Drug makers defy the advertising slump

Drug manufacturers are proving a refuge for media and advertising companies as a seasonal peak in pharmaceutical ad spending has helped to offset massive cuts in other industries.

"Drug makers are one of just few advertiser categories that haven't reduced their ad spending, and there are two reasons for this: They have the money and they haven't advertised much before," said Jakub Benke, general director of Starcom media house.

In the first three weeks of October, pharmaceutical TV ad spending hit zł. 57.2 million ($14 million), surpassing the zł. 56.4 million ($13.8 million) achieved in the whole of October 2000, according to AGB Polska, which monitors TV advertising.

Drug makers spent zł. 278 million ($68 million) on TV advertising in the first three quarters of this year, up 76.7% from the same period a year ago.

Despite the hefty increase in sales, Edyta Łyszkowska of AGB Polska said the numbers shouldn't be taken at face value. "When reading these figures, one must remember they don't account for immense discounts the media now offer advertisers," she said.

Nevertheless, the figures prove that drug makers are far less cautious when it comes to ad spending than other industries.

Expert Monitor, which tracks ad revenue in TV, radio and print media, said drug makers spent zł. 389 million ($95 million) on media advertising in the January-September period, 61% more than a year ago.

While media figures have been unable to pinpoint the depth of the overall slump in advertising this year, sources interviewed for this article agreed that pharmaceutical firms have been among the few advertisers that have not decreased spending levels.

"Drug makers have kept advertising spending at earlier levels, while many other advertisers reduced their advertising expenditures," said Andrzej Szymański, media and pharmaceutical markets analyst at DM BIG-BG brokerage house.

"I think advertising spending by drug makers has been either unchanged or slightly higher than last year," Łyszkowska of AGB Polska said.

Drug makers' ad spending peaked in October, the traditional high-water mark month for pharmaceutical advertising.

"The season (for drug advertising) is in the autumn," said Anna Hess, pharmaceutical industry analyst at CDM Pekao brokerage house. "It's the best time to advertise for cold-and-flu relief drugs."

Another factor inflating drug makers' ad budgets is mounting competition in the pharmaceutical sector, which has been fueled by the emergence of dozens of new brands or package redesigns over the past few months.

"The competition is intensifying," Hess said. "We have many more drugs now, particularly in the over-the-counter market. Consequently, brands are becoming increasingly important - this is the key reason for the advertising battle."

Robert Wylot