Medical Device Link.

Originally Published June 2000

ADVERTISING, DISTRIBUTION, & SALES

Integrative Marketing in a Disintegrating Marketplace

A primer on exploiting the power of the Internet to promote and market medical products in a brave new medium.

Like it or not, the Internet is dramatically changing the market infrastructure of the medical product industry. Alvin Toffler prophesied that the next round of competition would be between the fast and the slow—or, as the witticism has it, the quick and the dead. Medical device executives, involved in some of today's fastest-changing technology sectors, need to be savvy about new and better ways to compete and be profitable. Integrating the Internet into a marketing program can be one way to make a major impact on the bottom line, as long as some Internet marketing basics are understood.

For companies ignorant of how the rules are changing, the results of marketing via the Internet can be disappointing and costly. What is different about cyberspace in comparison with such other communication channels as print and broadcast media? How can the Internet be integrated into a company's marketing mix? Marketing, promotion, and advertising are closely related activities in an Internet context. How, then, should on-line media buys be evaluated? This article examines some ways companies can exploit the power of the Internet in a well-founded, integrated marketing program.

How the Rules Are Changing

In his book Permission Marketing, Seth Godin, Yahoo's vice president of direct marketing, writes: "The Internet is going to change marketing before it changes almost anything else, and old marketing will die in its path. The marketers who funded the explosive growth of the Internet are going to be the first to be destroyed. Their experiments and hype and sizzle will open the eyes of consumers, but then these same consumers will realize they don't need the old rules anymore."¹ The rules are changing. Marketing the traditional way—"off-line"—differs from on-line marketing in five fundamental ways, maybe more.^2,3 (See Table I for a summary.)

Space. Print advertising is expensive and generally constrained by space limitations. Full-page spreads in national newspapers and magazines, which run for a limited time, can cost thousands of dollars and only begin to tell the story about a product or company. Cyberspace is cheap and unlimited, on the other hand, allowing a marketer to tailor its message to various audiences, giving each target audience as much information as it can handle. A company has the luxury of being able to tell its story completely, with words, pictures, and animation, to millions of worldwide Internet users 24 hours a day, 7 days a week.

Time. With traditional advertising, time is an expensive commodity purchased in order to acquire television and radio exposure. Only enough time can be bought to achieve an impact and create an image, not to tell a story.

But on-line, time is an expense only for Internet users. Those users respond to value added to their on-line experience. Because those who spend time on the Internet may have better things to do with that time, they must be provided with information of substance and value, not simply an infomercial.

Moreover, everything for the on-line user exists in real time.⁴ Residing in millions of computers worldwide, communication content is accessible as if in a single giant information processor. As Scott McNealy, president of Sun Microsystems, said presciently more than a decade ago, "The network is the computer." Interactivity can be nearly instantaneous. The potential exists for anyone to communicate with anyone else in the world, anytime.

Image Creation. Off-line advertising images try to pull emotional triggers. Information is a secondary consideration. A BMW convertible speeding along a sunny back road, for example, presents the image of a high-performance "tanning machine."

On-line, however, the emphasis is on rich content and detailed information, not the hard sell. Taking full advantage of the printed word, the Internet uses hypertext (the "h" in html). Simply by clicking on the text or graphic of interest, the user is transported to other documents on the Web site or linked to another computer across the continent. Information is abundant and everywhere.

Not unlike radio, the Internet now features live audio feeds. It even offers Web-enabled telephone service, where a PC acts as a speaker and microphone and the Internet as the phone line. What are called Webcasts add a new dimension to teleconferencing, as well. In these, live images are part of shared discussions among several Internet users.

Communication Direction. Radio, television, and print are passive, one-way media. With the exception of TV infomercials and shopping networks, the only way for a potential customer to get more information about a product may be to drive to the nearest store. Even someone intrigued by a news story and craving more information on the topic might have to get off the couch and go to the library.

On the Internet, however, customers can seek out information about a company and its products—and they expect interactivity. On-line, companies can engage the customer in a personal dialogue, just as local business owners did before mass production and mass-media advertising began to treat everyone the same. Collaborative, two-way learning relationships are built that grow stronger over time.

TV is considered a push medium because it delivers advertising to a passive recipient. The Internet by contrast is a pull medium. It requires a prospective audience to actively seek the information a company wants people to see.

The Internet is a direct marketer's dream because it enables messages to be tailored to individuals. Rather than marketing to a mass audience, the company markets to selected small audiences. This is called niche marketing. Witness the thousands of dedicated Internet portals that cater to the shared special interests of bikers and beer makers, book readers and computer game players. Whatever the Internet user's interests, he or she is sure to find just the site desired.

Call to Action. Appeals from off-line marketers are often based on the so-called FUD factor—fear, uncertainty, and doubt. Rather than communicating with the intellect, they try to tap into the emotions. "You must take advantage of our sale!" "Snooze, you lose!" "Don't buy an inferior product from our competitor when we offer all the bells and whistles!" By contrast, on-line marketing efforts aim primarily to provide the consumer with information. Customers go on-line in order to be able to make informed decisions. Appeal must be made to their intellect, not their libido.

Off-line marketing efforts are also based on the hope of grabbing attention away from another activity or interest. Yahoo's Godin calls this interruption marketing. He contends that consumers are fed up with advertisers who try to steal their most precious commodity—time. Godin sees this as a business opportunity to which the best response is permission marketing.¹

The focus of a growing trend among Web marketers, permission marketing offers the consumer incentives to accept advertising voluntarily, in the process building brand awareness and maximizing the chance of a sale. In an on-line, one-on-one dialogue that is collaborative, consumers are asked for permission to include them in a sales effort over a period of time. Permission marketing replaces continual interruption with ongoing interaction.

Integrating On-Line Approaches

Of course, companies should not hasten to abandon traditional forms of marketing and communications altogether. The Internet is just another part of the marketing mix. A recent survey by Matrixx Marketing Inc. (Cincinnati) led to the conclusion that fewer than 10% of Fortune 500 companies realize the importance of integrating their on-line marketing efforts with their traditional marketing programs. Since the advent of the commercial Internet some four years ago, consulting firms have been established that specialize in helping clients to integrate this new medium into their marketing communications. Whether it is a product, a service, or a company that is being launched, developing a communication program is a three-step process (see Figure 1).

Figure 1. Building blocks of a marketing communications program.

1. Development of the Communication Platform. This step involves creation of the core positioning strategy and the key messages that articulate the value proposition to target audiences that include customers, business partners, the financial community, and the media. It includes integrating an understanding of the company's overall business and marketing strategy (internal assessment) with a competitive analysis of the market (market assessment).

2. Development of Documentation. Documents are devices for telling the story. Crafting the story involves everything from product brochures to a media kit, a video backgrounder, and a Web site.

3. Dissemination of the Message. An action plan to integrate various elements of push and pull marketing needs to be devised and executed in order to reach target audiences.

A marketing program is not fully integrated unless it incorporates the best of all media strategies. On-line print and on-line broadcast will have the highest impact when successfully combined with traditional broadcast and print appeals. To be effective, an on-line program should:

• Support the entire marketing program, not exist in a vacuum.
• Reflect a unified positioning strategy, including corporate and product branding.
• Establish message consistency; that is, the Web site should have the same look and feel as the company's other marketing materials.

As with any other marketing activity, the objectives of an on-line marketing program need to be defined. The Web site should not be seen as an end in itself, but as a marketing means. An Internet strategy involves more than developing a site map and information flow. Until a company can specify a reason for promoting its products or services on-line, and can identify what it is that customers will gain from its Internet presence, its Web site will be nothing more than a pale imitation of the traditional corporate advertising and public relations campaigns. Is the company targeting its customers? Its investors? Its business partners, old or new? Its employees? Has it gone on-line in order to provide information, to educate, to increase awareness of the enterprise or its products, to reinforce branding, to complete transactional sales? What exactly is the call to action?

On-Line Promotion

The "field of dreams" strategy of on-line promotion can turn out to be a dream unfulfilled. Customers will not necessarily come just because a Web site has been built. The launch of a Web site is no longer a newsworthy event in itself. It should be coupled with a product or service introduction. Web site promotion begins with registering the site with Web directories and registering key words or "metatags" with popular search engines. Web content should be continually refreshed, and dated information, such as press releases more than a year old, should be removed regularly. Here are some basic principles of Web promotion.

• Integrate the Web site with direct mail and off-line advertising. Print the Web address on letterhead, business cards, and product collateral.
• Link the site with professional organizations and related portals. This is called affiliate, or associate, marketing. A new twist on affiliate marketing is viral marketing. This technique turns each e-mail a company sends into a billboard, via a banner link or a simple message calling the recipient to action. This kind of self-infecting promotion was very successful for Hotmail, the free e-mail provider, but some e-mailing experts look down on it as a possible violation of basic on-line manners.
• Provide an engaging on-line demonstration of the company's featured product.
• Include downloadable media information for reporters on the site. A company's Web site is often the first place a journalist turns to research an unfamiliar company.
• Conduct on-line forums and Web simulcasts on a topic of interest to customers. Many publicly traded companies use simulcasts in conjunction with annual meetings, and also to review quarterly results with analysts and shareholders.
• Use e-mail to directly communicate with prospective customers and build one-to-one relationships. This is not the same as using random e-mailing like direct mail. Sending unsolicited e-mail—"spam"—can be the kiss of death for prospecting.

Someone conducting an on-line PR campaign may be aware that so-called e-zines have no traditional deadlines, but such sites often have news cycles that matter. It should not be assumed that information appearing in an off-line publication or broadcast will make it to the on-line counterpart, or vice versa. Each medium may have its own, unconnected editorial department. The names, e-mail addresses, and telephone and fax numbers of key staff members for the on-line vehicle should be on file and kept current. MediaMap (http://www.mediamap.com) is a good source for untangling the Web.⁵ All in all, a company will maximize its publicity impact with an integrated PR campaign that targets print, broadcast, and on-line media outlets.

Evaluating On-line Advertising

The big pharmaceutical companies spent some $915 million on direct-to-consumer advertising in the first half of 1999, according to a recent study by Cyber Dialogue (New York City).⁶ Television advertisements accounted for $530 million of that, and print ads for another $370 million. Internet advertising costs were only an estimated $10 million, just over 1% of the total direct-to-consumer outlays. But the Internet ads produced a dramatically higher return on investment (ROI) than either the print or television placements.

So, Internet advertising is highly cost-effective and it works. However, it is not a replacement for off-line advertising. Integrating on-line with traditional advertising can reinforce a company's message and boost its ROI. Regardless of the kind of ad that is placed, it should be designed to be user-centric; that is, focused on providing interactive information.

The three most important factors to consider when advertising opportunities on health portals such as Neoforma, WebMD, and Intelihealth are being assessed are content relevance, demographics, and verifiable traffic. Regarding the last two of these, the beauty of the Web is that every transaction can be tracked. But the advertising site's numbers ought to be verifiable by means of third-party auditors such as DoubleClick (http://www.doubleclick.com) and Media Metrix (http://www.mediametrix.com). Other things to consider are ad size and positioning. Is the site acknowledged to be best in its class? Has site usage grown over time? Is there a wide user base? Does the site feature distinctive targeting capabilities?

Most meaningful Web metrics relate to impressions delivered and click throughs, that is, the number of people who actually click on an ad banner and arrive at the advertiser's Web page. Sites boasting of hits per se can be problematical. Counting hits is a beginner's mistake because it is not an accurate measure of visits made to the site. Each time each file on a Web page is accessed, it registers as a hit. If a visitor to a home page visits a text file and two picture files, that is counted as three hits. Following are the metrics to be familiar with.

• Cost per thousand impressions (CPM). If a site has a CPM of $10 (that is, it charges 1 cent per viewer) and claims 100,000 readers, then the cost to advertise on that site would be $1000.
• Cost per click, click rate, average banner click through. These are ways to measure media cost in terms of the number of times an ad is clicked. Often the click rate is presented as the percentage of ad views that result in click throughs. This tends to vary from less than 1% up to 10%.
• Effective yield. This is the cost per click divided by the number of pages of content viewed by the consumer at the advertiser's Web site.
• Cost per lead. This is the cost of the ad divided by the number of click throughs.
• Return on investment. The gross profit above the cost of the marketing campaign is the ROI.

Table II analyzes the hypothetical return after advertising for one month on five health sites: DrKoop, Thriveonline, Intelihealth, WebMD, and Onhealth. The ad on DrKoop generated some 47% more unique visitors per month than the other health portals, at an average cost some 20% higher. With the exception of WebMD, all the sites had an average banner click through of about 0.9%. All generated roughly the same number of site visitors per 100,000 impressions, but the cost per visitor per 100,000 impressions was lowest for Thriveonline and Onhealth.

All five sites reflect a 1% estimated visitor-to-patient (or visitor-to-customer) conversion, but the number of patients generated by the ad placed with Onhealth was 33–100% above that of the other sites. The bottom line, where the estimated advertising cost per patient generated is calculated, reveals that the Onhealth ad generated 12 patients at a cost of $333.33 per patient. The performance of the other sites lagged by this measure. Clearly, the ad generated more bang for the buck on the Onhealth site, even though that site had little more than half as many unique visitors per month as DrKoop.

Conclusion

Whether the Internet is going to change the world or merely make it more efficient, one thing has not changed: companies still need to serve customers and make a profit in the process. The Internet has shown great promise as a tool for maximizing customer satisfaction. To what extent it helps to fatten a company's bottom line may depend on how well on-line marketing is integrated into the mix of marketing approaches.

References

1. Seth Godin, Permission Marketing (New York: Simon and Schuster, 1999).

2. David J Janal, On-line Marketing Handbook (New York: Wiley, 1998).

3. Gregory R Sherwin and Emily N Avila, Connecting Online: Creating a Successful Image on the Internet (Central Point, OR: Oasis Press, 1997).

4. Regis McKenna, Real Time (Boston: Harvard Business School, 1997).

5. Shel Holtz, Public Relations on the Net (New York: AMACOM, 1999).

6. Internet More Powerful than Television or Print Ads at Driving Prescription Drug Requests, [on-line] (New York: Cyber Dialogue, 2000 [cited 30 May 2000]).

Charles Versaggi, PhD, is president of Versaggi Biocommunications (San Francisco), a marketing consultancy serving the medical products industry.

Illustration by Gordon Studer

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