A Day Late and a Dollar Short

May 01, 2009
By Pharmaceutical Executive Editors

The trend is undeniable: ever larger portions of media budgets are moving to the online channel. This movement is now accelerating rapidly, as marketers look for greater efficiencies in a challenging economic environment. The implications for every business category are vast, but no industry is in a riskier position when it comes to online media than pharma.

Lee Slovitt
For a variety of reasons (regulatory review time lines, uncertain approval dates, lack of familiarity with the channel, innate industry conservatism), pharma buyers tend to be slow to make online advertising commitments. As a result, when they finally pull the trigger they often find the best inventory gone.

That's a problem. Quality online advertising real estate is in short supply, especially premium placements on marquee destinations such as MSN, Yahoo!, MayoClinic, and WebMD. By being slow to buy, pharma companies often end up with remnant inventory that fails to perform. Small wonder that a 2008 eMarketer study found that only 4.1 percent of pharma ad dollars went to the digital channel, compared with an average of 7.3 percent in other industries.

But with Internet usage now on par with TV viewership, according to Jupiter Research, it's essential for pharma to be competitive in the online market. In order for pharma marketers to compete effectively, we need to fundamentally shift the way our online campaigns are planned and purchased. We need to change our approach to the planning continuum, from start (strategy) to finish (regulatory approval). And we need to venture into new territories—such as social media and widgets—to have any chance of keeping up.

A Fresh Approach to Online Media

No other industry is so plagued by product launch-date uncertainty. The result: Pharma is at a buying disadvantage from the get-go. Compounding the problem is the fact that we can never be sure how these shifting timetables will affect our media budgets, so we don't know what size of buys to commit to the strategy and planning of our online campaigns. There are no simple answers here. But by being more innovative in the types of ads we use and how we design our planning schedules, pharma can help level the playing field.

One simple way to ensure the success of a campaign that may be forced to use less-than-ideal placements is to take advantage of hybrid pricing. This technique lowers risk by structuring deals around pay-for-performance media, whereby we pay for user interactions or completed registrations, rather than simply buying impressions and hoping for the best. One vendor, Videoegg, facilitates this model by allowing advertisers to pay only upon user engagement.

Another strategic solution lies in breaking the typical planning cycle. Most companies plan media campaigns from January through December. As a result, if regulatory realities require you to plan later than say, October, there is typically very little premium inventory available early in the next calendar year. To address this problem, consider planning your media campaigns from March through February. Because underperforming sites and placements are cut from plans in the early stages, by Q2 inventory tends to free up as buyers optimize their plans.

Though it might seem counterintuitive to purchase poorly performing inventory, a different message, offer, or creative execution might perform well in the same online real estate. Just because a placement or site underperforms for one brand doesn't mean it will underperform for yours.

Planning media campaign launches during Q2 not only allows you to pick up on the cheap inventory that's been dropped by other advertisers, but also gives you the opportunity to test those premium placements in Q1 of the following year—then you'll be ahead of next year's typical planning cycle.

Bottom line: Understanding the planning habits of others—particularly your competitors—is crucial to your own planning success. Pharma agencies must be more dynamic in their strategy than their non-pharma counterparts, and look to shift their planning cycles accordingly.

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