How to get real ROI from advertising
Is your advertising the kind to cut or the kind to keep? Dr. Andree K. Bates reportsBy Mar 22, 2010 on
Is your advertising the kind to cut or the kind to keep? Dr. Andree K. Bates reports
There has never been greater call for Pharma marketers to spend wisely on brand advertising (and PR). Nevertheless, the agency that will best produce the goods may not be the one that first comes to mind. Do your evaluation metrics really give you what you need to know?
Weve all read the headlines. Weve all been infected with the economic anxiety that runs rampant today. 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.
The age of frugality
Thats the feeling spreading across the industry, and across the world, as companies scale back, reduce spending, and wait out the worst. Thats 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 managements lead but maintaining marketing plans and goals as much as possible. Its a delicate process, and one that has many marketing managers throwing their hands up in defeat.
Often, the first budget cut is advertising spend. Scarily, in fact, making this decision is wherein the problem lies. 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 a 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? How do you know if your advertising is the kind to cut or the kind to keep?
Building brand revenue
When an advertising agency embarks on an ad campaign with a pharma company, acclaim, accolades, and even awards may seem a reflection of a campaigns 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, thats what we believe. In reality, however, it isnt 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 $40 million on Rozerem ads, and the company reported $26 million in sales during the same period. At the time, Rozerem had less than 3% of the US market and, despite the ads, the sleep aid was barely making a dent in a $3.6 billion US market.
So why didnt 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 doesnt have to happen.
Making marketing magic
In todays pharma environment, marketers are tasked with making more with less. With slashed budgets and skeptical senior management, the funds available for marketing magic are few. But still were 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 thats so, why are we worried? Here are some of the issues.
The first of these problems is that many agencies are still focused on television advertising to the exclusion of other more relevant and growing media. This is particularly true of US agencies, where both ethical and OTC brand advertising is allowed. In fact, television audiences in the US are bypassing advertising, either by abandoning the TV itself (in favor of pay-per-view TV, video games, DVDs and the Web) or by skipping through ads on digital video recorders and TiVos. Even among those that watch TV and the advertisements, skepticism reigns. The power has shifted from producers to consumers, and viewers feel comfortable ignoring or doubting the messages they receive on TV.
Turning to the Web
Consumers are increasingly turning to the Web when it comes to product choices. According to Forrester Research, more than half of online consumers dont 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 growing 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, theyre missing out, ignoring a major sector of the audience, and thereby being unable to translate ads into sales.
Coinciding with their bias towards analog media, agencies often focus on the wrong measurements of success. They work towards ad recall and brand awareness, and many equate campaign success with an award on their shelves. A study of UK and US companies found that 72% of the survey respondents measured advertising return. However, in the world of pharma marketing, this wont cut it. We need figures that justify our investment, and are required to deliver 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 dont match up.
Todays 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, and 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.
With these shortcomings in mind, its no wonder that pharma marketers can run into trouble with their advertising campaigns. Consider how we choose agencies:
By reputation and awards
Awards equal massive sales right? Thats our assumption. However, as weve discussed, the advertising agencys focus that brings about award-winning ads may not be product sales focused. Also, the criteria for awards are based on impact, originality and other factors, indicating that advertising agency peers liked the ad. Awards dont take into account viewer response, target audience reach, or sales. Winning awards for advertising does not necessarily mean the agency will produce increased prescribing or increased financial return for your pharma brand, and 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. Thats the perception. However, a small agency can produce just as good, if not better, results. When it comes to creating advertising that increases prescribing, size is irrelevant.
An agencys 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 doesnt necessarily mean a boosting of sales. Even if an ad is truly revolutionary, prescriptions may stay static.
In short (and in general), the best agencies for pharma marketers exhibit more vision. When an agency has a firm sales orientation, explicitly intending to increase your prescriber rate or act on your other needs, thats an agency to partner with. When an agency has a track record of relationship building and of acknowledging that sales are an ongoing process, and branding a matter of building trust, thats an agency to partner with. When an agency demonstrates no media bias, giving strategy and plans with balanced recommendations, thats an agency to partner with.
And finally, when an agency focuses on brand awareness in terms of loyaltyi.e., engaging with customers so that they routinely and automatically return to your company to satisfy their needs (resulting in increased prescriptions and profits)thats an agency to partner with.
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; i.e., does their advertising grow sales?
Yes, you might be able to uncover a 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. In addition, the effort involved for an exhaustive, effective analysis is often beyond most pharma marketers time constraints. It also is a highly uncertain endeavor, one based on little hard information.
A simpler method exists. The Eularis 94.8 Advertising Analytics System examines the financial impact of the advertising on the brands 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, ones that use all the right tactics and, most importantly, produce real financial results based on real mathematical analysis.
For more information on this topic, please contact the author, Dr. Andree K. Bates, at Eularis
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