Josh Wildstein has a really interesting analysis on the prospects for WebMD in the light of declining trust of pharma execs in the ROI of current sales/marketing 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 While that kind of thinking may be making its way into online health, it is outdated nevertheless.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)
My comment to the article:
Pharma as the golden goose of ad spend for online health 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…
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