What does Big Pharma and the Search Industry have in Common?

By JEgererJEgerer (1258337641|%a, %b %e at %I:%M%p)

… They both want to make money. Yahoo and Google, representing the search industry, just recently initiated talks with the FDA about how to treat branded drug advertising on the web. More after the jump.

Search Engines and Pharma Team Up

“Is it any surprise that Google and Yahoo are working hard to get FDA's stamp of approval on search-engine advertising for branded drugs?"

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Problem

Drug advertising is a 4 billion dollar a year industry just in the United States. However, search engines like Yahoo! and Google are only seeing 3% of that cash despite the obvious discrepancy in traffic as compared to print media or even television and radio. This is because the FDA’s current regulations on web advertising limit the structural effectiveness of the ads. Amit Pathania explains below,

"Since the current FDA rules require all drug ads to mention the benefits as well as the risks of a drug, companies complain that they cannot effectively tout the benefits of their products, due to the fact that several drug ad links appear on search sites, thereby leaving space for only a few words."

Put simply, on the web drug companies can’t utilize the guy in the background of every Lipitor commercial spouting off risks and directions at lightspeed and search engines aren’t ready to throw 2 pages of text into their results pages. Both the FDA, pharma, and search engines have valid motives here and you can’t fault any for pressing the issue; clearly this is not working.

In fact the misalignment between these parties has caused search engines to bypass the standards put forth by the FDA.

"Noting that drug-makers circumvent the requirements by running anonymous ads about general medical conditions, Zinman and other online executives argue that such ads prevent the consumers from navigating the Web beneficially."

Essentially the search engines will advertise the branded drug in question the way they and the producer see fit, and just omit the name relying on brand recognition in the Doc’s office to take care of the rest. These ads then require none of the benefits and risks criteria that the FDA has set forth for branded drugs, and simply contain links to pages that have general information about the drug. At this point the pharmaceutical can place a branded add with meeting all the requirements in a more spatially forgiving web environment.

"First, the online types are saying that brand-free drug advertising where a medical condition is mentioned, but the link leads to information about a drug—are cumbersome, inefficient, and unfriendly to consumers."

As mentioned this really is bad for all parties involved. It is bypassing the FDA rule which ensures the right information gets to end users and opens search engines to scrutiny on their business practices. I don’t think it wise for major engines to make a habit of brushing of the ‘powers that be’.

However, they are taking steps in the right direction by proposing plans for new ad structures.

Solution

"Yahoo's would have an extra link to detailed drug info, while Google's would contain an extra line of text that mentioned drug risks, plus a link to official labeling."

"The additional linkage for drug ads fits with PhRMA's proposed solution, which as you know is a standardized logo linking to official safety information."

It’s also worth noting these solutions would change the very avenues from which drug ads reach consumers.

"And the abbreviated nature of all three solutions would allow the format to be adapted for venues beyond search. For instance, Twitter dispatches are limited to 140 characters."

Yahoo! and Google have pitched these ideas to the FDA in hope of seeing a web specific set of rules drawn up for branded drugs. This would open the doors to significant new revenue streams. Below you can see the advertising spending in 2009. If search engines can even draw half of the pharma companies advertising expenditures we are talking about a 2% increase from one single little niche.

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My Two Cents

I think this article is an example of a larger marketing trend being driven by the search industry. Until the advent and explosion of internet advertising marketers were operating in old, familiar channels. Now with a new high traffic medium industries are struggling to fit their old advertising practices to the new ‘billboard’. This has given rise to viral marketing, pop-ups, spam and other equally intrusive techniques.

As the search industry grows more and more competitive companies will either need to offer existing advertising customers value in superior traffic or seek develop an online advertising structure that is receptive to more industries as is the case here. Google and Yahoo! seem to be pursuing both at the moment. I have to wonder what other industries left behind by rigid regulation will make strides to entering the net? Likewise, I think as the pie continues to grow the same regulatory bodies that have kept some industries from harnessing the web will pull back on the reins before internet advertising runs wild. In the coming years search engines should except and prepare to go to Washington to defend the inevitable attacks on alcohol and cigarette advertising among other industries traditionally targeted.

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