We’ve all read the headlines. We’ve all been infected with the economic anxiety that runs rampant today. But of course, the pharmaceutical industry has been suffering for years, falling under the weight of stagnant returns, bloated bureaucracy and increasing competition. Legal and regulatory agencies are getting stricter, and have pharma practices sighted and targeted.
If there is ever a time to be frugal, now is it. That’s the feeling spreading across the industry, and across the world, as companies scale back, reduce spending, and wait out the worst.
That’s when the orders to cut budgets come down from on high, and marketing managers panic, becoming stressed and frustrated. CMOs have to make tough and quick decisions, following management’s lead but maintaining marketing plans and goals as much as possible. It’s a delicate process, and one that has many marketing managers throwing their hands up in defeat.
Cut the ad spend?
Often, the first budget cut is advertising spend. But in fact, making this decision is where lies the problem. Of course, an advertising campaign seriously has to earn its keep. The fact of the matter is – advertising works to boost revenue; but only if the strategy is well planned and executed.
Without concerted effort, without devoting time, resources and people to creating more drugs, developing new markets, and strengthening companies against competition, our major problems will remain. So how can pharma be frugal and cut in the right places, but still build brand revenue, market share and profit?
So how do you know if your advertising is the kind to cut or the kind to keep?
Do accolades say it all?
When an advertising agency embarks on an ad campaign with a pharma company, acclaim, accolades and even awards may seem a reflection of a campaign’s success. Surely, ads that are getting attention suggest the pharma client is working with the best out there, and sales will automatically fall into place. At least that’s what we believe. In reality, however, it isn’t necessarily so. Sometimes, despite glowing reviews and positive feedback, sales and profits stagnate.
A prime example is the 2007 US Rozerem campaign, which features a sleepless man (Abraham Lincoln) and a talking beaver. TNS Media Intelligence figures showed that in the first quarter of 2007 Takeda spent more than $40m on Rozerem ads. The company reported $26m in sales during the same period. At the time Rozerem had less than 3 per cent of the US market, and despite the ads, the sleep aid is barely making a dent in a $3.6bn US market.
So why didn’t the significant spend on the Rozerem campaign create a bigger market share? What went wrong? The advertising agency that put it together won numerous awards for the campaign. It tested well in focus groups and in market research. Why would the marketers not go with it, given the evidence they had that they were in good hands? What happened, in fact, is a common enough problem – and one that doesn’t have to happen.
Blind Faith… Why It’s Misguided
In today’s pharma environment, marketers are tasked with making more with less. With slashed budgets and sceptical senior management, the funds available for marketing magic are few. But still we’re expected to make that magic, to turn products into sales, to boost revenue and shareholder value.
Logically, we turn to advertising agencies to help. We sink the funds we do have into contracts with these agencies, confident they have the knowledge and expertise to deliver sales and value. Agencies are our hope for creating campaigns that boost business.
But major problems exist with advertising agencies; problems that pharma marketers are only now starting to discover. Yes, advertising agencies can produce great campaigns that address what is needed to grow brand revenue, market share and profit. If that’s so, why then are we worried? Here are some of the issues.
Outdated media mix
The first of these problems is that many agencies are still focused on television advertising, at the exclusion of other more relevant and growing media. This is especially true of the US where both ethical and OTC brand advertising is allowed.
In fact, television audiences are bypassing advertising, either by abandoning the TV in favour of pay-per-view TV, video games, DVDs and the internet, or by skipping through ads on digital video recorders and TiVos. Even among those who watch TV and the advertisements, scepticism reigns. The power has shifted from producers to consumers, and viewers feel comfortable ignoring or doubting the messages they receive on TV.
Consumers are increasingly turning to the web when it comes to product choices. According to Forrester Research, more than half of online consumers don’t trust brand messaging and turn to the web to research product purchases. The good news is that when online consumers in the US find a product they trust, they are more than willing to agree to continued contact. They sign up for email lists and product updates, representing a ready and willing audience for powerful messaging.
With its gowing importance as a tool to reach consumers, internet spending is up, but many agencies still fumble and fret when it comes to effective internet messaging. Many of their tactics are geared towards consumers who sit back and soak it up, rather than actively seek out information and grant permission for additional marketing. As such, they’re missing out, ignoring a major sector of the audience, and unable to translate ads into sales.
Metrics to determine return
Coinciding with their bias towards analog media, agencies often focus on the wrong measurements of success. As we can see in Figure 1, which shows the evaluation metrics mainly used by large UK companies for measuring the effectiveness of their advertising and its return on investment, they work towards ‘ad recall’ and ‘brand awareness’. A separate study of UK and US companies found that 72 per cent of the respondents measured advertising return.
Interestingly, none of these measures is actually measuring bottom line return; they are all activity tracking. But in the world of pharma marketing, this won’t cut it. We need figures that justify our investment, and will determine how well a campaign delivers in terms of sales as a result of marketing messaging. The focus of the advertising agency and the pharma marketer are not necessarily mutually exclusive, but the results often don’t match up.
Lack of relationship marketing
Today’s sales transactions are not finite, simple events. Instead, they begin a pattern of activity, a chain of connection, in which a relationship is formed. Consumers and sellers, in a successful exchange, will be coming back together many times in the future for additional interaction.
They will do so because consumers are getting their needs fulfilled from sellers trusted for offering the best products for fair value. Agencies can still stumble when it comes to this idea.
It’s not who you know
With these shortcomings in mind, it’s no wonder that pharma marketers can run into trouble with their advertising campaigns. Let’s consider how we choose agencies:
By reputation
Awards equal massive sales. Right? That’s our assumption. But as we’ve discussed, the advertising agency’s focus that brings about award-winning ads may not be product sales-focused. Plus, the criteria for awards may be based on impact, originality, and other factors, which may simply indicate that advertising agency peers liked the ad.
Awards don’t take into account viewer response, target audience reach, or sales. Winning awards for advertising does not necessarily mean the agency will produce increased prescribing, nor increased financial return for your pharma brand. Countless examples can support that this is so.
By size and billings
Fact or fiction? A big agency means expertise, experience, savvy marketing, and everything a pharma marketer could seek. Well, that’s often the perception. But a small agency can produce just as good, if not better, results. When it comes to creating advertising that increases prescribing, size is irrelevant.
By creativity
An agency’s creativity can be truly unique and amazingly awe-inspiring, making you giddy with expectation. But remember (as we saw with the Rozerem campaign in the US): creativity doesn’t necessarily mean it is sales-boosting. Even if an ad is truly revolutionary, prescriptions may stay static.
Better Agency Selection
In short (and in general), the best agencies for pharma marketers exhibit more vision. When agencies have a firm sales orientation, explicitly intending to increase your prescriber rate or act on your other needs, that’s an agency to partner with.
When an agency has a track record of relationship building and of recognising that increasing sales is an ongoing process and branding a matter of building trust, that’s an agency to partner with.
When an agency demonstrates no media bias, giving strategy and plans with balanced recommendations, that’s an agency to partner with. And finally, when an agency focuses on brand awareness in terms of loyalty, ie, engaging with customers so that they routinely and automatically return to your company to satisfy their needs (resulting in increased prescriptions and profits); that’s an agency to partner with.
How can you find this agency?
By now you know what kind of agency may not be appropriate for you and your needs. You also know the mission and tactics of an agency that will fit with your goals, including those of securing an increase in prescribers and boosting profits. This group of talented individuals can be found with a little diligence. Sure, you can conduct your own research but what you find will normally be about billings, awards and the like – not what you need to know, ie, does their advertising grow sales?
Yes, you might be able to uncover this detailed analysis of the products they market and the results. Usually, however, the result will be something measured as response per thousand, ad awareness, ad recall, share of voice, or intent to prescribe.
None of these are adequate to let you really know the true financial impact of the advertising itself. And, the effort involved for an exhaustive, effective analysis is often beyond most pharma marketers’ time and financial constraints. It is also a highly uncertain endeavour, one based on little hard information.
A Simpler Way
A simpler method exists. The 94.8 advertising analytics system examines the financial impact of the advertising on the brand’s market share, in combination with advertising spend. This does not need control groups and study groups to be set up prior to beginning but does need the advertising to be out in the field for around six weeks prior to measurement. By using this approach, marketers and advertising agencies can accurately determine which advertising campaigns are consistently producing outstanding financial results for which brands – and which are not.
Using this system allows pharma marketers to choose agencies that exhibit all the right qualities; that use all the right tactics, and, most importantly, produce real financial results based on real mathematical analysis.
Advertising agencies are also realising that by using this system themselves they can see what components of their campaigns are letting them down and which are creating results. This then allows them to make adjustments and prove to their pharma clients exactly how much their advertising is adding to the brand’s bottom line. It becomes win:win for both sides.
If an agency is consistently creating campaigns that these kind of systems can prove are providing a pharmaceutical brand with a strong financial gain (sometimes we see advertising impact as significantly more profit-producing than salesforce results), then why would you cut the budget from the activity that is creating your profit?
Measuring PR return FOR A PHARMA BRAND
Let’s not leave PR out of this discussion. The extent of PR’s influence on pharmaceutical marketing programmes is so great that ignoring it would be a huge error. Despite the fact that the impact of PR differs, depending on brand category and brand, experience shows that there is a correlation between PR activity and the brand’s market share.
However, although marketers are convinced of the impact of PR, many have an inability to explain which aspects of it are working and how to separate out the different PR components to measure return on each.
Traditionally, there were measures such as number of placements, attendance at events, press clippings measurement, column inches measurement, impressions’ measurement, message frequency and positive or negative categorisations.
Then PR measurement moved on, fuelled by the RoI phenomenon, and the emphasis shifted towards having a distilled score to represent PR’s unique contribution within the mix, sometimes called a PR Gross Rating Point (GRP). A GRP was a distilled measure for planning and evaluating an advertising investment. But clearly this was not good enough, so the Weighted Impact Score was introduced. Again, this seemed lacking.
Today, using analytics, measuring the RoI of PR has advanced considerably. PR is now not only measurable in terms of how much impact it is having on market share for the brand itself but the components of PR are now individually measurable too, so we can see which PR programmes have had the most impact on market share and how they can be tweaked to increase performance.
Examples of questions that might be asked about PR activities include:
• How much overall market share is PR providing from specific target audiences?
• How much return is being provided by the different PR activities (eg, journal write-ups versus events, versus social investments, versus press releases, etc)?
• How could the overall PR mix be tweaked to gain an even greater return, given what is currently happening in the competitor mix and market environment?
• How should this mix within PR be allocated for maximum bottom-line gain?
• If I invest in these PR programmes, what is the likely return?
• What is the relationship between product branding and corporate branding?
• Which PR firms are at the top of the league table in terms of providing maximum market share impact for their client brands?
The future
By using analytics, you can still put trust in an advertising/PR/integrated agency, but in the knowledge that your goals and needs will be met.
By understanding the problems with many agencies, and knowing the real qualities to seek, you can separate the flashy agencies from the real performers. And with a little expert analysis, you can find the ideal agency and the ideal campaign with minimal stress and plenty of time left over, and a growing brand market share to boot… and one that can be directly attributed to the advertising campaign.