Monday, April 27, 2009

Forcing a Focus on Results

According to this article from AdAge, Coca-Cola is wanting to "to start an industrywide movement toward a 'value-based' compensation model like one it has adopted that promises agencies nothing more than recouped costs if they don't perform."

I'm not sure why Coke has designated itself as qualified to setting the industry standard. But it is an interesting prospect. Is it fair? IMHO, yes and no.

Let's face it -- advertising is always a bit of an experiment. The strategy, creative, media, sales force involvement, market conditions, and even external factors such as current events affect a campaign. Sure, (hopefully) your campaigns will be designed up-front with solid market research and key insights to drive you in the right direction. But to truly do it right, advertising is an ongoing cycle, especially when it comes to online marketing. Test a campaign, measure it, then optimize it, measure some more .... To ask agencies to only get paid for what works at X% margin is a bit much, even if you are Coke.

On the other hand, the model forces a focus on results. And if you're an agency that gets results, that's a very good place to be. Too often, marketers ignore analytics either out of ignorance, arrogance, or fear. From where I am sitting, I have seen too many pharma marketers get much more excited about pretty pictures and what color things are, versus being focused on analytics and results. There are some marketers that focus on the numbers and leave the creative to the experts (and man do we love working for them!), but they're a little more scarce.

The current excitement around social media is a current example of"focusing on the wrong thing" a bit. (Social media evangelists, hear me out ...) Everyone is talking about social media, but its for the most part still a new and unproven model, and the results just aren't there yet. The push now is to get pharmas to get more involved so benchmarks can be set and case studies established. And that I wholeheartedly support. But I wouldn't be able to predict how your sales will be affected by it. Not yet.

Sometimes you need to get back to the basics. I'd like to see Pharma Marketers focus more on analytics. Which campaigns are performing? Which medium is best reaching your audience? What are the most cost-effective channels? Which leads are converting to your product, and where did those leads come from?

If your agencies aren't providing this information to you now, you're missing the most important component of even the prettiest campaign.


Chris Nelson said...

Wendy, I wanted to comment quickly about this model Coke is adapting:

Wow, an interesting... and, somewhat egotistical move by Coke? :)

If a client/company really wants to do this, then they have to do a few things to make this feasible:

a) The online marketing budget has to be there. For a brand like Coke, that's no problem. But, for pharma, the online budget is oftentimes only a fraction of the marketing pie. That has to change. There's no way to test and target if you only have enough budget to do something once. (The old saying comes to mind: Don't put all your eggs in one basket.)

b) Trust the agency fully. All clients like to provide their own personal touch to every campaign. It may be tough for some clients to "let go" and fully trust the agency. What a client likes and wants, doesn't always line up with consumers.

c) Sales = Agency gets paid, but what are we measuring? For Coke, it's pretty cut and dry - Coke sales go up and the agency gets paid. But, for pharma it gets a lot more gray...

What are we really measuring?

If that is determined, then can the measurable "lift" be attributed back to the consumer agency, the professional agency, PR, or the sales force?

Or, is the drug just so darn good that it's selling itself?

Add in the complications of the FDA and the pharma's own internal Med Reg department... how can this really work for pharma? It's definitely a lot more risky for the pharma agency.

Bottom line: Coke's agency has the freedom to say whatever they want, create whatever they want and do a fully integrated strategy across all channels.

For better or worse, a typical pharma agency doesn't quite have that level of freedom. And, the measurement of the "lift" to the brand is much more difficult to attribute back to the appropriate team.

Wendy W. Blackburn said...

Hi, Chris. Thanks for your post. Your comments are very insightful and raise some key points for pharma marketers considering this model. It further illustrates the point that pharma marketing is ... well ... just different!

You're right about there being to be several things first to make this model feasible. In terms of tracking results, some clients do choose to track and compare ROI of separate channels down to the patient prescription-level. Many, however, do not -- but they should. That, at least, would be a good first step toward tracking results and optimizing programs.