Glaxo "Shakes Up" Alli Ad Strategy With New Agency

GlaxoSmithKline's decision to reassign the advertising contract for its alli OTC weight-loss drug two years after the product's launch could point to a fundamental problem with the brand's message, according to Steven Brozak, an investment banker working with biotech, medical device and health care firms.

GSK Consumer Healthcare moved alli advertising to Omnicom Group's TBWA division from the Arnold, New York agency June 3.

Brozak, president of San Diego-based WBB Securities, said the need to "shake things up" likely fueled the change. The alli campaign likely was not hitting its goal with the target market - overweight and obese consumers older than 18 years, he said.

The challenge to pharmaceutical marketers is striking a balance in offering an efficacious product that also is amenable to consumers' lifestyles.

"The question is, how do you go out there and develop the right" equation? Brozak said.

"Whether a different ad agency is able to solve that problem I just don't know," he added.

According to a June 3 release, GSK chose TBWA to work with agencies that have "comparable market presence to its brands, with a proven ability to roll out world class-ideas."

TBWA won the account "based on the strength of their strategic thinking and their ability to drive big, brand-driven, creative ideas across the world's most dynamic and fast-growing markets," Glaxo said.

GSK introduced alli (orlistat 60 mg)in 2007 as the first FDA-approved nonprescription diet pill (¹ (Also see "Alli Marketing Stresses Education, With Emphasis On Minority Groups – GSK" - Pink Sheet, 28 May, 2007.)).

An Arnold, New York ad campaign communicated to consumers that the product should be used as an addition to a low-calorie diet and exercise. A healthier, low-fat diet also would help reduce side effects of the pill, such as gas and oily leakage.

Initially, the campaign was thought to attract consumers with its honest approach to weight loss, rather than promising magic in a pill. GSK also used entertainer Wynona Judd as a celebrity endorser as well as ordinary consumers talking about their experience with the drug (² (Also see "GSK’s Alli Marketing Plays Celebrity Endorsement Tune" - Pink Sheet, 12 Jan, 2009.)).

While early sales of the drug were key OTC drivers for GSK - revenues reached 76 million U.K. pounds ($125.3 million under June 25 exchange rates) in the drug's first quarter on the market - the brand struggled in the U.S. in 2008, with full-year revenues declining 57 percent to $117 million.

However, net sales this year should receive a significant boost from the drug's introduction in Europe (³ 'The Tan Sheet' April 27, 2009).

Weight Loss Is Weighty Issue

Brozak said that despite the buzz surrounding the drug at launch, its marketing message ultimately may have run counter to why consumers would want to take such a pill. "If you have a well-rounded approach [to dieting] you probably wouldn't need the pill in the first place."

"There is a complacency in the typical consumer" about sticking to daily habits, and the marketing message encouraging alli users to adopt healthy eating habits and exercise may have been a turnoff rather than an attraction, he added.

Considering the pandemic of obesity - both in the U.S. and abroad, especially in developing regions - the "traction" for such products should be growing rather than shrinking, said Brozak.

He added that macro-economic conditions also will impact sales of the drug in coming quarters. "If you have less discretionary money to spend and if you spend less you eat less - in theory the economic formula would say that you wouldn't see any kick-up in terms of drug sales," he said.

TBWA also gained the creative responsibility for GSK's OTC smoking-cessation franchise, which includes Nicorette , NicoDerm , CQ and Commit .

GSK also moved the TUMS , Citrucel and FiberChoice brands to the WPP Group's Grey agency, which already manages the firm's Aquafresh , Sensodyne , Denture Care and Breathe Right brands. Arnold, New York previously held the account for TUMS and Citrucel, and Nelson Henry managed FiberChoice advertising, GSK said.

- Eileen Francis ([email protected])