Is Your Internet Strategy Profitable? How Do You Know?
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Unfortunately, for the past decade for many Pharma companies, having Web sites and Internet projects was more
a “we just have to have it because everyone else does” kind of approach. This led to companies either adopting a
‘wait and see’ approach or throwing budgets at a Web site. Both approaches were lacking. Since those early days,
e-Marketing projects have been scrutinized for ROI more than non-Internet projects due to the heavy scepticism of
senior management. The constant ROI questions seem to be asking “prove the channel works”. This is akin to saying
“prove TV advertising works” or “prove PR works”. This led to the ubiquitous ROI studies of channels – such as the
ARPP and the RAPP - which hypothesize that whatever one does in a channel will be pretty much the same and so
ROI can be determined to compare channels. This obviously ignores the fact that strategy and execution come to
play in marketing in any channel and one cannot say carte blanche that one channel is better than another channel
as it all depends on what you do and how you do it.
The Internet is simply a channel – and a widely used channel. The real question is, “How do I allocate resources and
effort across a variety of Internet projects and get the most economic return?” Or put another way, “What can be
done to ensure that companies develop and manage the best possible portfolio of Internet investments?” The same
question should be asked for marketing in general of course … and it is.
Unlike the ‘do or die’ approaches of the early days, it is now fi nally clear to most Pharma companies that basic
business principles of strategy and economics can be applied with rigour to this Internet project portfolio allocation
process as it can with traditional marketing budget allocation. This involves the same process being applied to
traditional marketing portfolio optimization i.e. determining the optimal portfolio of Internet investments (including
e-detailing) and using predictive analytics to see which allocation will produce what outcome to assist in making
decisions about budget allocation. Of course, companies can and should do both i.e. assess the Internet allocation,
assess the traditional allocations and assess the mixture of the two. The reason they have been divided here is that
the nature of the process requires 2 separate analytics procedures given that, in many cases, the Internet target
audience is slightly different from the traditional target list that the other marketing is targeted at.
How to Plan the Optimal Internet Portfolio
As most Pharmaceutical marketers with investing experience now realize, building a portfolio by simply selecting
the expected return on investments based on historic data and returns will seldom maximize the value of the
entire portfolio. Naturally, the reason is that the value of the entire portfolio of activities is determined by
the combination of expected return and risk. In addition, the risk of the Internet portfolio is comprised of the
risk of each investment and the degree to which each investment’s expected return correlates with that of all
other investments. Basically, marketers must take into consideration both the value-at-stake estimates and the
“relatedness” of each investment. One client chose a group of Internet projects to apply this process to. They had
e-Detailing, they had some disease awareness activities with some portals, they had some c-Detailing, they had
patient programs run via their Physicians, they had some online sponsorships and some direct e-mail activities.
The fi rst part of the process was mathematically determining where the investments would have the most impact,
then assessing the spend levels for each to see how that impacted on the economic results. Then they put this into
predictive analytics to see what the best combination of investments was in the Internet space that would yield the
highest returns. They spread the investments across the activities with most return but the analytics showed the
optimal budget allocations across Internet activities.
The result was a portfolio containing four high priority options that were to be funded in a specifi c percentage
allocation and implemented immediately. Most importantly, the highest priority options had a signifi cantly
measurable fi nancial return, with total value estimated at $18,560,000 from a $5,000,0000 overall spend.
Conclusion
As several of our client case studies confi rm, Internet investments do not need to rely on historical ROI
calculations (either by channel or project) that are calculated project-by-project and ignore inter-relationships
between projects, and can be subjected to the same, more progressive portfolio optimization approaches that
other marketing is subjected to. For companies implementing this kind of approach to their Internet investments,
the economic returns they stand to gain are great and signifi cantly greater than the investments being put at risk
for the brand.
If you have Internet projects and are still relying on the inadequate approach of only calculating ROI of how well you did
with one project at a time, then move from the equivalent power of a bicycle to a rocket by contacting Dr. Andree K Bates
for more information on this approach.
For more information on this topic, please contact the author,
Dr. Andrée K Bates at:
Eularis
Tel: +44 (0)20 7403 5378
Fax: +44 (0)20 7900 2086
http://www.eularis.com
Email: abates@eularis.com
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