Failure to Deliver Meaningful ROI Online for Pharma? 11 comments
-
Font Size:
-
Print
- TweetThis
Recently Citi analyst Mark Mahaney upgraded WebMD (WBMD) stock from a “hold” to a “buy” citing his expectation that the flow of new Pharma ad dollars online will increase significantly by 2010 (and that WebMD will be the major beneficiary). Mr. Mahaney’s upgrade comes a little more than a month after WebMD surprised many by lowering its 2008 financial guidance for the second time-this time citing a slowdown in consumer advertising amid a weakening economy.
WebMD’s reduced forecast caught many analysts by surprise as online health advertising was assumed to be “recession proof”. And while this assumption no longer appears true, I believe Mr. Mahaney’s prediction of significant inflow of Pharma ad dollars will also prove unfounded unless the online health industry is better able to address the fundamental problem keeping large Pharma budgets on the sideline: the failure to deliver meaningful ROI for Pharma in the majority of online health advertising campaigns.
In looking at the online health landscape in recent months it is clear that there is a land grab of sorts taking place. Firms battle back and forth via press releases, touting that they have the most "monthly eyeballs.”
In my opinion, this trend is nothing more than new competitors trying to force their way into advertising budgets largely reserved for WebMD. This strategy may be a short-term winner (and perhaps necessary for the smaller firms’ immediate survival), but it makes inevitable a long-term failure because it is indicative of "old" online thinking. While that kind of thinking may be making its way into online health, it is outdated nevertheless. From my perspective the most important and compelling issue regarding the economics of online health advertising—and one that few of us are actually talking about—is the fact that, regardless of the number of monthly unique visitors, the ROI being delivered against most online health content is performing poorly, especially for Pharma.
Evidence of this problem surfaced recently from a closed-door session of 14 Pharma executive directors and vice presidents who, according to TGaS, the consultancy who led the session, “are still in the dark about the bang they are getting for their online buck. No one has been able to draw the direct line from online marketing to prescriptions." (Pharma Exec magazine notes that Pharma reduced online ad spending by 5% in 2007 vs. 2006)
Even worse, Pharma is often seeing negative ROI on their advertising programs. As a hedge against this potential failure, Pharma has started to demand occasionally that their online ad agencies take on risk themselves. The problem of negative ROI seems to stem, at least partially, from a second "dirty little secret" in online health: the vast majority of the content and products found at most of the leading portals come from the same sources: that is to say they are licensed from Healthwise, Mayo Clinic, Harvard Health, Cleveland Clinic, et al.
Excellent sources to be sure, but the end result is that consumers often find the exact same information across numerous topics, whether they are searching WebMD, Everyday Health, Yahoo Health (YHOO), MSN Health (MSFT), Revolution Health, etc.
And that leaves the market chasing its tail. Everyone in the market wants to be big enough to demonstrate scale, while their largest advertisers only really care about performance, regardless of size. Advertising agencies are struggling to offer new or creative solutions for Pharma, but their best solution continues to be their old solution—purchasing cheap CPMs in order to get enough poorly performing ad impressions to try and meet the overall campaign goal—usually some action that moves a consumer towards getting a prescription for Pharma's drug.
So where are we today?
- Big portals all offer much of the same "mile wide and inch deep" content along with poorly performing ROI and very high CPM rates.
- Consumers, frustrated by a lack of content depth and few new products or services, desperately pound Google to try and find "long tail websites" to quench their information thirst—(leaving Google the big winner in the online health space; not Pharma, not advertisers, not agencies).
- Pharma advertisers, frustrated by high CPM rates at the major health portals, are instead looking for those same would-be active and engaged long tail consumers (the frustrated ones pounding Google), but are unable to find them in any practical or scalable way.
- Long tail websites, meanwhile, are looking for Pharma dollars but often find that (a) they are too small to get on the ad agencies’ radar—which gives rise to aggregating health networks, and (b) when they are found, they still, under the current success metrics, face CPMs that are often too low to create meaningful returns.
- Pharma continues to fail in their attempts to convince consumers that any content they author, via their branded websites or otherwise, is credible and trustworthy.
With this in mind, it is my opinion that the long-term winners in online health will only be those firms that are able to offer innovative “next generation” products and deeper content that more meaningfully engage consumers while simultaneously offering marketers new, more efficient ways to make the direct connection between online marketing and prescriptions. This connection is especially significant today as the industry faces slowing Pharma pipelines and fewer new products requiring “introduction” (i.e. cheap CPMs) to the consumer health market.
So what potential solutions are ready to be tested with Pharma clients today? One solution is a “hybrid advertising model:” a CPM + CPA (lead generation plus direct measurable advertising) based model that substantially increases Pharma’s ROI while significantly reducing risk. Deep, unique, in-depth content will be required to make this model effective, and to place it at the heart of a tested product strategy.
And while most of today’s quizzes, calculators, and symptom checkers offer only a very basic level of interaction/personalization (if any), tomorrow’s products must deliver a far more interactive, in-depth, clear, and actionable experience for the consumer, while simultaneously gathering robust consumer data that offers Pharma new marketing opportunities that are more efficient, measurable, and actionable than any available online today.
This experience will require a platform of significant software/algorithms that goes well beyond the technology powering today’s less complex products/widgets. During my early days at WebMD, then-CEO Jeff Arnold spoke of our mission as a “golden triangle”—the unification of information between consumers, physicians, and payors.
This dream is still unfulfilled, but I believe that the new golden triangle in online health has a different mission nevertheless—the unification of consumers, products/content, and advertisers.
Until the market is able to create new and innovative solutions to close this triangle, thereby increasing Pharma ROI, we will be unable to sustain and increase the trust of health sector advertisers in online health advertising. More importantly, we will continue to be unable to achieve a much larger objective—convincing Pharma to vastly increase their overall ad budget allocation to online health advertising.
Disclosure: I worked at WebMD for 7 years but left there two years ago to start my own firm, Q. Wild & Co. Today I have no association with WebMD or any other publicly traded company dealing in online health.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
TraderMark
-
2
Don Dion
-
3
Cliff Wachtel
-
4
Mike Havrilla
-
5
James Quinn
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 11 comments:
Interesting take. Pharma as the golden goose of ad spend does seem to be a losing proposition in the mid-term, as sales/marketing dollars drop with brands going generic and increasing infighting between branded me-toos/2nd generation products and generics in class.
Pharma profits are becoming increasingly clustered in specialty markets where mass marketing doesn't have the same bang for buck, and so disease vertical sites may make an interesting play.
As cost pressures move increasingly to consumers via tiered co-pays and other mechanisms to pressure brands, it would appear that many pharmacos will need to shift marketing spend to customer retention and brand differentiation strategies. To date, pharmacos have done a pretty poor job of having a real conversation about what their product does and engaging the consumer in a way that keeps them in compliance.
They've instead abdicated that responsibility to the same harried physicians who need to use their 6 minutes to sort through the next irrelevant question about a strangely named chemical they saw on TV (and isn't reimbursed for coordinating care).
I think we'll soon see smart drug spend moving from carpetbombing to targeted distribution in more engaging channels. Although engaging consumers in their health will require vehicles much more robust than mere publishing houses...
Thanks for your comments. And I agree, vertical sites that offer users more substantive, focused content are likely going to gain traction in the coming years as the general portals are unable to "be all things to all people".
And as you suggest, Pharma would be smart to understand how a smart, targeted spend in sites like these could impact their business, either via new scripts or for CRM/retention purposes.
Finally, I also concur (hope) that the more effective products/websites are more than mere publishing houses that are so prominent today.
Your article is interesting and makes some good points. ROI in the health space is difficult to measure but there are a few companies in the health space innovating and making interesting in roads into measuring ROI. Specifically in on line venues you mention that success will come from companies that use a hybrid model of CPA and CPM. That company already exists and has been very successful in the health space. Qualityhealth.com is a hybrid model and has filed a patent for a unique way to measure ROI in the health space by matching patients, who have been exposed to a pharma advertisement, with RX claims data in a HIPAA compliant manner. The information is invaluable to marketers and proves that in a hybrid model there is a return on investment when a patient is exposed to a clients brand.
I certainly think its possible to draw a connection between someone who at some point saw an online ad and their eventual arrival at the doctor's office, but I dont know if you can tie this outcome as close as you might in a more unique lead generation hybrid model. But hey, every little bit helps. And the larger point of my article isnt about what methods of innovation will work the best, but simply that in order to get Pharma to move we all must innovate more. And to the extent that Quality Health and others are doing that I tip my hat.
Let's face it, DTC generally is not the best driver of ROI. Every RX pharma brand still requires a prescription by a physician. Influencing a doctor, who sees hundreds of patients, is far more impactful than influencing the consumers one at a time.
Opportunities to influence physicians online include devices such as ePocrates, Medical associations, societies such as the AMA, AAFP, ACP, publishers such as Sage and Elsevier and others. These have been proven to work - and are generally the first tactic pharma should employ even before DTC.
R.J. Lewis
e-Healthcare Solution
Robert Kadar
CEO
Good Health Advertising
GoodHealthAdvertising....
Our proprietary technology enables targeted, profiled marketing that allows pharmas to reach their real market, physicians. iMedicor’s technology solution, coupled with it’s partnership with NaviNet, is a game changer. This disruptive technology will forever alter the status quo in profile marketing as it relates to the pharmaceutical industry
The Pharma industry’s marketing efforts are fragmented… their focus includes consumers and physicians as well as other, higher level healthcare providers. Madison Avenue is still thinking in 20th century terms - buy massive impressions in the hopes of hooking someone interested in buying your product. The approach is “shot-gun” based and it is costly.
Given today’s on-line marketing capabilities, this approach is passé. The important questions today are “how many targeted consumers” (in our case the consumer is a physician) can be reached by a message / content, and “how many of those targeted will react.”
Again, in our version of focused on-line pharma marketing, how many new prescriptions will be written that deliver better care to patients? The principle and logic represented in iMedicor’s ability to deliver the right message, to the right audience, will lead to proper use of the latest products and more prescriptions written. A successful proof-of-concept is an industry changing event. At this point we have the ability to redefine profiled Internet marketing once the initial business cases are established.
Content, delivered into the right hands, is the driving force behind increased ROI for pharma marketing (and possibly any on-line marketing to any target market). This content can now be delivered directly from pharmas, supported by peer review journals, clinical studies and other credible sources to eliminate the specter of bias marketing.
Content needs to be positioned as educational resources, not marketing hype. If you watch a commercial on TV regarding any drug, I often wonder why anyone would want to use the product after hearing all the disclaimers at the end of each commercial. On the other hand, physicians have told us that content, delivered to them directly by pharma reps, including the disclaimers is critical in keeping them informed, but pharmas have yet to make this transfer of knowledge to physicians efficiently and effectively.
An example of iMedicor’s initial pharma client dealing in pain medication:
• iMedicor targets 100,646 physicians and their practices that deal with pain management.
• iMedicor can get messages directly to physicians and their staff (i.e. the gatekeepers to physicians).
• iMedicor’s analytics, available through our partner NaviMedix, indicate that historically 92% of this universe will open the initial alert message .
• If the alert message is crafted properly, and delivered directly to those specifically involved in the subject area, logic tells us the majority will be motivated to retrieve our content.
• Once the content is obtained, they can order samples, set up a rep appointment, or ask higher level technical questions of the pharma company.
As stated in the article, advertising campaigns and on-line marketing portals are still trying to go a mile wide and an inch deep. iMedicor is positioned to go a foot wide and a mile deep, a profound and significant paradigm shift in pharma marketing.
Our story has two headlines. The first is our ability to respond to the Obama administrations’ call for a secure, interoperable health information infrastructure that will enable healthcare providers to become interconnected in a HIPAA compliant environment. The second is our ability, based on our in-depth reach into the market, to change and disrupt on-line profiled pharma marketing, and to produce the ROI that the Internet has thus far, failed to deliver.
Fred Zolla
CEO
iMedicor
For more information, please contact Aimee Whitelaw, 202.997.1114