Results from a recently released report on the return on investment for drug marketing dollars held some interesting implications for those who plan physician meetings and events.

While total drug marketing dollars grew 13.7 percent in the 1995 to 2000 period covered in the study, physician meetings and events (PME) spending grew 22.1 percent per year, second only in growth to direct-to-consumer (DTC) promotion, which grew 44.3 percent annually. The other two promotion areas included in the study — detailing and journal advertising, grew 7.1 percent and 7.6 percent, respectively.

Dick Wittink, PhD, professor of management and marketing at the Yale School of Management, presented the study findings at the Association of Medical Publications meeting in September. In a Q&A session following the presentation, Dean Slack, director of strategic analysis with Bayer Corp., called it “no less than a landmark study part 2.”

Part 1, conducted by Scott Neslin, PhD, professor of marketing at the Amos Tuck School of Business at Dartmouth College, found even more aggressive growth in PME in a 1995 to 1999 timeframe — 23.6 percent annually, with an increase in revenue spent per marketing dollar of $3.56. Both studies used data from Scott-Levin's Physician Meeting and Event Audit. The audit, released in 2001, included promotional and educational meetings under the PME category; the CME portion of the data came from accredited and nonaccredited meetings.

Average ROI by Revenue/Launch Date
pre-1994 1994-1997 1998-2000
Detailing
$25 M*-$100 M $0.9 $1.0 $1.0
$100 M-$500 M $1.2 $1.6 $2.1
$500 M+ $3.1 $5.9 $11.6
Direct-to-Consumer
$25 M-$100M $0 $0 $0
$100 M-$500 M $0.1 $0.2 $0.2
$500 M+ $0.4 $0.7 $1.3
Journal Advertising
$25 M-$100M $5.2 $6.7 $7.2
$100 M-$500 M $2.3 $3.1 $4.2
$500 M+ $3.1 $6.2 $12.2
Physician Meetings/Events
$25 M-$100M $0.1 $0.1 $0.1
$100 M-$500 M $2.0 $2.7 $3.6
$500 M+ $3.1 $6.0 $11.7
* M=million


Wittink's study added new data from 2000 to the existing database and altered brand size categories to the pooled data. The 392 branded drugs and 127 generics studied were sorted by revenue generation and by the year a drug was launched. He defined ROI as the estimated increase in revenues per dollar spent for each variable — detailing, journal advertising, DTC, and PME.

“The results show that for PME and some other activities, the marginal effectiveness of an additional dollar spent is greater for the most recently launched drugs. My guess is some drug managers are reluctant to aggressively reduce promotional expenditures on older, highly successful drugs because there's a lot of money at stake.”

Another interesting thing, he notes, is that the feedback available from detailing and PME activities also may be swaying drug managers to spend more in those areas. “There's a lot of observational material that can be translated into reports for detailing and physician activities,” says Wittink. “Journal advertising and DTC don't have any feedback mechanisms,” he adds, which makes it more difficult for managers to commit to funding them because there's no clear way to measure results.

“You may not want to hear this, but companies may actually be inclined to overspend on detailing and PME relative to journal advertising, and perhaps even DTC. Leaving out DTC, which has some unusual components, if we look at these areas equally, just looking at expenditures, we find a greater opportunity for ROI in journal advertising than PME.” But he cautioned that, since the study reports average results and expenditure allocations are influenced by all sorts of subjective factors, people should not use the results to determine exactly what they should spend and where they should spend it. “They instead should look at the numbers and consider that the higher the ROI, the more opportunity there is to increase expenditures,” and vice versa.

But what about the idea of reallocating funds for DTC, which trailed the other promotional tactics in most of the study results, to meetings? “That might be appropriate to do, absolutely,” says Wittink. “But I'd do it experimentally, and make sure to track that the ROI is going in the right direction.”

The study's results also suggested that the most promising targets for additional resources are PME, detailing, and journal advertising for large brands launched after 1997; that direct-to-consumer advertising had the greatest ROI for large, recently launched brands; and that journal advertising provided the best ROI for small brands. Results of the study and a webcast of Wittink's presentation are available at www.rxpromoroi.org.