marketing

The Lack of Price Transparency in the Pharma Industry

Terry Nugent of TN&A is an experienced and well seasoned veteran of the medical marketing community. He’s previously worked for the American Medical Association, and is a member of the Healthcare Marketing and Communications Council, the Midwest Healthcare Marketing Association, and the Association of Medical Media, just to name a few accolades! A few weeks ago he shared his medical marketing insights with the Pharma Marketing Network, and we’d like to repost his insights on our blog about the lack of price transparency in pharma marketing.


The Lack of Price Transparency in the Pharma Industry
By Terry Nugent

Pharmaceutical price transparency falls into the same oxymoronic category as the long-vaunted “paperless society” and the oldie but goodie, “airline food” (which used to be an oxymoron but now is a somewhat distant, if unpleasant, memory for boomer sojourners).

There are good reasons for the relative opacity of pharmaceutical pricing. I remember going to a pricing seminar back in the day where a gentleman in charge of pricing for one of the pharma companies explained to us very vividly that fundamentally, the only constraint on pharma pricing was regulation driven by public opinion.

I have a friend who has stage 4 lung cancer. He is 62 years old. He would have paid anything for a cure, and he just did. Miraculously, it seems to be working. The last thing he’s thinking about is the price. Fortunately, a third party is picking up most of the tab.

So, the price inelasticity of life-saving drugs is compounded by third-party payment, which is why we are where we are today. Pharma in health care is unlike any other good or service because it can literally be a matter of life and death. In the case of a life-threatening illness particularly, the patient has very little choice. In addition, the market is very distorted by third-party payment. Any good or service that is subsidized by a third party, also known as other people’s money, is subject to extraordinary inflation—period. It is no coincidence that the three principal segments of the economy that have managed to have serious inflation in a historically deflationary economic era—education, health care, and defense—are all paid for with other people’s money. The normal forces of supply and demand do not apply. The normal price competition of an efficient market does not apply. Thus, there is no transparency because the price signals through which buyers and sellers communicate in normal markets are not recognizable to either buyers or sellers. In fact, sellers have powerful incentives not to publicize pricing because they make different deals with different buyers based on volume discounts. For example, in the case of the Veterans Administration (VA), legislative fiats mandate the lowest, best price for our veterans.

In fact, pharma pricing is something of a trade secret. The big players get big deals. It’s the little guy who pays list price for drugs. This is the tragedy of the uninsured. One of the principle benefits of health insurance, beyond the insurance paying a certain portion of the cost of care, is its incredible “in-network” price negotiating power.

So, the main contemporary constraint on pharma pricing power is volume discounts, with one HUGE exception: Medicare, which is specifically prohibited from negotiating pharma prices. Yes, some elements of the government, such as the VA can, but the Gulliver of government is generally quite well-restrained by the Lilliputian lobbyists from flexing its giant muscles.  

Why the VA you ask? It all goes back to the ultimate restraint on pharma pricing: public opinion. Whenever government programs such as the Affordable Care Act (aka ACA, aka Obamacare, which oddly can be either pejorative or laudatory depending on your political hue) come into play, pharma always negotiates a clause, if possible, where the public payer is specifically prohibited from negotiating price, except where the market is relatively small and the PR damage potential is very high. Bad press about unaffordable drugs for our veterans is very bad for business.

That is, of course, why pharma and the rest of the health care industry tremble at the thought of a monopsony and “Medicare for All” (formerly known as national health, alias “single payer,” alias [pejorative] “socialized medicine”). We’ll just call it M4A, which is the current Beltway shorthand.

A monopsony is the inverse, or polar opposite, of a monopoly. In a monopoly, there is only one seller. In a monopsony, there is only one buyer. Whatever the buyer will pay is the price. Period. Full stop. Well, except of course, for those pesky lobbyists, whose employers may stop making the donuts, and inventing new ones, if they lose money on manufacturing and marketing. Oh, and the voters, who can’t get the drugs they need to keep voting. Oh, and then there are the health care professionals who won’t be too happy about not being able to do their jobs with anything but thoughts and prayers (they are doctors of MEDICINE after all).

However, for fans of pricing transparency, this is Utopia. There’s only one price and it’s published in the Federal Register.

Since purchasing power drives consolidation on both sides of the supply-demand line, and a monopsony is the singularity of purchasing power, the sell side would inevitably tend to consolidate into its own black hole singularity.

Nobody on the sell side wants that. Even the buyers may find that dealing with a monopoly Healthcare Inc. that owns all the doctors, hospitals, drugs, and medical devices, may not be as much fun as it sounded. The famously nonpartisan Congressional Budget Office (aka CBO for those of you collecting acronyms) just estimated the cost of M4A at a rather impressive $32 trillion with a T over the infamous 10-year budget window. To paraphrase the late Illinois senator Everett Dirksen, “a trillion here, a trillion there, pretty soon you’re talking real money.” Even, one might add, when you can print the stuff with just a keystroke at the Fed.

So that probably leaves us pretty much back where we are today absent any French Revolution-style head surgery. Since Utopian transparency shall probably remain for the next world, let’s get back to work here on this mortal plane.

Pharmacy benefit managers (PBMs) are another factor in the lack of price transparency in the pharma market. Much light has been shed of late on this particularly opaque area of pharmacoeconomics. PBMs have become a convenient whipping boy on the price and transparency issue, and not without some merit. PBMs basically carve out the pharma side of the equation, which is very complicated and which many payers don’t want to delve into. So, the PBM is tasked with negotiating a good deal with all the various pharma companies and passing on the savings to their client, the payer. The allegation, of course, is that the PBM negotiates a very good deal and then keeps an unfair amount of the money and passes on very little savings to the payer.

Another complicating factor is the use of co-pays and deductibles. Payers don’t like paying. The claims are the not-so-fun part of the insurance business—the premiums are! Of course, health insurance really isn’t insurance anyway; it’s just prepayment of health care, as the late, great Dr. Uwe Reinhardt held. However, co-pays are one of the blunt instruments that payers use to discourage people from prescribing and consuming expensive drugs. The intent of the co-pay is to bludgeon “covered life” (aka the patient) to seek the least costly solution to any particular problem, generally with a generic drug.

This briefly unmutes the price signal, like a dog whistle lowered to human pitch. Consumers, being quite careful with their own money vs. other people’s money, immediately head to Costco for a thousand-pill package of lisinopril or some such.

Here we will pause for a thought experiment on a world of perfect price transparency.

Suppose for just a moment that you woke up today and third-party payment of health care products and services had been made impossible according to the laws of economic physics, or an act of Congress. What would you do? What would pharma do? You would probably meet at the local pharmacy and have a little talk. You would say, there’s no way I’m paying that much money for your drugs. I guess I’ll just go die. The pharma company would say, wait, don’t do that, we’ll go out of business. A discussion would ensue in which you would discover a price. That’s what we capitalists call the invisible hand of the marketplace. Customers would pay what they could, or would pay, and companies would price accordingly and manage costs to make a profit. Simple, eh? Transparent? Perfectly. Possible? No. Okay, back to planet Earth.

When we last left our heroes, customers had become price sensitive due to the dastardly co-pays. Pharma companies responded by providing co-pay cards to take the sting out of the co-pay, muting the price signal. This is very controversial.

So now we have described the various clouds that make the pharmaceutical market a particularly nontransparent area of the economy. What is to be done?

The reality is that in an environment where third-party payment prevails, a transparent market is probably not achievable. Government will seek transparency, to some degree, for idealistic reasons, for the benefit of the public, and for their own political capital. Young representatives coming to the Beltway may not be privy even to the cursory knowledge articulated by your humble correspondent as they unveil simple solutions to complex problems. (As the saying goes, for every complex problem there is a simple solution, and it is simply wrong.) The issue of transparency will be debated in the halls of Congress, powerful lobbies will be brought into play, and it will be one more skirmish in a cold war leading down the eventual path to M4A. As time passes and I watched the Congress dominated by the GOP attempt to repeal the Affordable Care Act with no success, I have concluded that M4A is probably the end state of the health care debate. It is only a matter of time. However, the question is how much time. Eventually the only way for prices to be transparent, at least to the government, is for the government to pay for all prescriptions. The government will have the ultimate leverage, an absolute in negotiating prices. The trade-off for patients is innovation.

The reality is that 90% of the drugs that are prescribed in today’s world are generic, and thus, far less expensive than they were when they were exclusively patented. Therefore, time heals all (pricing) wounds, and that time is the patent life of a drug. (Except for insulin. Somebody please explain insulin—Ed.) There was a recent controversy regarding biologics. The progressive camp was up in arms about the fact that the Trump administration actually LOWERED the period of patent exclusivity in the replacement to the North American Free Trade Agreement (NAFTA) from 12 years to 10 years for biologics. Their point is that 10 years is still too long compared to international norms. Biologics are good examples of complexity. They don’t lend themselves to generic competition because, unlike small molecules, they’re very expensive and very difficult to make. (What could go wrong?) It’s not just a question of hiring a patent lawyer and hiring a contract manufacturer as it is for small-molecule drugs. For those drugs I pay as little as $3 for a 30-day prescription. That is not, and never will be, the case for complex, hard-to-manufacture drugs.

So, what does the future hold regarding transparency in drug pricing? If there’s anything I’ve learned over the course of my fairly lengthy life, it is that no one can predict the future. That has lost me a lot of consulting work. With that caveat, my prediction is that the complexity and opacity of pricing will persist in the foreseeable future. The companies that are involved are powerful and have very entrenched positions and very adept legal and lobbying teams. The status quo has a great deal of inertia. And the ultimate factor is the total lack of price elasticity that prevails for patented products that can save lives.

Ultimately, the question of pharmaceutical pricing depends on the value of a human life. This relates to the minimum wage as well. Are some lives worth more than others? Should people of means be able to buy better health care than those of lesser means? It goes to the heart of capitalism. Is capitalism a just and moral system? Should health care be separated from capitalism? Should health care be a business, because if it is a business, managers will maximize shareholder value, or they’ll be replaced by managers who will. There are nothing but trade-offs here. If one were to nationalize the discovery process in the drug production process one might arguably stifle innovation. It takes two decades for the government to build a new fighter plane. How long will it take the government to develop a new product to treat an orphan disease?

Another consideration is that the government is creating its own problems. Third-party payment inflates prices. The Food and Drug Administration is complex, and its byzantine regulatory process is the main driver of costs. Except for biologics, which are difficult and costly to manufacture, all of the value of a pharmaceutical product is intellectual property. This includes the information obtained from clinical trials and research and development that guides the formulation of various inexpensive chemicals into a product that actually cures a disease. That’s why the sale versus cost of goods sold argument in pharma is so specious. The whole universe is made of chemicals, but like alchemists, pharmaceutical companies add value through their research and development and testing.

That’s why the government licenses basic research results from the National Institutes of Health and other government branches to the private sector to get it approved. Another way that the government, as the largest single payer of health care, (already accounting directly or indirectly for 60% of the funding of U.S. health care) could get a better deal, which would be to extract bigger royalties from pharma for the intellectual property that they transfer to the private sector. There is merit to such an idea—in the mind of the payer at least.

But my prediction remains that pharma pricing will continue to be a very contentious item in the public sphere. Players, including the public, will demand greater transparency, while pharmaceutical companies and benefit managers will continue to seek privacy. And this is one area in which privacy is not an undisputed good.

Of course, the ultimate solution, absent M4A, is to eliminate third-party payments in health care. I have always argued that if third-party payment, including government and insurance, and everything else other than the private transaction between the patient the suppliers of healthcare goods and services were prohibited, prices would come down as much as 90%. That, however, is a mere thought experiment. What we saw with the failure of the GOP to repeal Obamacare was that we’re on a one-way street and there is no going back to a time when people paid for health care out of their own pockets without any assistance. That changed in the 1930s during The Great Depression when the physicians formed Blue Cross and the hospitals formed Blue Shield. The government at that time wanted to pass a health care scheme but failed. The idea persisted until it was finally enacted as Medicare and Medicaid in the 1960s as part of the Great Society. Since then, the progressive wing of government has tried to expand these programs into an M4A scheme much like that of the United Kingdom and other “civilized” member countries of the Organization for Economic Cooperation and Development.

So, there is no chance that third-party payment is going away. As long as there are third-party payers there will be transparency issues. These issues are indicative of a greater problem, which is that the normal forces of supply and demand that give us $100, 44-inch TVs do not apply in health care because there is an alienation between the providers of services and the consumers of services, thus prices will be high. Even in an M4A environment, political forces will tend to inflate the price of health care because ultimately, even M4A isn’t just other people’s money—it’s everybody’s money.



Content That Scales

Joe Shields from Health Accelerators recently did a webinar called “Designing Customer Services That Scale.” In it, he discusses the 9 reasons why his company has moved to services. In this article, we’ll break down and summarize his webinar and explain our own service offerings. 

Shields’ 9 reasons for moving to services are:

  1. Globalization. Brands are becoming more relevant and providing more services to their customers on a broader, global scale.

  2. Patient empowerment. Patients are demanding more services from their healthcare providers, particularly with the more expensive products out there.

  3. Competition. If you’re not innovating, you’d best believe your competition is, and you don’t want to be left behind while your competitors are excelling in both products and the services wrapped around those products.

  4. REMS. Short for risk evaluation and mitigation strategy and required by the FDA, REMS makes sure that pharmaceutical drugs are used safely, patients are not harmed, and physicians are aware of the risks associated with the products.

  5. Unmet needs. Making sure unmet needs haven’t already been satisfied elsewhere by another competitor or government program.

  6. More complex medicines. More complex medicines mean patients need more coaching and handholding. They need more information and services to make sure they’re using the product safely.

  7. Internet/mobile phones. The internet has changed how we access healthcare information and services. We can receive and search this info at a moment’s notice.

  8. Rising consumer expectations. Healthcare and pharmaceutical companies are not just competing with other pharma companies in the service arena; they are competing with top-tier companies like Amazon and Apple who have created very high customer expectations.

  9. The need to innovate. Where new technology and customer trends converge is where innovation lies.

Those are the reasons, Shields says, that services are a differentiator for pharmaceutical products. Another reason is that services really can help solve customers’ problems. Consultancies, UX design, and the marketing agencies within healthcare have created an ecosystem that produces much deeper insights and has uncovered a different kind of need than in the past, when companies just did concept research on a print ad.

The scale of the services, though, is the whole reason for Shields’ webinar. It’s important to scale the need into the project before you begin, because you’ll invest the same amount of effort serving people with a rare disease as you would serving people with a very common ailment like diabetes. Whatever you’re working on is going to be important to patients, and you want to reach as many patients and physicians as possible. Building in scale also gives you some valid research statistics. When you see patient communities that are quite large, you can amortize this functionality and the development costs across a larger base. Frankly, you can reuse content and functionality and transfer a lot of the things that you built, such as registration forms, instead of building them again.

The pharmaceutical industry is optimized to discover, manufacture, market, and sell medicines. There is much more effort, staff, and expertise applied to finding new medicines, but you don’t see that a lot on the digital healthcare marketing side. Shields believes that that’s going to change quickly over time, and that the industry will start to see pharma and medical device companies partner with a lot of digital health startups.

Even though the pharmaceutical industry isn’t really designed to be in the service business, companies are able to figure out through research, social listening, and other techniques what customers want and need. When thinking about the next product rollout, companies need to think about specific conditions and patient types globally, and balance that with personalization on the local level. It’s important to be realistic about what it’s going to take to launch a new pharma product globally and locally, and over the course of many years. Services, if done correctly, can help you differentiate your products. They are a great way to carve out a position that your competitors might not be able to catch up to. Most importantly, services can really help a lot of patients, and help a lot of physicians provide better care. Once you develop a systematic approach, you can be well on your way to doing very big things!

It’s important not to wing it and think the pilot phase will automatically turn your product into something big. You need a plan to make that happen. If you need help on ideating and implementing services to take your product “beyond the pill,” TNA is at YOUR service. Contact us today for a free, no-obligation consultation. Call or text us at 708.334.8414 or email terry@tnugentassociates.com.


Cold Emailing

Cold emailing — it seems intimidating, right? Cold emailing has a bad reputation with some due to the generic and poorly worded emails some marketers send, but this marketing tool is actually great when used correctly. The worst thing that can happen is that someone doesn’t respond, right? In that respect, cold emailing is low risk, but it can yield a high reward. Using Larry Kim’s article on the art of cold emailing as a guide, here are some tips to make sure your cold emails get the results you desire. 

The Art of the Cold Email

Cold emails should always focus on what you can offer a potential client. You want to create a connection, and starting your email guns blazing with a hard sell is never the way to go. People are bombarded by sales emails all the time, so you want to stand out from the crowd. Show them how they might personally profit from establishing a connection with you. You also want to emphasize your company’s reputation and your personal background and previous successes. Establish yourself as a confident marketing master!

And be sure to personalize your email to the sender. People are used to being marketed to and can spot a canned email a mile away. You want your pitch to feel personalized to their company’s wants and needs. If you don’t have a potential connection’s email address, a great way to get it is to go to their company website and look at the format of other employees’ email addresses. If you have an employee’s first and last name, it’s pretty easy to figure out the formula for their work email from there. 

Here are some circumstances where cold emailing can be a great approach:

Developing Your Business

Whether you’re seeking a partner or an investor, your contacts are everything. Even if you receive a rejection, these connections can help you later on down the line. Rejection helps you figure out what is working and what isn’t, and you end up fine-tuning your pitch. Investors are rooting for you, and even if they don’t back you at the start, showing that you can grow, take criticism, and change will make a major impact in the long run.

Recruiting

I know this sounds crazy, but sometimes the best person for a job at your company already has a job at a different company. The best way to let that person know you have an opening is by cold emailing. The worst thing the employee can do is say “no thanks,” and if that happens, you can move on to other qualified candidates. Reaching out directly to candidates you’re interested in has proven to have a higher success rate than finding candidates through other methods.

Networking

Working the digital room, wheeling and dealing, those of us in marketing know just how important connections can be. If you see someone being a valuable contact at some point, go ahead and make the first move with a personalized cold email. A simple invitation to have lunch, give a talk, or write a guest post on your blog can go a long way toward creating a lasting connection with someone who might help you out further on in your career.

Is Cold Emailing Forever Cool?

That’s tough to say, but the data shows it certainly doesn’t hurt. It isn’t everything, but it’s certainly not something you should ignore. 

If your company would like to explore some options that go beyond cold emailing, contact TN&A for a free, no-obligation consultation at 708.334.8414 or email terry@tnugentassociates.com.



Lead Generation

Today, we’re talking about marketing lead generation. Leads can come about from many different sources; for example, through a good ole Internet search, personal referrals, cold calls, advertisements, and marketing events. A 2015 survey from eMarketer found that 89% of responders said email was their most-used channel for generating leads, followed by content marketing, search engine optimization, and finally events.

Leads often need to be funneled to lead management in order to move towards the process of the consumer making a purchase. This process is sometimes called pipeline marketing. But of course, leads need to be followed up on; otherwise, their valuable information is wasted. Once someone at the company reviews and qualifies a lead to have business potential, the lead is acted upon.

Anatomy of a lead

A lead typically is the contact information and (sometimes) the demographic information of a customer who is interested in your product or service. There are two specific types of leads: sales leads and marketing leads.

  • Sales leads are generated on demographic criteria such as income, age, previous purchasing history (thanks to many AI machine learning algorithms), etc., and then these leads are resold to advertisers. Sales leads are followed up by phone calls or by using lead management systems like Salesforce. 

  • Marketing leads are generated for a distinctive advertiser offer and are often brand specific. They are different than sales leads because they are sold only once. Honesty and transparency are necessary requirements for generating marketing leads, and marketing lead campaigns can be perfected by tracking the leads to their sources.

Online leads

Online lead generation is exactly what it sounds like: the generation of prospective consumer interest into a business’ products or services through the Internet. Leads are also generally known as contacts and can be generated for a variety of purposes. A few of these are list-building, building out reward programs, or e-newsletter list acquisition. These leads can come about on the Internet through four main avenues:

  • Social media posts and engagement.

  • Email marketing campaigns (both the warm and cold emailing varieties).

  • Online advertising, which has many different pricing and scale points.

  • Healthcare industry leads, which use online lead generation as a way to contact existing patients and to acquire new patients.

The bottom line is that better leads lead to better marketing, period. A small investment in lead generation with TN&A can improve your business’s marketing and extend its reach to more consumers and clients.

For a free, no-obligation consultation, call or text us at 708.334.8414 or email terry@tnugentassociates.com.

TN&A Data Hygiene

Data, along with gold, diamonds, and oil, is now one of the world’s most valuable resources. We are living in the age of the information economy, and now, data is everything. There isn’t anyone who understands this more than marketing and media professionals who rely on targeted advertising to fuel their business.

Targeted advertising drives conversion, and stronger data leads to better marketing tactics. But the data most marketers receive is muddled and unrefined, and needs to be cleaned up in order to be used.

Marketers need data that’s both detailed and easily understandable in order to make informed decisions about their business. That’s where we come in. TN&A’s data cleanse will trim the fat of incomplete, inaccurate, or useless data that messes up otherwise-useful data sets. We also clean, refine, and reformat the data to merge it into a more unified, practical format.

According to a quote from Richard Joyce, a Senior Analyst at Forrester, less than 0.5% of all data collected by companies is analyzed and used. Furthermore, “just a 10% increase in data accessibility will result in more than $65 million additional net income for a typical Fortune 1000 company.” For digital marketers, those numbers seem wild. Data is our diamonds, yet so many companies seem to be leaving their data crude and uncut.

As it is with so many business decisions, the issue comes down to money. Most companies feel that cleaning up and synthesizing their data takes too long and costs too much to substantiate the effort. A study by the CMO Council found that 25% of marketing, commerce, and supply chain executives think that they don’t have the time and/or resources to clean and process all their data, and 51% of marketers said that inaccessible data trapped in individual platforms was a major barrier to getting the most value out of their assets.

Unclean data is normally due to marketers working across incompatible platforms, buying data from different sources, amassing different user IDs—the list goes on.

What about cost? The good news is that data hygiene pays for itself by eliminating wasted marketing dollars and capturing sales that would otherwise be lost due to bad data. TN&A improves the ROI equation by minimizing the denominator. As an independent marketing agency, we’ll shop around to find the best data hygiene value.

TN&A Data Hygiene will clean your data so you can improve your bottom line in two ways:

  • Minimize wasted marketing dollars

  • Maximize results and ROI

Better data leads to better marketing, period. A small investment in data cleansing with TN&A can improve your business’s bottom line. If you have a better picture of your ideal customer, you can understand more clearly the value of each customer relationship and know which marketing tactics deliver the most predictable results and plan accordingly for maximum ROI. When all the elements of an effective marketing data work in harmony, we can turn coal into digital diamonds together.

For a free, no-obligation consultation, call or text us at 708.334.8414 or email terry@tnugentassociates.com.

What is B2B Marketing?  (and what works in 2019?)

(Guest post written by T. Nugent & Associates COO, Katie Cochrane)

Sure, B2B marketing is no new concept, but things aren’t what they used to be — and in order for your campaign to be successful, strategies need to change, because it ‘isn’t as easy’ as it once was.

But why is it more difficult now?

Whelp, it’s called technology, and in turn, it’s called users.  Aka you and me.

Yes, B2B is one business targeting another, but businesses are run by people, and we the people don’t do things the same as we used to.  Just yesterday, I was openly sharing with friends that 50% of the new brand awareness that I experience and the purchases I make from new places is attributable to something marketed to me on Instagram.  Yes, you read that right: I am the quintessential, tech-savvy, educated, online user.

Did you notice that I said new brand awareness?

Because the truth is, a large part of preexisting or classic companies just weren’t/aren’t prepared to deal with the way marketing is today, and, as outlined in the attached article, a 2015 Bain & Company release states that nearly 90 percent of B2B marketing and sales executives do not feel prepared to sell to the digital-savvy customer — the evolved buyer.

So what does this shift mean for B2B marketers?  Adapt in order to survive.

1 - Experimentation

One of the most underrated yet important aspects of marketing is experimentation.  So often companies want a silver bullet, but there just isn’t one.  Remember, businesses are run by people and people are different.  Businesses today need to be willing to try and fail, and then try again.  Experimentation helps you understand what works for your brand and what doesn’t.

2 - Listen up

That’s what MBAs call ‘special listening.’  In order to know the person you are targeting better, you gotta spend time with them.  Follow your ideal customers on social media, subscribe to their emails, and join their Facebook groups. 

3 - Utilize your circle

Co-marketing initiatives by you and a partner attract new business to both brands by amplifying the brands’ reach.  Explore partnerships where you can cross-promote. When a company is featured or advertised in a curated email newsletter that targets a similar audience, the purchase rate is higher than it is for other marketing efforts.

Now more than ever, decision-maker positions of companies are increasingly being filled by late-20-to-30-somethings, and with so many channels to utilize, B2B marketing is only going to become more challenging. 

How are you doing with meeting the challenge?

T. Nugent & Associates knows what works and we can help you reach your target market.

To find out what we can do for you, contact us.


Digital derivative metrics - the key to resuscitating offline marketing.

I recently handled a direct mailing for a client.

The job cane in over the transom as we used to say in the 21st century and the client was old school.

However, it reminded me of a recent epiphany I had: digital will always have the best ROI because the “I” as in investment is so low.

However digital is what they call on finance a very crowded trade. Too many digital marketers are competing for a limited supply of human attention.

Therefore direct mail (which in my view includes print space advertising) becomes the contrarian play.

It has many advantages including its relative lack of competition. My USPS mailbox never overflows, whereas I almost always have about 10,000 emails. In addition, a physical piece demands some action: it silently screams “Read me, fold me, or if you must throw me away.” Something must be done with it, especially if Marie Kondo the clutter queen reigns in your condo. Email on the other hand is invisible and easy to hoard. Digital ads are even easier to ignore.

Direct mail also has a certain amount of inherent credibility. Subliminally it legitimizes its sender. Its delivered by a uniformed quasi-governmental employee. It often comes from authoritative sources such as creditors and public officials (who get to mail free with their franking privilege). It cost somebody money to send. Anybody can post online or send an email, but not everybody can afford postage and printing.

So there is merit to including mail in the omnichannel marketing mix.

However there are barriers. One of the biggest is modern media buyers don’t have any digital metrics to justify the ROI.

The answer may be found in a somewhat dated tech to bridge analog reality with the digital domain: QR codes.

I was a skeptic early on but once I got a scanner I became a user. They are particularly good when used in outdoor ads in colder climates such as real estate signs.

As print and direct mail make a comeback, QR codes or something like them are the best way to digitize readership and response metrics.these are analogous to digital impressions/email opens and clicks respectively. What would help is a metric that projects actual offline impressions to QR scans, developing a ratio reflecting the fact that only a small percentage people who read a print mail piece or add actually employ QR tech. This can be augmented by creating dedicated landing pages for each offline ad. The key is to understand that digital derivative print metrics are useful only as a relative metric vs an absolute measure if the ROI of offline ad spend; much of the value is awareness and branding which are best measured by traditional market research.

How T. Nugent & Associates Can Help

Our vintage associates’ (yours truly first and foremost) experience bridges the millennia so we’re old hands at the lost art of direct mail and print advertising in magazines.

Our youthful associates are digital natives. So, we can help you create and implement strategical programs to make the most of omnichannel options via integrated campaigns that maximize ROI.

For more information, go to www.tnugentassocites.com

The future of marketing: 4 industry leaders (including me) share their predictions

January is the season for predictions accompanied by the hackneyed caveat that they are very difficult especially when they involve the future.

So, it's high time for me to weigh in with predictions that I will remind you of next January if accurate and hope you forget about if I'm wrong. I peg the odds at 50%-50%.

Actually, the framework I'm using for my obligatory prediction piece is the "Think with Google" contribution to the predictatariat. 

Google asserts that "There’s never been a more exciting time to be in marketing. New technologies, trends, and customer behaviors are transforming the industry at breakneck speed, creating copious opportunities for those who are able to keep up — or better still, get ahead of the curve.”

Who can argue with that? Not I. Of course, having been in marketing for way too long, I could add that one could have said that at many points in the past couple of centuries. However, we truly do live in a time when a deluge of tech makes the impossible possible on virtually a daily basis. From the time I got in the marketing biz until about 1993, there wasn’t really that much new under the sun. Then the digital realm began to explode. Ever since, it has been a wild ride with one advancement after another challenging marketers to keep up with the pace of tech change.

On the other hand, the basic marketing proposition remains the same: use psychology to win hearts, minds, and share of wallet. The copywriter is still the key player. Most of the tech stack simply gets the logistics of the three “rights of Marketers”: right time, right person, right message,

Now for the fun part: let’s critique the three predictors’ predictions. 

1. Voice marketing

Abbey Klaassen, president of 360i’s NYC HQ thinks voice marketing is the future. “Voice is somewhere between an evolution and a revolution for marketing,” Klaassen predicts. 

I think it’s a fad.

True, lots of people are buying these little assistants or getting them for holiday presents. My “research” indicates lots of them are gathering dust.

In a mobile centric world, it’s hard to imagine the in-home voice devices will be the go-to interface. Speaking of (or potentially to) mobile, my experience with Siri has been botish at best. I know a few people who possess prowess, but most re using the good old virtual keyboard.

Then there’s the “Big Brother” privacy paranoia that the infernal thing is always on snooping on your every word. I predict voice will at least in the short term be one of those “great disappointments” along the lines of virtual reality.   

2. Intent

Matt Naeger, Merkle’s chief strategy officer argues “The next big thing is around predictive intent.” This new new thing would usurp old new things such as demographic-based personas and marketing funnels. 

I am personally unhappy about this scene I just mastered the buzzwords about this.

M y view is that the marketing industry tends to repackage commonsensical, ancient practices in new themes and memes in order to keep the consulting and tech pipelines moving (assuming pipelines are still in vogue). 

My personal 5-minute MBA has remained the same over two centuries: Find out what they want and give it to them.  Marketers since the beginning of time have been seeking buying signals in the form of new movers lists, RFM (recency, frequency, monetary value), and myriad other hoary techniques.

Intent is nonetheless interesting. There are many more data points available if you can capture and actualize them in as close to real time as possible. That is easier said than done but no doubt you will be hearing from multiple “partners” with shiny new tech objects which purport to do it. 

The older I get, the more I realize how great a role emotion plays even in the B2B space. How does one sense emotions that generate intent? One way is to monitor events that cause emotions and detect behavior that may catalyze them. For example, if I sell to the government and shutdown threats arise, perhaps that incites fear that causes buyers to pull the trigger on sales before the office closes.

3. New influencers

Jerri Devard, Office Depot’s chief customer officer, cleverly quips “It used to be that celebrities became influencers; now influencers are becoming celebrities.”  

What I think this means is that before you had to be a celebrity to be an influencer (e.g., a Kardashian). Now you can be an influencer even if you’re nobody and become somebody as a result.

I hope his is true, as I am a nobody and would love to become an influencer paid thousands of dollars every time I tweet (up from nothing at the moment).

What I do know is that this influencer thing is a BFD as Joe Biden would say. By that I mean marketers are throwing tons of budget at it. Sadly, this is because nobody trusts marketers or brands, so they need to hire outsiders who may command trust and respect. However, the paradox is that once their followers see through the aura of influence and realize the influencers are just paid shills, the magic dies.

Again, this is an ancient idea. We used to call it two-step marketing, word of mouth, and endorsements. He digital age has cloaked it in the mantle of social media, which is in and of itself under attack.

However, these things are tried and true because they worked. To paraphrase Lincoln (a 19th century influencer of some renown), you can influence some of the people some of the time, and all of the people some of the time. You may even be able to influence all of the people all of the time if you can match each person with an influential influencer for them.      

Well, that’s my prediction about the predictions from Google. File these away and give me fame or shame next January, unless it still “requires further study”.

 Check out what started it all - here is the newsletter that prompted my post.

 

Social Media Q&A

In the last 10+ years, social media was born and it has grown to be one of the most important communication channels to market to businesses and end-users. Within the pharmaceutical industry it is no different, social media plays a unique role and I was recently interviewed for an upcoming article on this topic. Check out how I feel about the current and future state of social media in pharma.

How will any of the scandals regarding social media companies last year (i.e., Facebook and Cambridge Analytica, Twitter bots, etc.) impact pharma marketers use of any of these platforms in 2019 and beyond?

It is difficult to predict how pharma marketers will respond to the recent blows to the credibility of Facebook and other social media, but Facebook in particular that cannot be ignored. The reality is that the political manipulation of social media has little to do with legitimate marketing, except insofar as it diminishes the overall credibility of the medium. To the extent that usage declines, Facebook and other social media will be of less utility to pharma and other direct to consumer marketers. However, Facebook has achieved such a massive market share that smart marketers will continue to exploit it for the foreseeable future.

What elements are crucial for pharma marketers to successfully work with social media influencers to promote their brands?

Influencers must be chosen with great care as to their credibility to ensure that they are bona fide. Proper credentials are essential. Any such content must be carefully prepared to ensure compliance with Medical, Legal and Regulatory (MLR) requirements.

As ephemeral content continues to gain popularity (such as Instagram Stories, Snapchat, and now Facebook Stories), how can marketers best use these platforms to engage with audiences?

Ephemeral content is challenging for, however the popularity of the more visual social media such as Instagram is compelling. Images as marketing tools are again challenging for pharma given MLR requirements, and the medium may not lend itself to traditional pharma creative. Therefore, testing of various approaches is indicated.

What will be the biggest changes or trends for social media marketing in 2019?

The challenges to social media’s credibility may impact on social media engagement. Anecdotally, I have heard people declare the death of Facebook, but to paraphrase Mark Twain I consider such reports to be grossly premature. It is apparent that the video as destiny movement has run its course, so the challenge will continue to be creating and targeting compelling content. Privacy concerns will make targeting more challenging. For example, Apple’s recent moves to limit retargeting may signal a trend to reduce the availability of data points necessary to micro target. This could particularly impact on healthcare professional targeting as most HCPs use iPhones.

5 marketing predictions for 2018 and beyond

5 marketing predictions for 2018 and beyond

1. 2018 will pose a historic opportunity for market researchers to fill the gaping hole in data sciencewhich is a paucity of data scientists. Market researchers are the perfect people to take charge of this role and need only to position and credential themselves accordingly.

2.  Market research will increasingly change from an attitudinal art to a behavioral science

Rickety email

Rickety email

DNAinfo is probably getting more attention in death than it did in life, which is no doubt the fundamental cause of its untimely demise.

While the journalism community laments the narrative of the evil billionaire crushing the unionist protagonists, I will share a mundane, prosaic observation that may have more to do with the realities of digital publishing.

The role of CMO does not=CEO

The role of CMO does not=CEO

In the last few years I've seen arguments that the CMO should be in charge of virtually every aspect of a company. I don't agree. I still see that as the role of the CEO.

The CEO is the ultimate authority and driving force of a company. The CMO should be as forceful and authoritative as other C-Suite executives, but no more or less. The CEO is still the ultimate source of power and should be, as she is accountable for shareholder value or any other organizational core metric.