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Return on investment in pharma marketing − GfK expert explains

May 5, 2020

In the intermedix interview, Frank Weidle (GfK) reports on the insights from various GfK analyses of return on investment (ROI) in pharma marketing and reveals, among other things, what you need to remember when setting up and expanding doctor’s recommendations as a marketing tool.

Pharmaceutical companies have found it increasingly difficult over the past few years to demonstrate the success of marketing activities, keyword ROI. In your opinion, what are the challenges facing product and marketing managers?

One of the biggest challenges when measuring ROI is making sure individual activities are comparable. The impact of different activities varies over time though. Take TV advertising as just one example from our studies in the OTC segment. TV advertising has a positive impact very quickly, but consumers also tend to forget about it very quickly once the campaign is “taken off-air”. Print campaigns have a longer-lasting effect; the doctor’s recommendation still lasts for a long time after the actual stimulus.

Most ROI studies on the market relate to modelling end-user advertising. The mutual influence of various additional factors is often not factored in, for instance what influence does a pharmacy’s recommendation or a doctor’s recommendation have? Might there be a correlation between higher or lower spending in public media and an increase or decrease in these recommendations? Many models fail to account for weather influences – a potent factor especially with cold remedies.

In our experience, the doctor’s recommendation is a powerful tool.

Frank Weidle, Director GfK Consumer Panels & Services | CHC & Dental

You talked about the issue of doctor’s recommendations. What influence do these have in the OTC segment?

In our experience, a doctor’s recommendation is a powerful tool. There are markets where a doctor’s recommendation has a greater influence on the purchase decision than the individual’s own satisfaction with products they already know or use. Often though the doctor’s recommendation is not the focus of the marketing activities or is given little, if any, prominence in the media mix or the analysis. Rather it’s the small and medium-sized enterprises that leverage more potential in this segment due to their proximity and focus on the German market.

Defining the right KPIs for the analysis is what really counts in the analysis. What do marketers need to bear in mind, what are the key issues?

First, marketers need to know and understand what the influencing factors in a market are. Do we need to develop a market almost entirely through end-user advertising or do doctors have an influence with their recommendations for this condition and target group? So there’s no point using end-user advertising in a doctor’s market, and vice versa. Say we’re dealing with a generics market, price is the decisive factor and consequently it’s all about delivering a low price in the market.

For a successful campaign, I need to know my target group’s market mechanisms and decision-making criteria. Only then can I optimally gear the marketing mix and in turn define the relevant KPIs. But here too you can see that there are KPIs that tend to be left out of the standard analyses. These include increasing the loyalty rate compared with the competition. What does loyalty rate mean here? Buyers of a product have a certain annual requirement, say for analgesics. Let’s assume that Aspirin buyers cover 80% of their annual requirement for analgesics with Aspirin, that gives us a loyalty rate of 80%.

You offer various panels for pharmaceutical companies. What issues is this kind of analysis best suited to?

For a start we have GfK m*scope, a buyer study that provides information on the end-user buying behaviour at the PoS (point-of-sale) in retail and mail-order pharmacies. This study helps us to understand the market mechanisms and tailor the right marketing mix to these market mechanisms.

We also record the advertising spend in consumer media publications, retail pharmacies through sales representatives and advertising collateral, investment in advertising activities at mail-order pharmacies and finally advertising activities with doctors through sales representatives, trade journals and mailings.

These tools provide us with an insight into investment in individual markets and enables us to follow how competitors act in the market. These tools then allow us to start adding detail to the marketing plan.

An important area that you’ve analysed is the influence of the doctor’s recommendation on OTC product sales. Can you summarise for us some of your initial findings?

One of the key findings is that since Germany’s Health Care Modernisation Act (GMG) came into force in 2004, the doctor’s recommendation has remained virtually flat as a percentage of total sales with self-medication. That’s certainly amazing.

There are also a few basic things you need to understand when setting up and extending the doctor’s recommendation. If you want to set up a doctor’s recommendation as a marketing tool, you need perseverance. It often takes up to a year before we see any returns. That’s definitely expensive and not a very compelling proposition at first glance. However, we also know from our studies that doctor’s recommendations last. Compared with a pharmacy recommendation, end-users will remember a doctor’s recommendation for much longer.

Conversely that means these buyers are also less likely to be influenced by end-user advertising and tend to be loyal buyers. Trust is certainly part of it.

Then of course you have to think what activities we can use to inform doctors and under what circumstances a doctor would be willing to give a recommendation. If you only have a single product, then there’s of course no point setting up a sales force. A mix of investment in physician information systems, mailings and advertisements in trade journals has often proved the best solution in this scenario. In other cases, sales force communications should be supplemented with other activities such as communications in the Physician Information System. We also had campaigns where communications were channelled solely through the Physician Information System and we saw an increase in doctor’s recommendations. You always need to check that against the specific context and tailor your offering accordingly.

Can you draw any conclusions regarding specific influencing factors that make a campaign successful? In your opinion, what are key elements in the campaign design?

In our experience, four elements that should intermesh and be optimally coordinated make up the key campaign components.

The message (1) with clear statements on the USP or benefits is just as important as the design (2) and execution of this statement. This will then only reach the selected targets if you select the right target group and the appropriate channels in the media planning (3). When we refer here to media planning, we’re not just talking about the end-user channels, but also question whether: I’m visiting the right pharmacies and doctors. Ultimately the budget (4) also plays a role of course.

GfK KEA (decision-making factors for memorable advertising)

GfK KEA (decision-making factors for memorable advertising)

In your opinion, how are the opportunities for measuring ROI being developed? What is set to change in future and what will be possible?

Measuring ROI will become increasingly complex in future given an increasing number of touchpoints. In our view, we need to pool activities and move away from monocausal analyses. The pharma sector is one of the best-studied industries with lots of valuable data. Unfortunately though this data isn’t always used fully. Anyone looking to gain an edge in highly competitive market segments in future needs to use the available data more often and more specifically. Two important requirements always apply here: collection and analysis of data needs to be as objective and impartial as possible, coupled with an openness to accept the results, which in some cases may attest to a campaign’s failure. After all, these results provide an opportunity to identify optimisation potential and to be successful long term.

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