Most consumers head to their computers when they need information on illness and treatment. But pharmaceutical companies have slashed spending on sponsored search results this year -- largely because the Food and Drug Administration's Division of Drug Marketing, Advertising, and Communications on March 14 warned top pharmaceutical makers that paid-search links violate the agency's fair balance guidelines requiring ads to outline drugs' side effects along with intended benefits.
Between the issuance of the warning and June, the number of sponsored links from pharmaceutical companies plunged 84 percent, according to online-ad tracker comScore. The cutback may affect the sales of some pharmaceutical companies, says John Mangano, a marketing VP at comScore.
Sponsored-link advertising "does drive people to talk to their doctors and seek treatment," Mangano says. "On a company level, it'll affect revenue, and on a general population level, it will affect how people seek treatment."
At the height of the swine-flu scare this spring, Mangano says, the top sponsored search result for "swine flue" was for Clorox bleach. "I'm not sure that's what people were looking for," he says. Mangano believes that Clorox came up as a sponsored search because of its use as a disinfectant. Flu vaccine makers GlaxoSmithKline (GSK) and Novartis AG (NVS) -- which has developed a flu vaccine to target the H1N1 ("swine flu") virus -- didn't comment for this article.
The FDA's concern was that sponsored search links can't provide enough information to satisfy the guidelines, he says: "In search, you get two lines that speak to the drug, so it's hard to include the safety issues in that. The industry had used an undefined rule of 'one-click'," meaning that consumers would be provided with the language required by the FDA guidelines on a web site one click away from the link."
The decline in sponsored link advertising may dent pharmaceutical online spending, which had increased by 36 percent in 2008, to $137 million, according to Advertising Age. Yet the findings don't mean the end of online advertising for pharmaceutical companies, Mangano says -- only that the guidelines need to be better defined. "Online advertising is evolving," he says, "and has its own limitations."
Understanding Stock Market Indexes
What does it mean when people say "the market is up 2%"?View Course »