Pros & Cons of Direct-to-Consumer Advertising
Mostly found in the medicine and pharmaceutical business, direct-to-consumer advertising refers to the practice of marketing services and products directly to the consumer rather than passing through distribution channels such as hospitals, physicians and retailers. Direct-to-consumer ads have both positive and negative effects, according to the U.S. Food and Drug Administration.
The main objective of direct-to-consumer advertising is to build consumer awareness about the existence of a company's products. While consumers might already know about the product, they may not know about the multitude of uses. Additionally, they may not know that they can use the product as a substitute for another. Direct-to-consumer advertising may also prompt consumers to ask questions and conduct research about the products they're using and the symptoms or issues they're trying to alleviate. The campaigns help individuals gain more knowledge about the existence and possible uses of the products, thus increasing sales revenue and profit margins.
It is all too common for each industry to contain a giant that is the most popular in that field, offering the commodities that have become the general way of life. Competing with these companies is extremely difficult for smaller companies that may have to fight for shelf space in stores and retail outlets. Direct-to-consumer advertisements helps inform consumers about the variety of products available and gives them more choices, all while helping smaller organizations reach out to draw in more customers. This can help create a competitive marketing environment and thus can result in a more extensive variety of products for consumers.
Consumers may not have sufficient technical knowledge to judge the benefits of the products competently. Thus, they may be misled by the overstated advantages mentioned in direct-to-consumer advertisements. While certain laws such as The Federal Food, Drug and Cosmetic Act require that distributors and advertisers disclose certain information about the uses and risks of products they advertise, adverse effects are often placed in the fine print of an ad and do not share equal prominence with the product's benefits. When they take the products directly to consumers, advertisers cut out the assessment of experts in the field who are knowledgeable about the level of benefits that the products offer. They sway customer opinions by employing marketing techniques.
Marketing is an expensive process, but without it, companies may not reach set sales goals. For example, pharmaceutical companies pay about $2.5 billion annually to make their companies and products household names, according to the National Conference of State legislatures. This advertising, however, translated to a 25 percent increase in the top 50 advertised drugs between 1999 and 2000, making direct-to-consumer advertising both a disadvantage and an advantage, because it increases costs as well as sales revenues.