How to know the real ROI of your advertising (and PR)

By Dr. Andrée K Bates, April 2009

We’ve all read the headlines. We’ve all been infected with the economic anxiety that runs rampant today. The turmoil has the potential to affect our personal and professional lives in untold ways. But, of course, that’s not the end of the story for Pharma. 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. That’s the feeling spreading across the Industry, and across the world, as companies scale back, reduce spending and wait out the worst.

That is when the orders to cut budgets come down from on high, when Marketing Managers begin a time of panic, stress and frustration. CMO’s have to make tough and quick decisions, following management’s lead but maintaining marketing plans and goals as much as possible. It’s a delicate process and one that has many Marketing Managers throwing their hands up in defeat.

IN HARD TIMES BUDGETS GET CUT

And where is the first place for budget to go? Often - advertising budgets. However, is this a sensible decision or not? Making this decision is where the problem lies. Without 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 what do we do? How can Pharma be frugal and cut in the right places, but still build their brand revenue, market share and profits?

The fact of the matter is – advertising works to grow revenue if, and only if, the strategy is well planned and executed. But, if it is not, then it is an entirely sensible decision to cut it. So how do you know if your advertising is the kind to cut or the kind to keep?

HOW DO YOU CHOOSE YOUR ADVERTISING AGENCY?

When an advertising agency embarks on an ad campaign with a Pharmaceutical Company, acclaim, accolades and even awards seem a sure sign of success. Ads that are getting attention mean a Pharma company is working with the best, and sales will automatically fall into place. At least that’s what we believe. However, in reality it doesn’t always happen that way.

Sometimes, despite glowing reviews and positive feedback, sales and profits stagnate and we’re left to explain why. Everyone in the Pharma Industry in the U.S. continually discuss the case of Rozerem in 2007 and how the brand was spending more annually on ads -- which feature a sleepless man, Abraham Lincoln, and a talking beaver -- than the drug was generating in revenue. Despite this, at the time, Rozerem had less than 3 percent of the U.S. market, according to Industry sales figures released at the time. Where were the competitors? Ambien and its controlled-release version had about 77 percent of the market and Lunesta, launched in 2005 - just a few months before Rozerem, had about 16 percent of the market, according to IMS Health. Rozerem was certainly up against an onslaught of ad spending by its rivals and a potentially cheaper version of Ambien, which recently became available in a Generic form. In Q1 that year, Sanofi-Aventis, the maker of Ambien, spent about $45 Million on consumer ads, largely for Ambien's controlled-release version, while Sepracor Inc. spent more than $70 Million for Lunesta, according to TNS Media Intelligence.

What went wrong? The advertising agency that put it together won numerous awards for the advertising. It tested well in focus groups and market research. Why would the marketers not go with it given the evidence they had that they were in good hands? This is a common problem and one that doesn’t have to happen.

BLIND FAITH, AND WHY IT’S MISGUIDED

In today’s 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. Nevertheless, we’re still expected to make that magic, to turn products into sales, to boost revenue and shareholder value. Logically, naturally, 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.

However, major problems exist with advertising agencies, problems that Pharma marketers are discovering more and more. Agencies can produce great campaigns that address what is needed to grow brand revenue, market share and profit. So what are some of the problems with the typical advertising agencies?

UNBALANCED MEDIA MIX

Depending on which country and whether the brand is Ethical or OTC, many agencies are still focused on television advertising at the exclusion of other, more relevant and growing, media. Television audiences are bypassing advertising, either by abandoning the TV itself (in favor of pay-per-view TV, video games, DVD’s and the Web) or skipping through ads on digital video recorders and TIVO’s. 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.

Consumers increasingly turn to the Web when it comes to product choices. According to Forrester, more than half of online consumers don’t trust brand messaging and prefer the Web to research product purchases. The good news is that when online consumers 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.

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 in, rather than actively seeking out info and granting permission for additional marketing, thereby missing out, ignoring a major sector of the audience, and being unable to translate ads into sales.

WRONG METRICS FOR DETERMINING SUCCESS

Fitting in with their bias towards analog media, agencies often focus on the wrong measurements of success. They work towards “ad recall” and “brand awareness”, and count campaign success as an award on their shelves. A study of U.K. and U.S. companies found that 72% of the survey respondents measured advertising return. In the main, metrics used by large U.K. companies for measuring advertising effectiveness and return can be seen in Figure 1. Interestingly, none of these measures are actually measuring bottom line return, they are all activity tracking. However, in the world of Pharma marketing, this won’t 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 don’t match up.

LACK OF RELATIONSHIP MARKETING

Today’s 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.

FIGURE 1: Advertising measures, UK
Effect tracked on routine basis           Number of agencies
Brand awareness:
Prompted                                                          24
Unprompted                                                      23
Ad awareness:
Prompted                                                          24
Unprompted                                                      23
Consumer purchases                                           23
Brand images and attributes                                 23
Recall of advertising content                                23
Brand preference/ranking                                    22
Advertising ‘vividness’ measures                             18
Purchase-related promotions                                10
Prices                                                                 5
Sizes/varieties                                                      5
Distribution                                                         4
Source: Admap Ad-Tracking Users’ and Buyers’ Guide

With these shortcomings in mind, it’s no wonder that Pharma marketers can run into trouble with their advertising campaigns. Consider how we choose agencies:

BETTER AGENCY SELECTION

In short and in general, the best agencies for Pharma marketers exhibit more vision. When agencies have a firm sales orientation, explicitly intending to increase your prescriber rate or act on your other needs, that’s a firm to partner with. When an agency has a track record of relationship building, encouraging and acknowledging that sales is an ongoing process and branding a matter of building trust, that’s a firm to partner with. When an agency demonstrates no media bias, giving strategy and plans with balanced recommendations, that’s a firm to partner with. And finally, when an agency focuses on brand awareness in terms of loyalty - customers that routinely and automatically return to your company to satisfy their needs, resulting in increased prescriptions and profits - that’s a firm to partner with.

SO HOW CAN YOU FIND THIS AGENCY?

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 increased prescribers and boosted profits. This group of talented individuals is not a myth. The right agency for your company can be found with a little diligence. Sure, you can conduct your own research into agencies, but what you find will normally be billings, awards and the like – not what you need to know i.e. does their advertising grow sales. You might be able to uncover this with 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 really let you know the real financial impact of the advertising itself. Also, 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 very little hard information.

A SIMPLER WAY

A simpler method exists. The 94.8 Advertising Analytics System examines the financial impact of the advertising on the brand’s 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 6 weeks prior to measurement. By using this approach, marketers and advertising agencies can accurately determine which advertising is 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, that use all the right tactics and, most importantly, produce real financial results based on real mathematical analysis.

Advertising agencies are also realizing that, by using this system themselves, they can see what components of their campaigns are letting them down and which are creating results. From this, they can make adjustments and then be able to prove to their Pharma clients exactly how much financial impact their advertising is providing the brand’s bottom line. It is win:win for both sides. If an advertising agency is consistently creating campaigns that these kind of systems can prove are providing a Pharmaceutical brand with a strong financial impact (sometimes we see advertising impact as significantly more profit producing than sales force results), then why would you cut the budget of something that is creating your profit?

CASE STUDY: UNDERPERFORMING ADVERTISING

This brand was spending significantly on advertising. The Eularis 94.8 Advertising Analytics System, previously described and conducted by Eularis for the brand, showed that in its category, advertising was green. ‘Green’ meant that this activity was influencing the Physicians’ actual prescribing irrespective of what the Physicians believed. However, for this brand, it was not supporting the brand’s market share, which was down to either poor content/messages or poor execution. Given that the team were spending significantly on this, they wanted to be able to understand why and also be able to correct the underperformance.

The brand team had already commissioned a number of primary market research studies on the sorts of areas mentioned earlier. It had data on brand awareness, ad awareness, brand image attributes and advertising message recall, among other areas. It also had data on advertising spend and knew it was spending at the same level as key competitors. However, the advertising activity stubbornly remained unsupportive towards the brand’s market share despite it being clearly an influencer for the therapy category.

The team decided to use the Eularis 94.8 Advertising Analytics System to find the answers to these questions:

• Is our key message differentiated enough in our campaigns?
• How effective are our campaigns in delivering key messages?
• How effective are our advertising messages, and should these be changed?
• Which of our advertising messages provides the most influence on changing actual prescribing behaviour?
• Is our advertising frequency appropriate or should it be changed?
• Which advertising campaigns have given us what market share impact?
• How much market share is our advertising getting us compared to our promotional activities?
• What do we need to change to be able to do better?
• How does our advertising agency compare to our competitors’ agencies in terms of results for their clients?

Using these analytics, the picture of this brand’s advertising was broken down into content/themes, execution, frequency, individual campaigns and sentiment.

The analytics provided answers to these questions and showed the key topics/themes that the advertising needed to be built around. It also highlighted some of the problems found in execution, suggesting what needed to be done to improve results in advertising effectiveness and bottom line results. The various campaigns were redone with the message focus found to be having the most impact. The execution elements were also corrected. The analysis was redone 6 months later and things had turned around. The market share had increased and the analytics showed that a large proportion of this was due to the revised advertising campaigns. This type of analytics has now been shown to highlight specific areas (devised in combination with the Pharmaceutical or agency client) for improvement and highly specific recommendations on what needs to be done within the advertising to grow the brand’s market share, for highly impressive results.

LET’S NOT LEAVE 'PR' OUT: MEASURING PR RETURN

The extent of PR's influence on Pharmaceutical marketing programmes is so great that ignoring it would be a huge error. Despite the fact that the impact of PR differs depending on brand category and brand, experience shows that there is a high correlation between PR activity and the brand’s market share. However, although marketers are convinced of the impact of PR, many have an inability to explain which aspects of it are working and how to separate out the different PR components to measure return on each. Traditionally, there were measures such as number of placements, attendance at events, press clippings measurement, column inches measurement, impressions measurement, message frequency and positive or negative categorizations.

Then, PR measurement moved on fuelled by the ROI phenomenon, and the emphasis shift went towards having a distilled score to represent PR's unique contribution within the mix, sometimes called a PR Gross Rating Point (GRP). A GRP was a distilled measure for planning and evaluating one's advertising investment. But clearly this was not good enough, so the Weighted Impact Score was introduced. Again, this has now been shown to be insufficient, so measurement again moved on.

Today, measurement of PR has advanced considerably using analytics. PR is not only measurable in terms of how much market share impact it is having on the brand itself but the components of PR are also measurable in this way, so we can see which PR programmes have had the most impact on market share and how they can be tweaked for even more impact.

EXAMPLE OF PR COMPONENT MEASUREMENT FOR A PHARMA BRAND

Examples of questions that might be asked about PR activities include:

• How much overall market share is PR providing from specific target audiences?
• How much return is being provided by the different PR activities (e.g. journal write-ups versus events, versus social investments, versus press releases, etc.)?
• How could the overall PR mix be tweaked to gain an even greater return given what is currently happening in the competitor mix and market environment?
• How should this mix within PR be allocated for maximum bottom line gain?
• If I invest this much in these PR programmes, what is the likely return?
• What is the relationship between product branding and corporate branding?
• Which PR firms are at the top of the league table in terms of providing maximum market share impact for their client brands?

By using analytics, you can still put trust in an advertising agency and know that your goals and needs will be met. By understanding the problems with many agencies, and knowing the real qualities to seek, you can separate the flashy groups from the real performers. And, with a little expert analysis, you can find the ideal agency and the ideal campaign with minimal stress, plenty of time left over and a growing brand market share to boot, which can be directly attributed to the advertising campaign!