John Mack

Jim Edwards over at Business Insider Advertising recently wrote a story about layoffs at Procter & Gamble. He said:

"Reality appears to have finally arrived at Procter & Gamble, the world's largest marketer, whose $10 billion annual ad budget has hurt the company's margins.

"P&G said it would lay off 1,600 staffers, including marketers, as part of a cost-cutting exercise. More interestingly, CEO Robert McDonald finally seems to have woken up to the fact that he cannot keep increasing P&G's ad budget forever, regardless of what happens to its sales.

"He told Wall Street analysts that he would have to 'moderate' his ad budget because Facebook and Google can be 'more efficient' than the traditional media that usually eats the lion's share of P&G's ad budget."

You can read the entire article here.

Of course, advertising on Facebook is not really free, but it's pretty darn close when compared to TV.

Interestingly, P&G CEO Robert McDonald had some interesting comments about the cost-effectiveness of digital advertising, including:

"I believe that over time, we will see the increase in the cost of advertising moderate. There are just so many different media available today and we're quickly moving more and more of our businesses into digital. And in that space, there are lots of different avenues available. In the digital space, with things like Facebook and Google and others, we find that the return on investment of the advertising, when properly designed, when the big idea is there, can be much more efficient."

If a packaged goods company like P&G is "moderating" its cost of advertising by shifting to digital and laying off marketers, then the pharmaceutical industry can't be far behind. A "recession" in pharma digital marketing is even more likely considering the well-known "patent cliff" that's currently in progress; ie, blockbuster drugs with a combined $170 billion in annual sales will go off-patent by 2015. That means even less mass media advertising and more digital advertising.

But "more digital advertising" does not mean that much more money will be spent in the digital arena. That's because of social media, where it's virtually free to advertise!

Recently, I presented a webinar on this topic as part of a BrightTalk "Digital Marketing & Pharma Summit" series of webcasts. The title of my presentation was "The Coming Pharma Patent Cliff and 'Recession' in Digital Spending." You can view and listen to the webinar in the window below.