I thought this would be simple. As a responsible pharmaceutical executive, you naturally want to know which marketing activities are most effective for selling your product, right? And, it seems logical to conclude, if you had that data, it would guide your promotional investment decisions. I wasn't even that young at the time I began trying to solve the pharma marketing ROI riddle—but I was naïve.
DTC: the early years
This was more than 10 years ago—the early 2000s—and as the head of a digital marketing agency, I fixated on one of the central questions facing a marketer in the pharma world, a world where billions of dollars in revenue were at stake, with hundreds of millions being spent every year on DTC advertising. In such a world, it's not a small thing to know what marketing techniques actually work best at driving sales. In fact, I thought, if a marketer could crack this code, she would significantly increase the success of her brand, and advance her own career.
So I started out by doing what my academically-oriented mind told me was the logical first step: review the existing research on DTC ROI to see what was known about the effectiveness of those expensive "old world" tactics like television and print.
I was pretty sure the data would confirm what I felt in my mind and gut: that for healthcare marketing, digital is inherently more efficient and effective since people are actively looking for health information and therefore are much easier to target. Moreover, in digital there are many opportunities along the patient journey to intercept and add knowledge at key decision points. At the same time, the traditional mass media (television, magazines, and newspapers) were becoming less and less effective: consumers were increasingly using DVRs and skipping 80 percent of commercials; readership of print publications was dropping precipitously every year. It was rapidly becoming a digital world and the core qualities of digital—the lean-forward, information-seeking nature of the online experience (which was particularly well-suited for people concerned about health issues), along with the decline of the other media—made an overwhelming case in favor of digital.
I would come to find that I was right about nearly all these things. But I would also find that it didn't much matter that I was right. Figuring out why this was the case would turn out to be the much greater challenge.
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What the data said
So about those academic papers. In September 2002, Richard Wittink from the Yale School of Management published a study, "Analysis of ROI for Pharmaceutical Promotion" (ARPP). An update to another study done in 1999 by Scott Neslin of Dartmouth, ARPP examined major promotional activities by the pharma industry, from 1994-2000, including the "new" DTC. (In the early 1990s, the FDA had loosened regulations to allow DTC advertising.) Arguably the first DTC TV commercial was a 60 second ad for Rogaine, a treatment for male pattern baldness, which first aired in 1994, marking the beginning of "DTC" as we know it now, and the starting point for Wittink's study. Wittink examined a total of 392 brands, each with a minimum revenue of $25 million; 63 brands had more than $500 million in revenue. In this period, DTC advertising grew at an astonishing rate of 44 percent a year.
Despite the house-on-fire growth and enormous spend levels (quite a few brands were spending more than $100 million annually), the ARPP study showed barely any positive ROI for DTC. To quote Wittink's paper: "For the 192 brands with intermediate revenues ($100-$500 million) DTC...return is close to zero." For larger brands (revenue above $500 million) ROI for DTC was just barely positive—.02." So for every dollar spent on DTC for a big brand from 1994-2000, you got back a measly two cents. If you had a medium size brand, you were basically firing up thousand dollar bills with your Bic cigarette lighter.
Granted, this was a long time ago. Other studies were done later, some of which showed an ROI for DTC of between 1.5-2.0 to 1. It should be noted that some of these other studies counted revenue over a three-year period post-campaign, which made the numbers look a whole lot better.
Nevertheless I decided to be generous and use the higher estimates as the benchmark. That meant that for our digital efforts to prove themselves "superior" to traditional DTC, we had to show better than a 2:1 ROI.
The path seemed clear, but it turned out the road was strewn with obstacles. First, no one was even measuring digital as a channel back then. We had a chicken/egg problem. In order for digital spend to show up using the standard measurement models, there needed to be much greater spend, but in order to justify greater spend, we needed to prove it could work. You see the problem.
Just about this time, Paul Ivans, a young Cornell-educated chemist with a big dose of computer science and business experience, tried to solve this problem. Over the next 10 years, Paul and his company, Evolution Road, would have arguably more influence on the evolution of digital marketing measurement in pharma than any other single entity.
"The pharma marketing and sales model was broken a decade ago," recalled Ivans. "I saw that the digital wave was coming, and there needed to be a better way for patients and physicians to get information, make choices and create better outcomes for patients. In order to change the model in a significant way, I concluded that we needed better ways to measure ROI."
So Ivans set to work on an approach to measuring the effect of digital initiatives that would break the industry out of its Catch 22 predicament. Along the way, he innovated new methodologies with the help of a variety of partners. First, around 2003, he pioneered a technique called PLA (patient longitudinal analysis), also sometimes referred to as PBM Matchback. Whatever the name, the central idea was this: in cases where there was a pharma marketing campaign without database name capture, (i.e., most digital campaigns) these techniques could connect digital marketing activities to actual script lift, using de-identified patient data so that activity could be matched without violating patient privacy.
"At the time, I thought this would be the best thing in the world," admitted Ivans. But, as it turned out, for a number of technical reasons, "the analytics groups at major pharma companies had issues with the PLA approach." As he summarizes the problem: "The Achilles heel is getting enough people's names and addresses, and that's historically been hard to do. Sample sizes are the rate-limiting factor in PLA." However, Ivans notes that recently some players have been developing approaches to address this fundamental issue.
Survey says: success
The Evolution Road methodologies (both PLA and survey) began to be used by many companies and agencies, including my own, and it revealed some pretty startling results. While virtually no pharma company is willing to share results publicly, we consistently saw campaigns achieve ROIs ranging from 4:1 on the low end, up into the mid-teens.
At the same time, using similar survey techniques, our clients also saw ROI for traditional channels showing results that ranged from barely positive to decidedly negative. Traditional DTC techniques seemed to work well only for new brands with large budgets that needed to build rapid awareness. Haren Ghosh, Chief Analytics Officer at Symphony Advanced Media, is another leading player in the advertising effectiveness measurement field, with a long history wrestling with the same problems encountered by Paul Ivans. "The strength of TV is building brand awareness and influencing people to do research online about the brand, said Ghosh. "But in lower funnel metrics (i.e., moving past awareness to consideration and trial), online will have higher ROI than TV."
The story was compelling: except for large brands looking to build mass awareness at launch, the ROI of digital techniques was clearly superior (and even with large launch brands, digital was proving to be a very effective complement to TV). Yet budget decisions didn't seem to be much affected by this pretty indisputable evidence. According to Ghosh, year after year, up to the present day in fact, TV consumed some 70 to 90 percent of DTC budgets. In general, online spend accounts for a single digit sliver of those budgets.
So why would rational marketers looking to maximize returns for their brands refuse to change their investment behavior in the face of this evidence?
To get to the bottom of what turned out to be the central question—not whether digital returned higher ROI, but why people seemed reluctant to believe it—I turned to other veterans of the ROI wars. Hans Sjoquist, president of Global Channel Marketing Solutions, has spent 32 years in the pharma industry, including stints at Pharmacia, Novartis, and Sanofi. In fact, he worked on Rogaine, that DTC pioneer back in the 1990s. Sjoquist, like Paul Ivans, was also trained as a scientist, and had been likewise frustrated by the lack of sophisticated measurement for promotional spend. "No one could ever tell me what the TV dollars gave me back. If you spent $50 million sales went up, but no one could say exactly why...I saw the Internet as an opportunity to become more metrics-oriented, more intelligent in terms of how we reach out to our customers."
Back in the late 1990s and early 2000s, "ROI was not a big thing for pharma marketers," recalled Sjoquist. "Most marketers were measured on launching things on time and on budget. And budgets were based on 10 percent plus or minus last year's budget. Not very scientific."
Sjoquist was a hands-on client using many of the new methodologies, including work done by Ivans and Ghosh. "When Paul Ivans came up with proof that if you got more than three page views on a website you saw a higher conversion rate," recalls Sjoquist, "that was the first attempt to optimize based on a more stringent Rx change metric."
The quest: from merely measuring to improving in real time
Sjoquist went on to experiment with other methodologies, and around 2005 became quite impressed with a new approach developed by Crossix, a startup founded by Asaf Evenhaim, focused on maximizing the effectiveness of marketing campaign budgets. "The comScore/Evolution Road methodology was useful, but we struggled with measuring lead generation program. That's where Crossix came in."
According to Evenhaim, "We have a fundamentally different way of looking at ROI. "For us, it's not so much about measuring ROI, but improving ROI in real time."
"Crossix said I can get an early read on tendency to convert," said Sjoquist. "Over time conversion rate became more and more accurate. It turned some patient relationship marketing programs from strongly negative to strongly positive. Everyone had been buying the cheapest leads, but they never converted. By applying this approach we could buy based on leads that converted. And that turned the whole thing around."
What if too good to be true—is true?
Sjoquist was experiencing some real, measurable success for major brands. Yet he too was baffled at the industry's resistance to changing budget allocations based on clear evidence—evidence blessed by their own marketing analytics departments. "I think there is a constant suspicion of new channels in the pharma industry," said Sjoquist. "And there is also this human tendency to not believe something if it sounds too good to be true."
"If sales force does 1.5 or 2.0, they are happy," he continued. "If something comes in at 4:1 or 8:1 they find it hard to believe and it shows up the other stuff."
Symphony's Ghosh came to a similar conclusion. "They are overspending on TV, absolutely. You'd be better off allocating some portion of their budgets to online. But clients are risk-averse and they get push back from their agencies, so they continue with the high TV spend."
Could it be that marketers were just refusing to believe "evidence-based marketing?" Was it a lack of knowledge, a lack of courage, or something else entirely causing this seemingly irrational behavior?
To get another perspective, I turned to a pharma marketer for whom I have great respect. She has run major brands for several large pharma companies and is highly regarded inside and outside her company. She prefers to remain anonymous.
"We are oriented internally to POA planning and many times we have built up internal systems/processes in the commercial space that are really entrenched and hard to change," she said. "It's not that it's a lack of courage so much as that in addition to courage, it takes Herculean strength and a strong advocate internally to bring change. These things generally take time. They don't immediately happen and sometimes, even when they do, the benefits take a bit of time to manifest externally."
Perhaps enough time has passed; the resistance to evidence-based marketing is finally beginning to wear down.
"The first time I have a conversation with a company client, I have to sell the idea that digital is more effective," said Bob Doyle, VP of consumer insights at IMS Health. "But the second time, they are coming back on their own. They're convinced."
Another expert who did not want to be quoted on the record shared this observation of current pharma marketing behavior: "For our clients, they're getting better ROIs on digital than they are on offline stuff. For brands that do mass advertising, they want to keep the TV budgets whole, but beyond that, digital is much better than print."
New techniques bring new believers
As new techniques enter the market, the "provability" of the digital model is becoming even more compelling. One such innovation comes from the aforementioned IMS Health, which everyone seems to agree is the 800-pound gorilla in the Rx analytics business. Traditionally, IMS has been the place to go for analytics because they had the most Rx data. And lately, they have brought some innovation to the market through their partnership with Yahoo. IMS is now able to cross their 280 million patient records with Yahoo's 175 million consumer database, coming up with an overlapping group of 100 million patients. That level of granularity is unprecedented in the industry. Consequently, IMS can provide pharma marketers with more precise measurement of patient behavior even for relatively small brands. According to Doyle, "We are seeing shifts in spending and increases in spending because now people know what they are getting for their money."
Finally, pharma marketers are getting comfortable with "evidence-based marketing." "People now understand that they can see an ROI, and how click through rate translates to actual script lift," Doyle concludes.
One of the most exciting recent developments we have seen in our own work is the ability to use "Big Data" techniques to directly correlate Rx lift for particular sales territories to a specific campaign. Leveraging multiple data streams, digital's ability to deliver messages with pinpoint precision on both the consumer and healthcare practitioner sides is finally giving marketers the proof they need to change the way they market.
Of course, the journey is far from over. Just when we seem to have achieved some clarity about the efficacy of "traditional digital" (to coin a phrase), here comes social and mobile marketing—about the ROI of which we are freshly clueless. Although there are sure to be techniques in development as I write this, no one I interviewed knew of a market-tested way for pharma to measure the effectiveness of social or mobile campaign elements.
He won't be happy about this, but I am going to call Paul Ivans "the father of pharma ROI," and give him the last word: "The economic environment isn't getting any easier. Measuring ROI is hard, but we need to be persistent about it."
And, speaking for myself, maybe a little less naïve, too.
Bill Drummy is the Founder & CEO of Heartbeat Ideas & Heartbeat West and a member of Pharm Exec's Editorial Advisory Board. He can be reached at [email protected]
Digital Promotion Update: Mirror the Customer in Real Time
Making sense of the shifting frontier of digital in pharma requires frequent, healthy doses of feedback—and a willingness to change course when audiences and technology get ahead of the message. Pharm Exec's sister conferencing organization, CBI, convened its 12th annual Digital Innovation Forum, better known as iPharma, last month, to assess the current confusing state of play. The theme of the meeting? There is insight and wisdom for the taking when pharma makes technology its friend and turns its eye to what's happening in other, more e-media savvy sectors of business.
Here is a summary of speakers and some of the best practices they shared:
Don Schreibenreif, VP of industries research at Gartner Inc., explained how all marketers need to develop closer relationships with IT departments to collaborate in overcoming digital challenges. He also said big data must be harnessed to provide predictive analysis, and that marketing will increasingly become about taking advantage of real-time opportunities with the consumer, i.e., via geo-targeting technologies that offer on the spot deals to patients, as they are shopping.
Bruce Rogers, chief insights officer for Forbes Media, advised on content strategy as a way of engaging customers and creating long-lasting relationships. He suggested some of the following rules: stop selling, use research, "snacks" entice people over time, make content accessible and sharable, measure ROI, and ultimately, keep your audience satisfied. Above all, fostering trust is key.
Dan Tyre, director at HubSpot explained ways to leverage inbound marketing to capture the attention of patients and prescribers. He stressed that, "context allows you to marry the buyer to the right content at the right time."
Janaki Joshi, CEO of Iris Interactive discussed how stalls in workflow between departments of large pharma companies led to her idea of creating a transparent and fluid cloud-computing solution that allows medical, compliance, legal, branding, and other pharma company functional teams to view each other's activity in collaborative projects to streamline the process of producing digital products quicker and more seamlessly.
Jeff Rasp, president of Boomerang US, stressed leveraging search engine optimization (SEO) as a way to drive traffic to a company's website and increase audience exposure to its products. He noted: "While 80 percent of marketing spend goes to paid advertising, 90 percent of search clicks are delivered from SEO."
Augustine Fou, PhD, founder and chief strategist of Marketing Science Consulting Group, Inc., was one of the top tweeters at the conference. He walked the talk in scheduling tweets during his presentation, showing the group that timing is a considerable element of any digital strategy.
Todd Kolm, director of emerging channel strategy at Pfizer explained that video is an important element of the company to patient dialogue. He stressed using visual aids to increase exposure, as patients, like all humans, are audiovisual by nature. Additionally, listening to consumers, monitoring Twitter, and other social media venues is important to gaining valuable insight into patient constituencies.
Amy West, from Novo Nordisk's patient relationship marketing talked about the company's Cornerstones4Care program, which relies on digital trials to help users manage their diabetes as a chronic condition. She explained how customizable apps embedded within the program such as pill reminder schedules help in creating meaningful dialogue between company and patient.
Jim Dayton, senior director of emerging media at InTouch Solutions, talked about media convergence, and how harnessing emerging trends such as SoLoMo (Social Local Mobile), big data, responsive design, and gamification generate insights and thereby relevant solutions that foster trust with customers.
Monique Levy, VP of research at Manhattan Research distinguished the digital behaviors of pharmacists, nurses, physician's assistants, and formulary makers in contrast to doctors. She stated that there are significant opportunities for pharma to leverage relationships with these emerging audience members, as they are often overlooked in favor of the oft-sought physician.
In summary, as noted by conference participant Wendy Blackburn, EVP of InTouch Solutions, it all comes down to living the four "c's" of digital engagement: strong content, need-appropriate context, reader customization, and multi-channel convergence. Sounds like a plan.
—Clark Herman, Associate Editor