Where Does it All Go? Digital Ad Spending Trends


By Victoria Petrock, Principal Analyst, eMarketer, Inc.
Contributors: Christine Bittar, Rebecca Chadwick, Tobi Elkin, Cindy Liu, Martín Utreras



eMarketer’s US digital ad spending estimates are based on the analysis of reported revenues from major digital ad-selling companies; estimates from other research firms; consumer internet usage trends; and eMarketer interviews with executives at ad agencies, brands, digital ad publishers and other industry leaders. eMarketer’s digital ad spending figures include advertising that appears on desktop and laptop computers, as well as on mobile phones and tablets, and all the ad formats on those platforms: banner ads (static display), classified ads, email (embedded ads only), mobile messaging (SMS, MMS and peer-to-peer [P2P] messaging), rich media, search ads (including contextual text links, paid inclusion, paid listings and search engine optimization [SEO]), sponsorships, lead generation (referrals) and video (including in-banner, in-stream and in-text).

In a change from previous years, eMarketer now bases its definitions of branding and direct response on a marketer’s primary advertising objective rather than the specific way the advertising is priced, measured or formatted. Branding-focused advertising is defined as having the objective of building awareness, familiarity, opinion, consideration or engagement with a brand. It is not designed primarily to drive immediate sales or leads. Direct-response advertising is designed to elicit a specific call to action that prompts a target audience to respond immediately and directly to an advertiser. Both branding-focused and direct-response advertising can take different formats and be priced in various ways.


The US healthcare and pharmaceutical industry will spend $1.41 billion in paid digital media in 2014, including $373 million in mobile ad formats. Digital spending will climb to $2.22 billion by 2018.

eMarketer estimates that industry advertisers—including marketers of prescription (Rx) and over-the-counter (OTC) products, facilities, services, research, healthcare professionals, hospitals and biological products, as well as establishments providing healthcare services, health insurance and social assistance for individuals—will invest 56% of their paid digital dollars in direct-response efforts this year. The remaining 44% will be invested in branding-focused campaigns. Search and display will command the largest chunks of digital spending, with higher-than-average growth expected in mobile, digital video and native formats.

While ad spending remains tempered by regulatory and privacy concerns, changing consumer behavior and industry dynamics are pushing healthcare and pharmaceutical companies to incorporate more digital advertising in the media mix.

Though constrained by regulatory requirements on Rx and OTC products, paid digital ad spending by healthcare and pharma marketers is expected to grow at an 11.6% compound annual rate during our forecast period.


This lower-than-average growth rate has resulted in a share loss when it comes to total digital advertising among industries. Healthcare and pharma currently accounts for 2.8% of total digital spending, down from 3.0% in 2013. Through 2018, however, this share is expected to remain relatively stable.


After several years of sluggish investment, healthcare and pharma advertising is showing new signs of life. Though patent expirations for mass-market blockbusters have slowed, there are fewer of them to market. At the same time, the industry is adjusting to a pipeline that will produce a promising new crop of higher-priced specialty treatments for diseases that are less common and more complicated.

Some of the industry’s largest advertisers are starting to open their checkbooks again. Kantar Media reported that Pfizer alone spent $1.14 billion on paid media in 2013 (including internet display but no other forms of digital advertising). Pfizer’s investment grew 26.8% over 2012— the result of marketing pushes for blood thinner Eliquis, rheumatoid arthritis drug Xeljanz and more spending on established brands, including Viagra, Chantix and Lyrica.

Generally speaking, several factors are driving this boost in industry spending:

Changing industry dynamics: Mass-market blockbuster drugs that have come off patent in the past several years are being replaced by a new wave of more expensive specialty drugs that treat less-common diseases. Marketers are using more digital media to target these drugs to smaller populations of consumers. They are also beefing up efforts aimed at healthcare specialists.

More digital experimentation on the unregulated side: While big spenders in pharma remain constrained by FDA rules, some marketers in less-regulated sectors of the industry are moving full speed ahead with digital.

The Affordable Care Act rollout: Insurers and other service providers have increased consumer-focused spending to promote their plans and will continue to market to their members in efforts to keep them healthy.

A focus on wellness vs. sickness: The ACA is also responsible, in part, for the industry’s shift to increased focus on preventative healthcare and positive outcomes. This shift is driving increased spending targeted to younger demographics—by both regulated and unregulated advertisers.

Better targeting and measurement options: The availability of better ad targeting technology and more data is helping marketers create more effective direct-to-consumer (DTC) advertising, as well as advertising targeted to healthcare providers (HCPs).


Digital continues to grow as a percentage of the overall ad spending pie. While big-pharma marketers still lean heavily on TV and print for mass-market products, Larry Mickelberg, chief digital officer and partner at Havas Health, anticipates a “sea change” in marketing over the next three years, as the industry shifts away from marketing blockbusters to “micro-casting” to smaller slices of consumer and HCP audiences with online and mobile channels.

“We have seen a dramatic shift in two short years where now it is common to have at least 20% of healthcare advertising budgets dedicated to digital,” said Ryan Olohan, national industry director for healthcare at Google.

“More drugs are being launched against really niche or specific populations,” added Matt McNally, president and chief global media officer at Publicis Health Media. He also said his clients have increased digital spending an average of 10% in the past year. “As clients face patent expiry, they want to be super focused with their dollars and make sure they’re engaging the right consumer and physician audiences that are going to drive revenue.”

A Standard Media Index (SMI) ranking of top US industries by digital ad spending found a substantial increase in digital. Pharmaceutical advertisers represented by agencies tracked in the index boosted their digital investment 34% between 2012 and 2013. This growth was higher than other industries in the top five.

A similar shift is happening on the hospital and service-provider front. “What’s changed the most in the past three years isn’t necessarily how much we’re spending, because hospitals are all very closely watching expense management,” said Paul Matsen, chief marketing and communications officer at Cleveland Clinic. “We’re not spending more; we’re spending differently, and our mix of media has moved quite significantly from traditional media channels, particularly away from print and to some degree away from outdoor, and much more into digital and search.”



“Healthcare providers are technologically advanced and adopt new technologies much faster than an average consumer,” Google’s Olohan said. “Our clients realize it is increasingly difficult to reach healthcare providers with a traditional sales force and are therefore investing in digital to reach physicians through digital technologies.”

HCPs appear receptive. In a June 2013 study by Communications Media Inc. (CMI) and Compas Inc., high percentages of US physicians surveyed said they find various digital resources “important.”

Bill Evans, executive vice president and chief digital officer of Team Chemistry at WPP, estimates that spending aimed at HCPs is now about 50% of total digital budgets. “There’s still a heavy reliance on journal ads, but digital is taking on much more importance,” he said. “The percentage on digital spend for the doctor is probably much more robust [than it is on the consumer side].” Similarly, Havas Health’s Mickelberg sees about 55% of digital spending aimed at HCPs today, with a steeper tilt over time. “It will probably go to 60/40 in two years. And two years after that it will probably be 65/35.”


HCP-focused social media is additional fertile ground. A December 2013 survey of global pharma marketers by PMLiVE found that 60.0% of respondents said healthcare professional networks would be important to them in 2014. This put them higher on the list than consumer-focused networks Twitter, LinkedIn and Facebook.



Despite increasing reliance on smartphones and tablets among US consumers and healthcare providers, the healthcare and pharma industry lags others in its use of mobile advertising. eMarketer expects that in 2014, health and pharma companies will spend just $373 million, or 26.5% of total digital ad spending, specifically on mobile formats.


Steve Minichini, president of interactive marketing at TargetCast, also sees lower-than-average investments in mobile advertising, particularly for prescription products. “We have some OTC clients that are starting to ramp up their mobile spend, but on the Rx side it’s very, very quiet,” he said. “Across my Rx digital spend, mobile has the smallest percentage of the budget.” [Editor’s Note: TargetCast is now Assembly and Minichini is now managing partner.]

Team Chemistry’s Evans also describes mobile investment as marginal. “The reason it hasn’t gotten more traction is that the industry as a whole hasn’t deployed a lot of mobile-optimized programs,” he said.

Paid search advertising makes up the majority of mobile investment. The Search Agency reported that by the end of 2013, more than 26% of the health industry’s paid search click share was coming from smart-phones and tablets.

Search has proven highly effective for marketers with mobile-optimized search programs. For example, Matsen said 60% of those who visited the Cleveland Clinic’s website used smartphones or tablets to do so. “By making sure these programs worked for [our mobile users], we improved not only the volume of clicks but, more importantly, the number of people making appointments through links,” he said.


On the mobile display front, health-related ads often follow a seasonal pattern. Mollie Spilman, executive vice president of global sales and operations at mobile ad network Millennial Media, said she sees cyclical upticks in mobile spending by pharma companies during the flu season, allergy season and at other times of the year. In Q3 2013 alone, Millennial Media reported that pharma ads on its network grew 744%, the highest of any industry during that time period. The category finished out the year with a 139% year-over-year increase, putting it below other industries but still among the top six worldwide.



Victoria Petrock is Principal Analyst, Industries, for eMarketer. She leads the company’s analysis and coverage of digital marketing topics and trends in vertical industries, including healthcare/ pharma, automotive, financial services, tech/ telecom, travel and media & entertainment. Victoria produces forecasts, reports, webinars and other in-depth content about digital advertising, social media, eCommerce, mobile, marketing technology and other emerging topics.

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