Pharma and Wellness sectors naturally represented a key focus in the U.S. advertising industry during calendar-year 2021. As the pandemic evolved over time, marketers in the space navigated uncertain times, with health and wellness concerns remaining a particular, top-of-mind presence for consumers.

Nicole McCurnin

With such opportunity for contextual relevance, Pharma and Wellness ad spend remained a regular growth source for the ad economy during irregular times. These times, for instance, featured vaccine rollouts, ebbing-and-flowing cases, disrupted gym routines, new telehealth appointments, and emerging variants.

While sharp Pharma and Wellness ad spend growth persisted throughout 2021, the trajectory has begun to narrow in scope during the January to May 2022 period. Consumer confidence has been wavering amid pricing inflation, as a potential driver whose full extent remains to be seen.

The SMI Pool ad spend grounds this analysis, capturing U.S. media bookings as placed and billed via major and independent media agencies across all major media channels, reflecting 95% of all U.S. national brand ad spend. The following analyzes the ad spend trajectory through May 2022, across Pharma- and Wellness-related sectors, including pharmaceuticals (prescription drugs, O-T-C medicines and remedies); wellness (sporting goods and exercise equipment, supplements and vitamins, hospitals and medical centers, health/fitness facilities and services, medical equipment and supplies); and supermarkets, convenience and general stores [contains pharmacies].

Pharmaceuticals

When looking across the 12 category groups in the SMI Pool dataset, which dates back to 2017, Pharma has shifted from the typical No. 5 annual investor to No. 3 as of 2020. Amid the challenges of the pandemic, Pharma was the sole category group to expand linear TV (+5%) expenditure in 2020 vs. 2019 annually. Moreover, in both 2020 and 2021 annually vs. the prior respective years, Pharma expanded digital, linear TV, and radio presence to cast a wide net for consumer reach.

With deep pockets, prescription drugs account for roughly 90% of pandemic-era Pharma ad dollars. Upward momentum for the sector, annually year-over-year, carried from 2020 (+16%) into 2021 (+12%). Despite a continued strong push in digital, the overall Rx growth trajectory halted in January to May 2022 (-1%) following linear TV divestment.

Meanwhile, O-T-C ad investment shifted from decline in 2020 (-3%), to mirroring the growth of Rx in 2021 (+11%), and now eclipsed Rx in January to May 2022 (+26%). This lift, primarily within digital and linear TV, helped tip the scales to overall Pharma growth during 2022 to date (+1%).

Wellness

Among all category groups, Wellness ranked third in media-wide annual ad spend growth during 2021 vs. 2020, with overall ad expenditure increasing +50% year over year. Surging media support across all major media types, excluding print, newly propelled annual investment above $2 billion for the first time in 2021, when assessing available history back to 2017.

Notably, Wellness generated 18 consecutive months of strong year-over-year ad spend growth, from October 2020 through March 2022. However, this sharp growth newly changed course to -1% decline in April 2022 vs. 2021, followed by sharper -14% fallout in May 2022 vs. 2021.

In the recent April to May 2022 vs. 2021 period, three of the five Wellness sectors culled ad spend by double digits, namely sporting goods and exercise equipment (-52%), medical equipment and supplies (-18%), and hospitals and medical centers (-16%). The three sectors above detracted from continued health/fitness facilities and services (+54%) and supplements and vitamins (+9%) growth, pulling down Wellness at large.

Supermarkets, convenience and general stores [contains pharmacies]

Supermarkets naturally distributed groceries, which consumers leaned on more in the early pandemic period as restaurant dining faced restrictions, and supermarkets eventually also distributed vaccines as the pandemic progressed.

Retail pharmacy stores played a huge role in the pandemic response by selling masks, hand sanitizer and medicines to treat COVID, as well as distributing COVID vaccines. Accordingly, ad spend grew dramatically over the pandemic. The supermarket/retail pharmacy vertical expanded annual 2020 ad spend by +6%, fueled by linear TV and digital efforts. That growth rate further amplified to +20% in 2021: Apart from print, marketers increased all channels, with a heavy digital push.

Several messaging points can drive online or foot traffic and thus sales in 2022. First, that there will be more drug manufacturers working to get new treatments of COVID approved and out to consumers who fall ill. Second, with new variants likely to emerge, there will be continual demand for at-home tests and medical supplies, such as readily available masks and sanitizer. Finally, the CDC seems likely to continually approve different first-time vaccine and/or booster series, such as the recent vaccine for children under 5 years old, which will continue to spur ad spend around related messaging.

With such opportunities, marketers have increased ad spend in January to May 2022 vs. 2021 by +11% already. Like 2021 patterns, the increased communication spanned all media touchpoints, with the exception of newspaper declines.

Although it remains to be seen if May 2022, which newly fell -2% vs. last year after six prior months of lift, will mark the start of a lull for the sector.

Looking ahead

Despite the emerging Wellness ad investment slowdown, relatively stable supermarket/retail pharmacy investment, coupled with the halo effect of relatively stable pharmaceutical (Rx + O-T-C) investment, will raise consumer awareness and consideration to drive sales.

As the pandemic continually evolves, the health-minded focus is presumably here to stay in the U.S., which represents an evergreen opportunity for the aforementioned product subcategories.

The emergence of recessionary dynamics will be a key factor, determining if these sectors pump the brakes on the former robust influx of ad dollars to the space.

Pharma- and Wellness-related brands must think strategically, develop integrated communication efforts to best approach consumers and differentiate in the post-COVID era.

Nicole McCurnin is director at Advertising Insights.