we found national TV ad dollars actually grew +16%.

During the pandemic the ratings for broadcast and cable news increased notably. With an older viewing audience seeking information, news remains an ideal genre for pharma advertising. In 2019-20 pharma ad spend remained flat at $718 million. By comparison, ad spend for sports ($184 million) dropped by -22% and entertainment ($2.7 billion) was -5%.

Cable accounted for 50% of national TV ad spend. More ad dollars were invested on Investigation Discovery at $76 million (+1%) than any other network. ID replaced ION Television at $75 million (-22%). Among the top ten cable networks, Food Network ($68 million) had the largest increase in pharma ad spend at +33%, followed by TLC ($54 million) at +32%. Both were destination networks during the pandemic.

Digital: Digital media provided pharma advertisers with greater flexibility (i.e., targeting, ad budgets, etc.), especially during the pandemic. As a result, every digital media subtype increased YOY in pharma ad spend. Ad network/exchange surpassed search with the highest ad spend total at $518 million, a YOY of +28%. The ad spend for search was $469 million, a slight (+1%) increase. Pharma ad spend for content was +13%, reaching $452 million. The video ad spend was $267 million (+16%). Social however, had the most robust increase at +39%, with ad spend at $266 million.

Looking at video, as more traditional media companies launched streaming services the ad spend allocation became more fragmented. The streaming providers with strong YOY growth were several traditional media companies. Disney led at $70 million (+43%), ViacomCBS at $41 million (+58%) and NBCU at $40 million (+38%). Although YouTube, a "pure play" digital streaming provider, ranked second at $48 million, its YOY ad spend was -30%.

You can rely on SMI to report ad spending trends by major product categories and the overall marketplace on an ongoing basis.

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