Pharma could be one lucky industry. A new age in global agency networking has begun, one in which individual talents and agencies are striving to join seamlessly in an internationally organized, fluid-yet logical-structure. One in which competition is pass-collaboration is standard, and agency holding companies offer pharma clients the "best of field" in networked services, from contract research to consumer advertising. Three holding companies, ubiquitous in the industry-WPP, Interpublic, and Omnicom-dwarf smaller ones such as Grey, Publicis, and Bcom3. And they all paint the same fanciful picture of their roles in pharma's future as a global industry, yet none offers anything different from the rest, with one exception: Omnicom's DAS.
DAS stands for Diversified Agency Services, the recently restructured division of Omnicom Group that houses its marketing services and specialty communications agencies. DAS' holdings in healthcare marketing include well-heeled pharma ad shops such as Corbett Healthcare Group and Lyons Lavey Nickel Swift (LLNS) and public relations agencies Ketchum, Porter Novelli, and Fleishman-Hillard. WPP and Interpublic Group cover similar areas in their marketing specialty divisions-CommonHealth and Advanced Marketing Services (AMS), respectively. But Omnicom stands out because of its new pharma global brand lifecycle management strategy rooted in global regulatory developments, individual talent, and personal accountability. Its strategy may be innovative enough to sway other companies to model their healthcare networks after it, adding fuel to the burning question, "Can independent agencies survive?"
Today, DAS is headed by chairman and CEO Tom Harrison, one of the founders of medical ad agency Harrison & Star. In an exclusive interview with Pharmaceutical Executive, he and DAS global healthcare director Rob Dhoble share an ambitious vision of DAS' future, of its healthcare communications companies, and of the pharma clients they serve. What makes DAS different? It's not so much what they do, or even how they do it. It's why.
"We are putting together electronic submissions right now that regulating authorities really like because they can get into them very quickly," says Tom McKillop, CEO of AstraZeneca. "Submissions are becoming more harmonized across the world as a result of the International Harmonization Program. Ultimately, the common technical document will, in fact, be just that-a single core document. But you have to be careful to still tailor things to individual regulators. It's not 100 percent."
That concern, echoed by other pharma executives and industry analysts, doesn't deter DAS from building its healthcare network structure and client counsel around "regulatory harmonization." That's the concept inspired largely by the World Health Organization's push to raise the standards of medical care in developing countries through clinical studies. DAS' Dhoble explains that the CTD differs from the new drug application (NDA) because it requires more double-checking that a product works with all populations around the world.
The impact on pharma R&D and marketing promises to be tremendous: Theoretically, companies will be able to file one streamlined application instead of separate documents for approval in each market. The data collected to satisfy those markets' regulatory bodies should prove to be appropriate for marketing purposes as well. Ostensibly, widespread CTD adoption and use could mean that pharma company marketing and sales teams in France or Japan won't have to make do with US clinical trial data in their professional detail materials and, eventually, their consumer marketing campaigns.
"The CTD is a lot more of a market composite," Dhoble says. "Our job is to help figure out what a CTD should look like for our clients' products and what kinds of studies we should have that will fit the way medicine is practiced in Indonesia, Australia, Japan, Europe, and the United States."
Capturing the World Market Harrison describes DAS expertise as representing clients' interests on a global level while managing them locally in the United States, Europe, and Japan. He asks, "Do clients care about global capabilities?," then answers, "Yes, but are their companies global? I'm not sure. Clients want their advertising partners to look, feel, and be operational around the world, or in as many key major local markets as possible. In fact, many new business presentations that we've been involved with are billed as global, but when you get down to it, they're really US presentations with local representation, maybe in the United Kingdom or in Germany, Japan, or France. But the number of truly global pharma brands is really small. How many have the same image, the same tag line, the same creative around the world? Zero."
DAS isn't alone in its coverage of global markets. WPP's CommonHealth division operates agencies in European, Asian, and other markets, and so does Interpublic's AMS, which also recently restructured. The September 2001 merger of BSMG and Weber Shandwick gave the new company boasting rights to the world's largest public relations agency, Weber Shandwick Worldwide (WSW).
"Healthcare will be the driv-ing engine of the economy for at least the next 15-20 years, much the way technology was for the past 20 years," says Larry Weber, chairman and CEO of AMS. In addition to managing AMS, Weber is charged with Interpublic's overall growth. He counts healthcare as a major expansion area for the company in terms of acquiring new companies, investing in start-ups, and building revenue streams beyond the advertising/media buying standbys. That, he says, includes services that get agencies involved earlier in the pharma product development process. Healthcare investments include SAI, a data-management software company, and NFO, a market research organization.
"We're getting very close to hiring 'marketing integrators,' people who would help coordinate agency collaborations for pharma clients across advertising, PR, digital, and research," explains Weber. "They don't necessarily come out of advertising. They may come from any professional service. Traditional marketing has only advertising or PR global managers."
Left Hand, Meet Right Hand It's no secret that many pharma companies calling themselves "global" don't always do a good job of managing global communications. In fact, many have problems just getting their internal communications working so employees at market company affiliates know what's going on at headquarters or at sites for a multicenter clinical trial. Simple things can become impossible when accountability is shared among several individuals who work in different corporate divisions, in different countries, or on different continents.
Interviews with some of DAS' pharma clients reveal a serious problem with staff continuity in the industry, in which individuals either leave or are promoted to different departments. Solving that problem is part of the rationale behind DAS' "global lifecycle management" structure.
A single person at a DAS agency is appointed jointly by the client and DAS management to be accountable for the entire effort throughout the work process. The "lifecycle manager" is responsible for ensuring that a recommendation coming from any group-on the client or agency side-represents the assignment by a client's signed "global charter," which represents the big picture, the full assignment that the client entrusted to DAS. Ultimately, the lifecycle manager is charged with ensuring that everyone knows what's happening, whether they talk to each other or not.
DAS bases that unusual leadership structure on trends defined by the flow of requests for proposals going to medical advertising agencies Accel! Healthcare and Harrison & Star. Executives at those agencies say they noticed an increase in explicit requests for global capabilities in 2001. DAS also uses lessons learned from other Omnicom agencies such as DDB, TBWA, and BBDO-with clients such as Sony Playstation, Absolut Vodka, and Nissan-who used the "global charter" method to set detailed rules of engagement.
"Who's making decisions about agencies?" Dhoble asks. "The heads of global marketing. And as the stakes get higher, they can't keep a 'pet' agency anymore. They're asking for agencies with global credentials, saying, 'I need more scientists in marketing and more marketing in science.' R&D people are being held accountable for market performance like never before."
At the same time, clients are holding agencies accountable for their collaborative performance. Jeff Winton spent half of his career at LLNS and other Omnicom healthcare agencies. Now, as vice-president of global public relations for Pharmacia, Winton thinks that agencies owned by holding companies are still focused on their own profits and that, only if there is a shift in compensation, will they have an incentive to work with others in the network.
"It behooves clients to push cross-fertilization among network groups," says Winton, "because it's clear that most of the advantages offered by networks go largely untapped. Often, the PR folks in those networks aren't even aware of who their counterparts are in medical education or DTC advertising."
Winton says Pharmacia insists that everyone on its agency teams assigned to major brands meet on site once a month, to ensure that everyone is on the same page with strategy and tactics. "We shouldn't have to do that," he says. "Especially if agencies are part of a major holding company. They should be doing it for us."
In an ideal world, Winton says he would prefer to consolidate all Pharmacia's business into one agency, rewarding it for a job well done. "But with all the mergers and acquisitions, there's a conflict of interest every time you turn around. We'd love to have top talent, but sometimes, that's not possible."
The Future of Free Radicals It's still the client's choice whether to partner with independent agencies or to tap into giant global networks. That makes predicting the future of independent agencies more difficult, especially considering the client rosters of agencies such as Gerbig, Snell/Weishemer and Associates (GSW) and Ribotsky Worldwide, which include many of the same top ten pharma companies as their globally networked competitors.
Troy Mastin, a William Blair & Company analyst, who gave Omnicom a "buy" rating in December, 2001, says, "Categorically, clients are looking where they can get the best creative development, whether it's in a global network or not. But they do see advantages to partnering with global agencies in terms of financial security, corporate stability, and a volume discount that they may get when they pool their millions among agencies that fall under one holding company."
When posed the question, 'Can independent agencies survive?' Tom Harrison's response is less equivocal and more controversial than Mastin's. He says, "I think all independent companies eventually will be part of a holding company." Then, commenting on the tremendous growth and visibility of GSW, he adds, "If you look at their client roster, the bulk of that is Eli Lilly. So, to sustain their position and their model, they'll have to be acquired by a holding company, whether it's ours or WPP or whomever. But eventually they'll have to be acquired."
That may explain why GSW and its affiliates-ad agency Palio Communications, interactive agency Blue Diesel, market researcher Health Process Management, medical education company S. G. Madison, and marketing consultancy CHS-formed inChord, a United States-based network with representation in the United Kingdom and an affiliate in Australia.
Responding to Harrison's assessment, Blane Walter, inChord's chairman and CEO says, "Eli Lilly may be our most important client, making up 25-30 percent of the organization, but we're experiencing growth with them and with others, and we're adding new clients. Clients make decisions based on ideas and people, whether you're independently owned or part of a network. Chemistry and structure have to be similar to their own organization. The giant global network idea looks great on paper, but it's largely been an empty promise. Some of the big agencies don't know an SSRI from an ACE inhibitor."
Walter suggests that the larger independent agencies account for much of the growth in the industry, when other agencies are closing their doors. He uses inChord as an example, citing a growth rate of 40 percent a year for the past five year and projecting 30 percent growth in 2002.
Although he agrees that agencies' biggest challenge is helping pharma companies coalesce global efforts with their market company affiliates, he says, "Independence is an asset, not a liability. It affords a greater degree of flexibility in recruiting talent and keeping it. There are no pay grades, no rigid structures. They're speedy and able to react to minute-by-minute market changes. If I were part of a large network, I would just make sure that I was in tune and contemporary with brand managers."
The conventional wisdom about global agency networking may also explain why Ken Ribotsky, president of Ribotsky Worldwide, recently announced that his independent agency joined the IN Network, which describes itself as "an international network of independent communications agencies with members located on five continents and a combined agency staff of more than 2,000 employees."
"The big guys like to talk about their resources, but they don't really have too much more to offer than we do. They might have a branch office in Timbuktu somewhere, but does that branch office have the talent that we offer, partnering with other independent agencies that are tops in their field?
"We even have the big guys coming to us and trying to sell us their services. I had a large shop call me the other day about their media strategy and buying department, selling that as a stand-alone service. So I can get that kind of media talent anywhere I want, and I can evaluate who I think is the most talented. I can evaluate them as a client evaluates an agency."
According to Ribotsky, clients with smaller product accounts appreciate the attention of small- to mid-size agencies, because they are concerned that they can't attract the top talent of a giant agency that handles more big-ticket accounts.
"There will always be a place in advertising for independent agencies that aren't part of those large networks," says Stuart Elliott, advertising columnist for the New York Times. "It's the nature of the business, unlike the automotive industry, where it's almost impossible for a small company to survive outside the orbit of Detroit or Japan. In this business, an agency could be two guys in a room with an idea but, on the other hand, Omnicom has done a very good job with the way it structured DAS."
Time will tell.