False economies give OTC drug advertisers self-inflicted headaches

Back in the 1960s, the standard length of a television commercial was 60 seconds. Oh, you could buy shorter lengths, like :30s, but it didn’t pay to. While a 30-second spot was half as long as a minute, the air time cost 75% as much to buy. The same holds true for radio air time today, which is why you still hear so many 60-second radio commercials – not just here in Richmond but nationally.

A few years later, television broadcasters reduced the cost of their :30s to just 50% of their :60s, and with the price premium gone, guess what happened: The :30 became the standard unit for tv commercials, because with them advertisers could double their frequency for the same money.

Deja vu all over again?

For the past three years, it’s been looking as if history repeated itself, as significant numbers of television advertisers started switching from :30s to :15s, mainly to run more ads for fewer dollars during a recession.

In 2007, about 20% of television commercials were 15 seconds. This year, 35% are, according to Ameritest and Competitrack, two firms that track ad buying. That’s 75% growth, or an average of 25% per year.

But why?

With 15-second commercials priced at 60 to 80% of :30s, they’re not really getting all that much added tv presence for their money. But that’s only part of the problem.

Not just less efficient, but less effective

The shorter commercials don’t just cost more per second to air. Research shows that when they do, they’re less effective.

As for back as half a century ago, advertising researchers knew that consumers watching television commercials could absorb 1.25 ideas per 30 seconds. Halve the length, and that’s 62.5% of one idea.

Today’s research shows that while an average of 44% of consumers pay attention to 30-second commercials, only 38% pay attention to :15s. And Australian researchers studying ads from Australia, the U.S. and the U.K. found that the shorter commercials’ likeability scores were 20% lower.

In copy testing, Ameritest has found that 15-second commercials were markedly less effective than their 30-second counterparts.

“It’s an awfully short form to work with,” Ameritest CEO Charles Young told Advertising Age. “If it devolves into simply reminder advertising, you’re not building brands.”

Bad medicine

Even more than advertisers in general, the over-the-counter drug industry has gone head over heels for the shorter format, only to find themselves up to their necks in trouble.

In 2007, :15s comprised a mere quarter of OTC drug television advertising. This year, they’re 65%.

And the same Ameritest study, with 4,000 consumer panelists, that showed 6% less audience attention for :15s than for :30s also showed 19% less attention to 37 OTC drug commercials tested.

Of course, the true test of advertising effectiveness is not in audience research, but in the marketplace. And here there’s clear proof that the shorter commercials are failing. Badly.

Last year, according to Symphony IRI, unadvertised “[a]ll-outlet private-label unit sales and dollar volume for health-care products rose 1.4 and 1.9 share points…to 27.9% and 36.1% respectively.” Those gains are at the direct expense of the branded OTC drugs that put 65% of their television into 15-second advertising.

But it gets worse.

A cost-cutting prescription with nasty side effects

Last year was the second straight year that the category led all others in share erosion to private label, and this year promises to be a third.

But how do you know that’s because of shorter television commercials, you may ask.

Well, while the OTC drug industry’s 15 second/30 second mix is 65/35, the package goods industry’s 35/65 ratio is just the opposite. And that same year – 2009 – they lost only 0.2% in unit sales and 0.9% in dollar volume to unadvertised private labels.

“[C]ompanies that live and die by their advertising are stretching their budgets with :15s,” says Young, “and frankly there’s a lot for them to learn.”

They could do lots worse than learning from history.

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