Pharma's Embrace of Digital Advertising Includes YouTube
In Q1 2023, major pharmaceutical companies like AbbVie and Novo Nordisk significantly increased their YouTube ad spending to over $494 million—especially in categories like hepatitis, hemorrhoids, and diabetes—despite a 29% drop in the number of pharma advertisers, with some shifting away from traditional long-form ads and dietary supplement brands drastically cutting their YouTube budgets.
YouTube’s advertising revenues topped $29 billion in 2022, up from about $8.1 billion in 2017. With 62% of American internet users accessing YouTube daily and 85% doing so weekly, advertisers of all sizes are eager to invest in YouTube.
Some medical and pharmaceutical advertisers are among those investing heavily. In Q1 2023, advertisers from major companies such as AbbVie and Novo Nordisk spent more than $494 million on YouTube, representing a 26% year-over-year increase (up from $391 million in Q1 2022). However, the number of pharma and medical companies buying YouTube ads dropped by 29%.
For those advertisers who did invest in YouTube, their strategies diverged from traditional approaches, possibly signaling a greater embrace of digital advertising.
YouTube Spending Slowed by a Handful of Advertisers
In Q1 2023, half of YouTube spending from pharma and medical advertisers ($246 million) came from those promoting products in six categories:
- Hepatitis prescriptions: ~$66 million
- Hemorrhoids OTC medications: ~$50 million
- Diabetes prescriptions: ~$47 million
- Dietary supplements: ~$36 million
- Pain management OTC medications: ~$24 million
- Multiple Sclerosis prescriptions: ~$23 million
Despite the overall increase in YouTube ad spend, advertisers for dietary supplements decreased their YouTube spending by 90% year-over-year, including brands like Ka’Chava and Nucific. Interestingly, Nucific recently celebrated selling more than 3 million units of its best-selling product, Bio-X4, despite dropping YouTube from its media mix.
Pharma & Medical Advertisers do the Unexpected
Pharma and medical advertisers have a history of running campaigns built on lengthy ads. Most consumers are reportedly comfortable with this; a recent study found that 64% of respondents thought the length of pharmaceutical ads was fair, good, or excellent.
However, this goes against the trend toward shorter content, as seen with the popularity of TikTok and Instagram Reels. In digital advertising, shorter is often better.
Historically, pharma and medical advertisers have avoided this best practice, but that may be changing. In Q1, almost 130 companies out of 325 invested their YouTube budgets in ads less than 15 seconds long, including those promoting hemorrhoids OTC meds, diabetes prescriptions, dietary supplements, pain management OTC meds, and depression prescriptions.
Meanwhile, more than 130 and 65 companies invested in ads of 16-30 and 31-45 seconds, respectively. Advertisers for diabetes prescriptions, heart attack prevention prescriptions, and cold/cough OTCs who bought 31-45 second YouTube ads in Q1 2022 did not return in 2023.
Finally, just 95 companies, including Botox, invested in ads longer than one minute.
The move toward shorter ads may indicate that pharma and medical advertisers are evolving to meet the preferences of today’s digital-first world. This could also open the door to more innovative ad types, including OTT and CTV.
Where Besides YouTube?
Where else are medical and pharma advertisers spending their budgets?
Traditional ad formats still receive significant investment. In 2022, pharma advertisers collectively invested over 65% of their budgets in broadcast and cable ads. For these advertisers, traditional formats, especially TV, still offer impressive reach, particularly among older consumers.
The continued investment in traditional ad formats also aligns with recent trends of advertisers returning to these formats as they prepare for the decline of third-party cookies, increasing digital ad loads, and dwindling trust in some digital formats.
While traditional ads will continue to attract pharma and medical advertisers, the industry’s accelerated shift to digital will push advertisers into the future—a trend already evident in 2022. Last year, advertisers for 572 pharma brands spent nearly $1.5 billion on video ads, with some investing exclusively in this format, including Entyvio (Millennium Pharmaceuticals), Gardasil 9 (Merck & Co), Prevnar 20 (Pfizer), Epclusa (Gilead Sciences), and Cibinqo (Pfizer).
Social media advertising is also becoming more prominent as younger generations turn to platforms like Facebook, Instagram, and Twitter for healthcare information. A recent study found that 76% of people use social media after a doctor’s visit to ask others about their experiences.
Influencer marketing is likely to play a role as well. According to WEGO Health, 51% of patients mostly or completely trust patient health influencers, and 85% said they would be somewhat or very receptive to an ad from a patient influencer.
YouTube Still Has a Place for Pharma and Medical Advertisers
YouTube’s reach and influence are too significant for advertisers to ignore. As younger healthcare professionals enter the workforce and consumers turn to YouTube for healthcare information, the platform will remain a key connection point between brands and their target audiences.
Related
YouTube Advertisers to Watch: Which Brands Spent More Than $100mm in 2021?
In 2021, fourteen companies collectively spent nearly $2.7 billion on YouTube ads, with Amazon notably increasing its YouTube ad investment by 124% year-over-year to over $100 million, allocating 47% of its ad budget to retail products, 30% to media and entertainment, and significant portions to tech and various content categories such as music and gaming.
YouTube Ad Spending Rebounds After a Rocky 2022
After a 2% dip in YouTube's ad revenue in Q3 2022 amid economic uncertainty affecting major platforms like Facebook, YouTube's ad spending rebounded strongly in Q1 2023 with nearly 9,800 advertisers across key industries investing $5.7 billion—a 28% year-over-year increase—driven largely by a surge in Media & Entertainment advertisers who boosted their spending by 88%, including significant investments from movie promoters like The Walt Disney Company ahead of major releases.
Firearms & Accessories Advertising On the Rise in the US
In the first half of 2022, firearms and accessories advertisers in the US increased their spending by 21% year-over-year to over $67 million, with significant investments not only in promoting guns but also in body armor, driven by rising demand, safety concerns, and increased police funding despite ongoing calls for gun reform.
85% of American Kids Watch YouTube Videos: Advertisers Take Notice
Over 85% of American children aged 2 to 12 watch YouTube videos—making it more popular than traditional kids' networks—and this surge, amplified during the pandemic, has driven significant growth in YouTube's advertising revenue, especially in educational content, while prompting lawmakers to push for stricter privacy and content regulations such as the proposed KIDS Act to better protect young viewers.
Q4 2023 12 for ‘24 - Beauty
In 2023, the beauty sector saw a 3% year-over-year decline in ad spend totaling over $5.2 billion across 5,200 companies and 11,600 brands, with TV still dominating at 34% of spend despite a 10% drop, while online video and native ads surged by 35% and 41% respectively, driven by increased investments in deodorant (up 72%), skincare, and hair care, alongside notable spending spikes from companies like P&G, and a mixed performance with declines in oral hygiene and bath & shower advertising, as MediaRadar highlights 12 key beauty advertisers poised for growth in 2024.
Q4 2023 12 for ‘24 - Alcohol
In 2023, the alcohol advertising sector saw a 3% year-over-year decline in spending to $1.4 billion from 1,600 companies, with beer advertisers dominating over half the spend at $740 million, while twelve top alcohol brands—including Bud Light and Crown Royal—significantly increased their ad investments by 114% collectively through November, leveraging major events like Super Bowl LVII and football programming to boost TV and digital advertising.